Document:

Exhibit 10.2

Exhibit 10.2

Execution Copy

SECURITY AND COLLATERAL AGENCY AGREEMENT

This Security Agreement dated as of May 28, 2010 (“Security Agreement”), is made by
and among diaDexus, Inc., a Delaware corporation (“Grantor”), the secured parties listed
on the signature pages hereto (each, a “Secured Party” and, collectively, the “Secured Parties”)
and VaxGen, Inc., a Delaware corporation, in its capacity as Collateral Agent (as defined
below) on behalf of the Secured Parties.

Recitals

A. Pursuant to that certain Loan Agreement of even date herewith (as amended, supplemented or
otherwise modified from time to time, the “Loan Agreement”), VaxGen, Inc. agreed to make advances
to Grantor as evidenced by that certain Secured Promissory Note dated May 28, 2010 executed by
Grantor in favor of VaxGen, Inc. (the “Violet Note”), and the other Secured Parties have purchased
secured promissory notes (each, a “Secured Promissory Note”) from Grantor pursuant to that certain
Note Purchase Agreement, dated as of May 28, 2010 (as amended, supplemented or otherwise modified
from time to time, the “Note Purchase Agreement”). The Violet Note and the Secured Promissory
Notes are referred to collectively herein as the “Notes.” Such advances under the Loan Agreement
and the Violet Note, and the loans evidenced by the Secured Promissory Notes, collectively, are
referred to herein as the “Loans.”

B. The Secured Parties are willing to make the Loans to Grantor evidenced by the Notes, but
only upon the condition, among others, that Grantor shall have executed and delivered to the
Secured Parties this Security Agreement.

Agreement

Now, Therefore, in order to induce the Secured Parties to make the Loans and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
and intending to be legally bound, Grantor hereby represents, warrants, covenants and agrees as
follows:

1. Defined Terms. When used in this Security Agreement the following terms shall
have the following meanings (such meanings being equally applicable to both the singular and plural
forms of the terms defined):

“Bankruptcy Code” means Title XI of the United States Code.

“Collateral” shall have the meaning assigned to such term in Section 2 of this Security
Agreement.

“Contracts” means all contracts (including any customer, vendor, supplier, service or
maintenance contract), leases, licenses, undertakings, purchase orders, permits, franchise

 

 

 

agreements or other agreements (other than any right evidenced by Chattel Paper, Documents or
Instruments), whether in written or electronic form, in or under which Grantor now holds or
hereafter acquires any right, title or interest, including, without limitation, with respect to an
Account, any agreement relating to the terms of payment or the terms of performance thereof.

“Copyright License” means any agreement, whether in written or electronic form, in which
Grantor now holds or hereafter acquires any interest, granting any right in or to any Copyright or
Copyright registration (whether Grantor is the licensee or the licensor thereunder) including,
without limitation, licenses pursuant to which Grantor has obtained the exclusive right to use a
copyright owned by a third party.

“Copyrights” means all of the following now owned or hereafter acquired or created (as a work
for hire for the benefit of Grantor) by Grantor or in which Grantor now holds or hereafter acquires
or receives any right or interest, in whole or in part: (a) all copyrights, whether registered or
unregistered, held pursuant to the laws of the United States, any State thereof or any other
country; (b) registrations, applications, recordings and proceedings in the United States Copyright
Office or in any similar office or agency of the United States, any State thereof or any other
country; (c) any continuations, renewals or extensions thereof; (d) any registrations to be issued
in any pending applications, and shall include any right or interest in and to work protectable by
any of the foregoing which are presently or in the future owned, created or authorized (as a work
for hire for the benefit of Grantor) or acquired by Grantor, in whole or in part; (e) prior
versions of works covered by copyright and all works based upon, derived from or incorporating such
works; (f) income, royalties, damages, claims and payments now and hereafter due and/or payable
with respect to copyrights, including, without limitation, damages, claims and recoveries for past,
present or future infringement; (g) rights to sue for past, present and future infringements of any
copyright; and (h) any other rights corresponding to any of the foregoing rights throughout the
world.

“Event of Default” means (i) any failure by Grantor forthwith to pay or perform any of the
Secured Obligations when due, (ii) any report, information or notice made to, obtained or received
by Secured Party at any time after the date hereof shall indicate that Secured Party’s security
interest in the Collateral is not prior to all other security interests or other interests in the
Collateral reflected in such report, information or notice, (iii) any breach by Grantor of any
warranty, representation, or covenant set forth herein or any other Loan Document, and (iv) any
“Event of Default” as defined in the Note Purchase Agreement, the Loan Agreement or the Notes.

“Intellectual Property” means any intellectual property, in any medium, of any kind or nature
whatsoever, now or hereafter owned or acquired or received by Grantor or in which Grantor now
holds or hereafter acquires or receives any right or interest, and shall include, in any event, any
Copyright, Trademark, Patent, License, trade secret, customer list, marketing plan, internet domain
name (including any right related to the registration thereof), proprietary or confidential
information, mask work, source, object or other programming code, invention (whether or not
patented or patentable), technical information, procedure, design, knowledge, know-how, software,
data base, data, skill, expertise, recipe, experience, process, model, drawing, material or record.

 

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“License” means any Copyright License, Patent License, Trademark License or other license of
rights or interests, whether in-bound or out-bound, whether in written or electronic form, now or
hereafter owned or acquired or received by Grantor or in which Grantor now holds or hereafter
acquires or receives any right or interest, and shall include any renewals or extensions of any of
the foregoing thereof.

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.

“Loan Documents” means the Loan Agreement, the Note Purchase Agreement, the Notes, this
Security Agreement and any control agreement, Intellectual Property security agreements or other
documents executed by Grantor in connection herewith.

“Majority Lenders” means any Secured Party or group of Secured Parties holding greater than
fifty percent (50%) of the outstanding and unpaid principal under all Loans of all Secured Parties.

“Patent License” means any agreement, whether in written or electronic form, in which Grantor
now holds or hereafter acquires any interest, granting any right with respect to any invention on
which a Patent is in existence (whether Grantor is the licensee or the licensor thereunder).

“Patents” means all of the following in which Grantor now holds or hereafter acquires any
interest: (a) all letters patent of the United States or any other country, all registrations and
recordings thereof and all applications for letters patent of the United States or any other
country, including, without limitation, registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country; (b) all reissues, divisions, continuations, renewals,
continuations-in-part or extensions thereof; (c) all petty patents, divisionals and patents of
addition; (d) all patents to issue in any such applications; (e) income, royalties, damages, claims
and payments now and hereafter due and/or payable with respect to patents, including, without
limitation, damages, claims and recoveries for past, present or future infringement; and (f) rights
to sue for past, present and future infringements of any patent.

“Permitted Lien” has the meaning assigned to such term in Section 4(g) of the Loan Agreement.

“Pro Rata” means, as to any Secured Party at any time, the percentage equivalent at such time
of such Secured Party’s aggregate unpaid principal amount of Loans, divided by the combined
aggregate unpaid principal amount of all Loans of all Secured Parties.

“Secured Obligations” means (a) the obligation of Grantor to repay each Secured Party all of
the unpaid principal amount of, and accrued interest on (including any interest that accrues after
the commencement of bankruptcy), such Secured Party’s Loans, (b) the obligation of Grantor to pay
any fees, costs or expenses of the Secured Parties or the Collateral Agent under the Loan
Documents, and (c) all other indebtedness, liabilities and obligations of Grantor under

 

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the Loan Documents to each Secured Party, whether now existing or hereafter incurred, and
whether created under, arising out of or in connection with any written agreement or otherwise.

“Security Agreement” means this Security Agreement and all Schedules hereto, as the same may
from time to time be amended, modified, supplemented or restated.

“Trademark License” means any agreement, whether in written or electronic form, in which
Grantor now holds or hereafter acquires any interest, granting any right in and to any Trademark or
Trademark registration (whether Grantor is the licensee or the licensor thereunder).

“Trademarks” means any of the following in which Grantor now holds or hereafter acquires any
interest: (a) any trademarks, tradenames, corporate names, company names, business names, trade
styles, service marks, logos, other source or business identifiers, prints and labels on which any
of the foregoing have appeared or appear, designs and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings thereof and any
applications in connection therewith, including, without limitation, registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar office or agency of
the United States, any State thereof or any other country (collectively, the “Marks”); (b) any
reissues, extensions or renewals thereof; (c) the goodwill of the business symbolized by or
associated with the Marks; (d) income, royalties, damages, claims and payments now and hereafter
due and/or payable with respect to the Marks, including, without limitation, damages, claims and
recoveries for past, present or future infringement; and (e) rights to sue for past, present and
future infringements of the Marks.

“UCC” means the Uniform Commercial Code as the same may from time to time be in effect in the
State of California (and each reference in this Security Agreement to an Article thereof (denoted
as a Division of the UCC as adopted and in effect in the State of California) shall refer to that
Article (or Division, as applicable) as from time to time in effect; provided, however, in the
event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or
priority of the Secured Parties’ security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of California, the term “UCC”
shall mean the Uniform Commercial Code (including the Articles thereof) as in effect at such time
in such other jurisdiction for purposes of the provisions hereof relating to such attachment,
perfection or priority and for purposes of definitions related to such provisions.

 In addition, the following terms shall be defined terms having the meaning set forth
for such terms in the UCC: “Account”, “Account Debtor”, “Chattel Paper”, “Commercial Tort Claims”,
“Commodity Account”, “Deposit Account”, “Documents”, “Equipment”, “Fixtures”, “General Intangible”,
“Goods”, “Instrument”, “Inventory”, “Investment Property”, “Letter-of-Credit Right”, “Money”,
“Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Securities Account”, and “Supporting
Obligations”. Each of the foregoing defined terms shall include all of such items now owned, or
hereafter acquired, by Grantor.

 

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2. Grant of Security Interest. As collateral security for the full, prompt,
complete and final payment and performance when due (whether at stated maturity, by acceleration or
otherwise) of all the Secured Obligations and in order to induce the Secured Parties to cause the
Loans to be made, Grantor hereby assigns, conveys, mortgages, pledges, hypothecates and transfers
to the Collateral Agent, on behalf of the Secured Parties, and hereby grants to the Secured
Parties, a security interest in all of Grantor’s right, title and interest in, to and under the
following, whether now owned or hereafter acquired, (all of which being collectively referred to
herein as the “Collateral”):

(a) All Accounts of Grantor;

(b) All Chattel Paper of Grantor;

(c) The Commercial Tort Claims of Grantor more particularly described on Schedule E attached
hereo;

(d) All Commodity Accounts of Grantor;

(e) All Contracts of Grantor;

(f) All Deposit Accounts of Grantor;

(g) All Documents of Grantor;

(h) All General Intangibles of Grantor, including, without limitation, Intellectual Property;

(i) All Goods of Grantor, including, without limitation, Equipment, Inventory and Fixtures;

(j) All Instruments of Grantor, including, without limitation, Promissory Notes;

(k) All Investment Property of Grantor;

(l) All Letter-of Credit Rights of Grantor;

(m) All Money of Grantor;

(n) All Securities Accounts of Grantor;

(o) All Supporting Obligations of Grantor;

(p) All property of Grantor held by any Secured Party, or any other party for whom any Secured
Party is acting as agent, including, without limitation, all property of every-description now or
hereafter in the possession or custody of or in transit to any Secured Party or

 

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such other party for any purpose, including, without limitation, safekeeping, collection or
pledge, for the account of Grantor, or as to which Grantor may have any right or power;

(q) All other goods and personal property of Grantor, wherever located, whether tangible or
intangible, and whether now owned or hereafter acquired, existing, leased or consigned by or to
Grantor; and

(r) To the extent not otherwise included, all Proceeds of each of the foregoing and all
accessions to, substitutions and replacements for and rents, profits and products of each of the
foregoing.

Notwithstanding the foregoing provisions of this Section 2, the grant, assignment and transfer
of a security interest as provided herein shall not extend to, and the term “Collateral” shall not
include: (a) “intent-to-use” trademarks at all times prior to the first use thereof, whether by
the actual use thereof in commerce, the recording of a statement of use with the United States
Patent and Trademark Office or otherwise or (b) any Account, Chattel Paper, General Intangible or
Promissory Note in which Grantor has any right, title or interest if and to the extent such
Account, Chattel Paper, General Intangible or Promissory Note includes a provision containing a
restriction on assignment such that the creation of a security interest in the right, title or
interest of Grantor therein would be prohibited and would, in and of itself, cause or result in a
default thereunder enabling another person party to such Account, Chattel Paper, General Intangible
or Promissory Note to enforce any remedy with respect thereto; provided that the foregoing
exclusion shall not apply if (i) such prohibition has been waived or such other person has
otherwise consented to the creation hereunder of a security interest in such Account, Chattel
Paper, General Intangible or Promissory Note or (ii) such prohibition would be rendered ineffective
pursuant to Sections 9-406(d), 9-407(a) or 9-408(a) of the UCC, as applicable and as then in effect
in any relevant jurisdiction, or any other applicable law (including the Bankruptcy Code) or
principles of equity); provided further that immediately upon the ineffectiveness, lapse or
termination of any such provision, the Collateral shall include, and Grantor shall be deemed to
have granted on the date hereof a security interest in, all its rights, title and interests in and
to such Account, Chattel Paper, General Intangible or Promissory Note as if such provision had
never been in effect; and provided further that the foregoing exclusion shall in no way be
construed so as to limit, impair or otherwise affect Secured Party’s unconditional continuing
security interest in and to all rights, title and interests of Grantor in or to any payment
obligations or other rights to receive monies due or to become due under any such Account, Chattel
Paper, General Intangible or Promissory Note and in any such monies and other proceeds of such
Account, Chattel Paper, General Intangible or Promissory Note.

If Grantor shall at any time acquire a Commercial Tort Claim, Grantor shall immediately notify
Secured Party in a writing signed by Grantor of the brief details thereof and grant to Secured
Party in such writing a security interest therein and in the proceeds thereof, all upon the terms
of this Security Agreement, with such writing to be in form and substance satisfactory to Secured
Party.

 

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3. Rights Of Secured Party; Collection Of Accounts.

(a) Notwithstanding anything contained in this Security Agreement to the contrary, Grantor
expressly agrees that it shall remain liable under each of its Contracts, Chattel Paper, Documents,
Instruments and Licenses to observe and perform all the conditions and obligations to be observed
and performed by it thereunder and that it shall perform all of its duties and obligations
thereunder, all in accordance with and pursuant to the terms and provisions of each such Contract,
Chattel Paper, Document, Instrument or License. The Secured Parties and the Collateral Agent shall
not have any obligation or liability under any such Contract, Chattel Paper, Document, Instrument
or License by reason of or arising out of this Security Agreement or the granting to the Secured
Parties or the Collateral Agent of a lien therein or the receipt by any Secured Party of any
payment relating to any such Contract, Chattel Paper, Document, Instrument or License pursuant
hereto, nor shall any Secured Party or the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of Grantor under or pursuant to any such Contract,
Chattel Paper, Document, Instrument or License, or to make any payment, or to make any inquiry as
to the nature or the sufficiency of any payment received by it or the sufficiency of any
performance by any party under any Contract, Chattel Paper, Document, Instrument or License, or to
present or file any claim, or to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to which it may be entitled at any
time or times.

(b) The Secured Parties authorize Grantor to collect its Accounts, provided that such
collection is performed in a prudent and businesslike manner, and the Collateral Agent may, upon
the occurrence and during the continuation of any Event of Default and without notice, limit or
terminate said authority at any time. At the request of the Collateral Agent, Grantor shall
deliver all original and other documents evidencing and relating to the performance of labor or
service which created such Accounts, including, without limitation, all original orders, invoices
and shipping receipts.

(c) The Collateral Agent may at any time, upon the occurrence and during the continuance of
any Event of Default, without notifying Grantor of its intention to do so, notify Account Debtors
of Grantor, parties to the Contracts of Grantor, and obligors in respect of Instruments of Grantor
and obligors in respect of Chattel Paper of Grantor that the Accounts and the right, title and
interest of Grantor in and under such Contracts, Instruments and Chattel Paper have been assigned
to the Secured Parties and that payments shall be made directly to the Collateral Agent for
distribution to the Secured Parties. Upon the occurrence and during the continuance of any Event
of Default, upon the request of the Collateral Agent, Grantor shall so notify such Account Debtors,
parties to such Contracts, obligors in respect of such Instruments and obligors in respect of such
Chattel Paper. The Collateral Agent may, in its name or in the name of others, communicate with
such Account Debtors, parties to such Contracts, obligors in respect of such Instruments and
obligors in respect of such Chattel Paper to verify with such parties, to the Collateral Agent’s
satisfaction, the existence, amount and terms of any such Accounts, Contracts, Instruments or
Chattel Paper.

4. Representations And Warranties. Grantor hereby represents and warrants to the
Secured Parties that:

 

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(a) Except for the security interest granted to the Secured Parties and the Collateral Agent
under this Security Agreement and Permitted Liens, Grantor is the sole legal and equitable owner of
each item of the Collateral in which it purports to grant a security interest hereunder, having
good and marketable title thereto, free and clear of any and all Liens.

(b) No effective security agreement, financing statement, equivalent security or lien
instrument or continuation statement covering all or any part of the Collateral exists, except such
as may have been filed by Grantor in favor of the Secured Parties and the Collateral Agent pursuant
to this Security Agreement and except for Permitted Liens.

(c) This Security Agreement creates a legal and valid security interest on and in all of the
Collateral in which Grantor now has rights and will create a legal and valid security interest in
the Collateral in which Grantor later acquires rights.

(d) Grantor’s taxpayer identification number is set forth in the signature page hereof. If
Grantor is a corporation, limited liability company, limited partnership, corporate trust or other
registered organization, the State (or if not a state, the other jurisdiction) under whose law such
registered organization was organized is set forth on the signature page hereof. Grantor’s chief
executive office, principal place of business, and the place where Grantor maintains its records
concerning the Collateral are presently located at the address set forth on the signature page
hereof. The Collateral consisting of Goods, other than motor vehicles and other mobile goods, is
presently located at such address and at such additional addresses set forth on Schedule A attached
hereto.

(e) All Collateral of Grantor existing as of the date hereof consisting of Chattel Paper,
Instruments or Investment Property comprising certificated securities is set forth on Schedule B
attached hereto. All action necessary or desirable to protect and perfect such security interest in
each item set forth on Schedule B, including the delivery of all originals thereof, duly endorsed
to the Collateral Agent or the Secured Parties, has been duly taken. The security interest of the
Collateral Agent and the Secured Parties in the Collateral listed on Schedule B is prior in right
and interest to all other Liens (other than Permitted Liens) and is enforceable as such against
creditors of and purchasers from Grantor.

(f) The name and address of each depository institution at which Grantor maintains any Deposit
Account and the account number and account name of each such Deposit Account is listed on Schedule
C attached hereto. The name and address of each securities intermediary or commodity intermediary
at which Grantor maintains any Securities Account or Commodity Account and the account number and
account name is listed on Schedule C attached hereto. Grantor agrees to amend Schedule C from time
to time within five (5) business days after opening any additional Deposit Account, Securities
Account or Commodity Account, or closing or changing the account name or number on any existing
Deposit Account, Securities Account, or Commodity Account.

(g) None of the Investment Property of Grantor has been transferred in violation of the
securities registration, securities disclosure or similar laws of any jurisdiction to which such
transfer may be subject.

 

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(h) All Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark
Licenses now owned, held or in which Grantor otherwise has any interest are listed on Schedule D
attached hereto. Grantor shall amend Schedule D from time to time in accordance with Section 5.9
below to reflect any additions to or deletions from this list. Except as set forth on Schedule D,
none of the Patents, Trademarks or Copyrights has been licensed to any third party.

5. Covenants. Grantor covenants and agrees with the Secured Parties that from and
after the date of this Security Agreement and until the Secured Obligations have been performed and
paid in full and any commitment of Secured Party to make Loans to Grantor has expired or
terminated:

5.1 Disposition of Collateral. Except for Permitted Liens, Grantor shall not in any manner
sell, convey, lease, license, transfer or dispose of any equitable, beneficial or legal interest in
any of the Collateral except for equipment disposed of in the ordinary course of business for at
least the estimated fair market value of such equipment as determined in good faith by the
Company’s board of directors.

5.2 Change of Jurisdiction of Organization, Relocation of Business or Collateral. Grantor
shall not change its jurisdiction of organization, relocate its chief executive office, principal
place of business or its records, or allow the relocation of any Collateral (except as allowed
pursuant to Section 5.1 immediately above) from such address(es) provided to the Secured Parties
pursuant to Section 4(d) above.

5.3 Limitation on Liens on Collateral. Grantor shall not permit to exist against any of the
Collateral any Lien, except for Permitted Liens.

5.4 Limitations on Modifications of Accounts, Etc. Upon the occurrence and during the
continuance of any Event of Default, Grantor shall not, without the Collateral Agent’s prior
written consent, grant any extension of the time of payment of any of the Accounts, Chattel Paper,
Instruments or amounts due under any Contract or Document, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any person liable for the payment
thereof, or allow any credit or discount whatsoever thereon other than trade discounts and rebates
granted in the ordinary course of Grantor’s business.

5.5 Insurance. Grantor shall maintain insurance policies insuring the Collateral against loss
or damage from such risks and in such amounts and forms and with such companies as are customarily
maintained by businesses similar to Grantor.

5.6 Taxes, Assessments, Etc. Grantor shall pay promptly when due all property and other
taxes, assessments and government charges or levies imposed upon, and all claims (including claims
for labor, materials and supplies) against, the Goods, except to the extent the validity thereof is
being contested in good faith and adequate reserves are being maintained in connection therewith.

 

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5.7 Maintenance of Records. Grantor shall keep and maintain at its own cost and expense
satisfactory and complete records of the Collateral. Grantor shall not create any Chattel Paper
without placing a legend on the Chattel Paper acceptable to the Collateral Agent indicating that
the Secured Parties has a security interest in the Chattel Paper.

5.8 Registration of Intellectual Property Rights. Grantor shall promptly register or cause to
be registered (to the extent not already registered) the most recent version of any Copyright,
Copyright License, Patent, Patent License, Trademark or Trademark License, which, individually or
in the aggregate, is material to the conduct of Grantor’s business, with the United States
Copyright Office or Patent and Trademark Office, as applicable, including, without limitation, in
all such cases the filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation proceedings. Grantor shall
register or cause to be registered with the United States Copyright Office or Patent and Trademark
Office, as applicable, those additional rights and interests developed or acquired by Grantor after
the date of this Security Agreement, including, without limitation, any additions to the rights and
interests of Grantor listed on Schedule D hereto, which individually or in the aggregate, are
material to the conduct of Grantor’s business.

5.9 Notification Regarding Changes in Intellectual Property.

(a) Grantor shall:

(i) promptly advise the Collateral Agent of any subsequent ownership right or interest of the
Grantor in or to any Copyright, Patent, Trademark or License not specified on Schedule D hereto and
shall amend or permit the Collateral Agent to amend such Schedule, as necessary, to reflect any
addition or deletion to such ownership rights;

(ii) promptly give Collateral written notice of any applications or registrations of
intellectual property rights filed with the United States Patent and Trademark Office, including
the date of such filing and the registration or application numbers, if any; and

(iii) (i) give Collateral Agent not less than 30 days prior written notice of the filing of
any applications or registrations with the United States Copyright Office, including the title of
such intellectual property rights to be registered, as such title will appear on such applications
or registrations, and the date such applications or registrations will be filed, and (ii) prior to
the filing of any such applications or registrations, shall execute such documents as Collateral
Agent may reasonably request for Collateral Agent to maintain its perfection and priority in such
intellectual property rights to be registered by Grantor, and upon the request of Collateral Agent,
shall file such documents simultaneously with the filing of any such applications or registrations.
Upon filing any such applications or registrations with the United States Copyright Office,
Grantor shall promptly provide Collateral Agent with (x) a copy of such applications or
registrations, without the exhibits, if any, thereto, (y) evidence of the filing of any documents
requested by Collateral Agent to be filed for Collateral Agent to maintain the perfection and
priority of its security interest in such intellectual property rights, and (z) the date of such
filing.

 

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(b) Collateral Agent may audit Grantor’s Intellectual Property to confirm compliance with
Section 5.8 and this Section 5.9, provided such audit may not occur more often than twice per year,
unless an Event of Default has occurred and is continuing. Collateral Agent shall have the right,
but not the obligation, to take, at Grantor’s sole expense, any actions that Grantor is required
under this Section 5.9 to take but which Grantor fails to take, after [five (5)] days’ notice to
Grantor (provided that no such notice shall be required if an Event of Default has occurred and is
continuing). Grantor shall reimburse and indemnify Collateral Agent for all reasonable costs and
reasonable expenses incurred in the reasonable exercise of its rights under Section 5.8 or this
Section 5.9.

5.10 Defense of Intellectual Property. Grantor shall (i) protect, defend and maintain the
validity and enforceability of its Copyrights, Patents and Trademarks, (ii) use its commercially
reasonable efforts to detect infringements of its Copyrights, Patents and Trademarks and promptly
advise the Collateral Agent in writing of material infringements detected and (iii) not allow any
of its Copyrights, Patents or Trademarks to be abandoned, forfeited or dedicated to the public
without the prior written consent of the Collateral Agent.

5.11 Further Assurances; Pledge of Instruments. At any time and from time to time, upon the
written request of the Collateral Agent, and at the sole expense of Grantor, Grantor shall promptly
and duly execute and deliver any and all such further instruments and documents and take such
further action as the Collateral Agent may reasonably deem necessary or desirable to obtain the
full benefits of this Security Agreement, including, without limitation, (a) using its commercially
reasonable efforts to secure all consents and approvals necessary or appropriate for the grant of a
security interest to the Secured Parties or the Collateral Agent in any item of Collateral held by
Grantor or in which Grantor has any right or interest, (b) executing, delivering and causing to be
filed any financing or continuation statements (including “in lieu” continuation statements) under
the UCC with respect to the security interests granted hereby, (c) executing and delivering to
Grantor an Intellectual Property security agreement for filing or recording with the United States
Patent and Trademark Office or the United States Copyright Office and filing or cooperating with
the Collateral Agent in filing any forms or other documents (including any such Intellectual
Property security agreement) required to be recorded with the United States Patent and Trademark
Office, United States Copyright Office, or any actions, filings, recordings or registrations in any
foreign jurisdiction or under any international treaty, required to secure or protect the Secured
Parties’ and the Collateral Agent’s interest in the Collateral, (d) transferring the Collateral to
the Collateral Agent’s possession (if a security interest in such Collateral can be perfected only
by possession), (e) executing and delivering and causing the applicable depository institution,
securities intermediary, commodity intermediary or issuer or nominated party under a letter of
credit to execute and deliver a collateral control agreement with respect to each Deposit Account,
Securities Account or Commodity Account or Letter-of-Credit Right in or to which Grantor now or
hereafter has any right or interest in order to perfect the security interest created hereunder in
favor of the Secured Parties and the Collateral Agent (including giving the Collateral Agent or the
Secured Parties “control” over such Collateral within the meaning of the applicable provisions of
Article 8 and Article 9 of the UCC), (f) at the Collateral Agent’s reasonable request, executing
and delivering or causing to be delivered written notice to insurers of the Secured Parties’ and
the Collateral

 

11

 

Agent’s security interest in, or claim in or under, any policy of insurance (including
unearned premiums) and (g) at the Collateral Agent’s reasonable request, using its commercially
reasonable efforts to obtain acknowledgments from bailees having possession of any Collateral and
waivers of liens from landlords and mortgagees of any location where any of the Collateral may from
time to time be stored or located. The Collateral Agent may at any time and from time to time file
financing statements, continuation statements and amendments thereto that describe the Collateral
as all assets of Grantor or words of similar effect. Any such financing statements, continuation
statements or amendments may be signed by the Collateral Agent on behalf of Grantor and may be
filed at any time in any jurisdiction. Grantor also hereby authorizes the Collateral Agent to file
any such financing or continuation statement without the signature of Grantor. If any amount
payable under or in connection with any of the Collateral is or shall become evidenced by any
Instrument, such Instrument, other than checks and notes received in the ordinary course of
business and any Instrument in the outstanding or stated amount of less than $10,000, shall be duly
endorsed in a manner reasonably satisfactory to the Collateral Agent and delivered to the
Collateral Agent promptly and in any event within five (5) business days of Grantor’s receipt
thereof.

6. Collateral Agent’s Appointment as Attorney-in-Fact; Performance by Collateral
Agent.

(a) Subject to Section 6(b) below, Grantor hereby irrevocably constitutes and appoints
Collateral Agent, and any officer or agent of Collateral Agent, with full power of substitution, as
its true and lawful attorney-in-fact with full, irrevocable power and authority in the place and
stead of Grantor and in the name of Grantor or in its own name, from time to time at Collateral
Agent’s discretion, for the purpose of carrying out the terms of this Security Agreement, to take
any and all appropriate action and to execute and deliver any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this Security Agreement and,
without limiting the generality of the foregoing, hereby gives Collateral Agent the power and
right, on behalf of Grantor, without notice to or assent by Grantor to do the following:

(i) to ask, demand, collect, receive and give acquittances and receipts for any and all monies
due or to become due under any Collateral and, in the name of Grantor, in its own name or otherwise
to take possession of, endorse and collect any checks, drafts, notes, acceptances or other
Instruments for the payment of monies due under any Collateral and to file any claim or take or
commence any other action or proceeding in any court of law or equity or otherwise deemed
appropriate by Collateral Agent for the purpose of collecting any and all such monies due under any
Collateral whenever payable;

(ii) to pay or discharge any Liens, including, without limitation, any tax lien, levied or
placed on or threatened against the Collateral, to effect any repairs or any insurance called for
by the terms of this Security Agreement and to pay all or any part of the premiums therefor and the
costs thereof, which actions shall be for the benefit of Secured Parties and not Grantor;

 

12

 

(iii) to (1) direct any person liable for any payment under or in respect of any of the
Collateral to make payment of any and all monies due or to become due thereunder directly to
Collateral Agent or as Collateral Agent shall direct, (2) receive payment of any and all monies,
claims and other amounts due or to become due at any time arising out of or in respect of any
Collateral, (3) sign and endorse any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments, verifications and notices in connection
with Accounts and other Instruments and Documents constituting or relating to the Collateral,
(4) commence and prosecute any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right
in respect of any Collateral, (5) defend any suit, action or proceeding brought against Grantor
with respect to any Collateral, (6) settle, compromise or adjust any suit, action or proceeding
described above, and in connection therewith, give such discharges or releases as Collateral Agent
may deem appropriate, (7) license, or, to the extent permitted by an applicable License,
sublicense, whether general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any Copyright, Patent or Trademark throughout the world for such term or terms, on such
conditions and in such manner as Collateral Agent shall in its discretion determine and (8) sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Collateral Agent were the absolute owner thereof for all
purposes; and

(iv) to do, at Collateral Agent’s option and Grantor’s expense, at any time, or from time to
time, all acts and things which Collateral Agent may reasonably deem necessary to protect, preserve
or realize upon the Collateral and Collateral Agent’s security interest therein in order to effect
the intent of this Security Agreement, all as fully and effectively as Grantor might do.

(b) Collateral Agent agrees that, except upon the occurrence and during the continuation of an
Event of Default, it shall not exercise the power of attorney or any rights granted to Collateral
Agent pursuant to this Section 6. Grantor hereby ratifies, to the extent permitted by law, all
that said attorney shall lawfully do or cause to be done by virtue hereof. The power of attorney
granted pursuant to this Section 6 is a power coupled with an interest and shall be irrevocable
until the Secured Obligations are completely and indefeasibly paid and performed in full and no
Secured Party has any commitment to make any Loans to Grantor.

(c) If Grantor fails to perform or comply with any of its agreements contained herein and
Collateral Agent, as provided for by the terms of this Security Agreement, shall perform or comply,
or otherwise cause performance or compliance, with such agreement, the reasonable expenses,
including reasonable attorneys’ fees and costs, of Collateral Agent incurred in connection with
such performance or compliance, together with interest thereon at a rate of interest equal to the
highest per annum rate of interest charged on the Loans, shall be payable by Grantor to Collateral
Agent within five (5) business days of demand and shall constitute Secured Obligations secured
hereby.

 

13

 

7. Rights And Remedies Upon Default. After any Event of Default shall have occurred
and while such Event of Default is continuing:

(a) The Collateral Agent, on behalf of the Secured Parties, may exercise in addition to all
other rights and remedies granted to it under this Security Agreement or the Other Loan Documents
and under any other instrument or agreement securing, evidencing or relating to the Secured
Obligations, all rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, Grantor expressly agrees that in any such event the Collateral Agent,
without demand of performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon Grantor or any
other person (all and each of which demands, advertisements and notices are hereby expressly waived
to the maximum extent permitted by the UCC and other applicable law), may (i) reclaim, take
possession, recover, store, maintain, finish, repair, prepare for sale or lease, shop, advertise
for sale or lease and sell or lease (in the manner provided herein) the Collateral, and in
connection with the liquidation of the Collateral and collection of the accounts receivable pledged
as Collateral, use any Trademark, Copyright, or process used or owned by Grantor and (ii)
forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, assign, give an option or options to purchase or sell or otherwise
dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange or broker’s board or at any Secured
Party’s offices or elsewhere at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. To the extent Grantor has the right to do
so, Grantor authorizes the Collateral Agent, on the terms set forth in this Section 7 to enter the
premises where the Collateral is located, to take possession of the Collateral, or any part of it,
and to pay, purchase, contact, or compromise any encumbrance, charge, or lien which, in the opinion
of the Collateral Agent, appears to be prior or superior to its security interest. The Collateral
Agent shall have the right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of said Collateral so sold,
free of any right or equity of redemption, which equity of redemption Grantor hereby releases.
Grantor further agrees, at the Collateral Agent’s request, to assemble the Collateral and make it
available to the Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at Grantor’s premises or elsewhere. The Collateral Agent shall apply the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale as provided in
Section 7(f), below and only after so paying over such net proceeds and after the payment by the
Collateral Agent of any other amount required by any provision of law, need the Collateral Agent or
any Secured Party account for the surplus, if any, to Grantor. To the maximum extent permitted by
applicable law, Grantor waives all claims, damages, and demands against the Collateral Agent and
the Secured Parties arising out of the repossession, retention or sale of the Collateral. Grantor
agrees that the Collateral Agent need not give more than ten (10) days’ notice of the time and
place of any public sale or of the time after which a private sale may take place and that such
notice is reasonable notification of such matters. Grantor shall remain liable for any deficiency
if the proceeds of any sale or disposition of the Collateral are insufficient to pay all amounts to
which the Collateral Agent and the Secured Parties are entitled from Grantor, Grantor also being
liable for the attorney costs of any attorneys employed by the Collateral Agent or the Secured
Parties to collect such deficiency.

 

14

 

(b) As to any Collateral constituting certificated securities or uncertificated securities,
if, at any time when the Collateral Agent shall determine to exercise its right to sell the whole
or any part of such Collateral hereunder, such Collateral or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under Securities Act of 1933, as amended (as
so amended the “Act”), the Collateral Agent may, in its discretion (subject only to applicable
requirements of law), sell such Collateral or part thereof by private sale in such manner and under
such circumstances as the Collateral Agent may deem necessary or advisable, but subject to the
other requirements of this Section 7(b), and shall not be required to effect such registration or
cause the same to be effected. Without limiting the generality of the foregoing, in any such event
the Collateral Agent may, in its discretion, (i) in accordance with applicable securities laws,
proceed to make such private sale notwithstanding that a registration statement for the purpose of
registering such Collateral or part thereof could be or shall have been filed under the Act;
(ii) approach and negotiate with a single possible purchaser to effect such sale; and
(iii) restrict such sale to a purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment, and not with a view to the distribution or sale of
such Collateral or part thereof. In addition to a private sale as provided above in this
Section 7(b), if any of such Collateral shall not be freely distributable to the public without
registration under the Act at the time of any proposed sale hereunder, then the Collateral Agent
shall not be required to effect such registration or cause the same to be effected but may, in its
discretion (subject only to applicable requirements of law), require that any sale hereunder
(including a sale at auction) be conducted subject to such restrictions as the Collateral Agent
may, in its discretion, deem necessary or appropriate in order that such sale (notwithstanding any
failure so to register) may be effected in compliance with the Bankruptcy Code and other laws
affecting the enforcement of creditors’ rights and the Act and all applicable state securities
laws.

(c) Grantor agrees that in any sale of any of such Collateral, whether at a foreclosure sale
or otherwise, the Collateral Agent is hereby authorized to comply with any limitation or
restriction in connection with such sale as it may be advised by counsel is necessary in order to
avoid any violation of applicable law (including compliance with such procedures as may restrict
the number of prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and purchasers to
persons who will represent and agree that they are purchasing for their own account for investment
and not with a view to the distribution or resale of such Collateral), or in order to obtain any
required approval of the sale or of the purchaser by any governmental authority, and Grantor
further agrees that such compliance shall not result in such sale being considered or deemed not to
have been made in a commercially reasonable manner, nor shall the Collateral Agent or the Secured
Parties be liable nor accountable to Grantor for any discount allowed by the reason of the fact
that such Collateral is sold in compliance with any such limitation or restriction.

(d) Grantor also agrees to pay all fees, costs and expenses of the Collateral Agent and the
Secured Parties, including, without limitation, attorneys’ fees, incurred in connection with the
enforcement of any of its rights and remedies hereunder.

 

15

 

(e) Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Security Agreement or any
Collateral.

(f) The Proceeds of any sale, disposition or other realization upon all or any part of the
Collateral shall be distributed by the Collateral Agent in the following order of priorities:

First, to the Collateral Agent in an amount sufficient to pay in full the costs of
the Collateral Agent in connection with such sale, disposition or other realization, including all
fees, costs, expenses, liabilities and advances incurred or made by the Collateral Agent in
connection therewith, including, without limitation, attorneys’ fees;

Second, to the Secured Parties Pro Rata in an amount sufficient to pay in full the
costs of the Secured Parties in connection with such sale, disposition or other realization,
including all fees, costs, expenses, liabilities and advances incurred or made by the Secured
Parties in connection therewith, including, without limitation, attorneys’ fees;

Third, to the Secured Parties in amounts proportional to the Pro Rata share of the
then unpaid Secured Obligations of each Secured Party; and

Finally, upon payment in full of the Secured Obligations, to Grantor or its
representatives, in accordance with the UCC or as a court of competent jurisdiction may direct.

8. Collateral Agent.

8.1 Appointment. The Secured Parties hereby appoint VaxGen, Inc., as the “Collateral Agent”
for the Secured Parties under this Security Agreement to serve from the date hereof until the
termination of this Security Agreement. Notwithstanding anything to the contrary in this Security
Agreement, the Collateral Agent may be removed or replaced with the written consent of the Majority
Lenders.

8.2 Powers and Duties of Collateral Agent, Indemnity by Secured Parties.

(a) Each Secured Party hereby irrevocably authorizes the Collateral Agent to take all actions,
to make all decisions and to exercise all powers and remedies on its behalf under the provisions of
this Security Agreement, including without limitation all such actions, decisions and powers as are
reasonably incidental thereto. The Collateral Agent may execute any of its duties hereunder by or
through agents, designees or employees.

(b) Neither the Collateral Agent nor any of its partners, directors, members, officers,
agents, designees or employees (collectively, “Indemnified Persons”) shall be liable or responsible
to any Secured Party for any action taken or omitted to be taken by Collateral Agent or any other
such Indemnified Persons hereunder or under any related agreement, instrument or document, nor
shall any Indemnified Person be liable or responsible to the Secured Parties for (i) the validity,
effectiveness, sufficiency, enforceability or enforcement of the Notes, this Security Agreement or
any instrument or document delivered hereunder or relating hereto or

 

16

 

thereto; (ii) the title of Grantor to any of the Collateral or the freedom of any of the
Collateral from any prior or other liens or security interests; (iii) the determination,
verification or enforcement of Grantor’s compliance with any of the terms and conditions of this
Security Agreement; (iv) the failure by Grantor to deliver any instrument, agreement, financing
statement or other document required to be delivered pursuant to the terms hereof; or (v) the
receipt, disbursement, waiver, extension or other handling of payments or proceeds made or received
with respect to the Collateral, the servicing of the Collateral or the enforcement or the
collection of any amounts owing with respect to the Collateral.

(c) Each of the Secured Parties agrees to pay to the Collateral Agent, promptly on demand, its
Pro Rata share of all fees, taxes and expenses incurred in connection with the operation and
enforcement of this Security Agreement, the Notes or any related agreement or document. Each of
the Secured Parties hereby agrees to hold the Collateral Agent harmless, and to indemnify the
Indemnified Persons from and against any and all loss, damage, taxes, expense or liability which
may be incurred by such Indemnified Persons under this Security Agreement and the transactions
contemplated hereby and any related agreement or other instrument or document, as the case may be,
unless such liability shall be caused by the willful misconduct or gross negligence of such
Indemnified Persons.

8.3 No Reliance. Each Secured Party represents to the Collateral Agent that it has made its
own appraisal of and investigation into the business, prospects, operations, property, financial
and other condition and credit worthiness of the Grantor, and made its own decision to enter into
this Security Agreement and to extend credit to the Grantor independently based on such documents
and information as it has deemed appropriate and without reliance upon the Collateral Agent or any
of its partners, directors, members, officers, agents, designees or employees. Each Secured Party
agrees that the Collateral Agent shall not have any duty or responsibility to provide any Secured
Party with any credit or other information concerning the business, prospects, operations,
property, financial and other condition or credit worthiness of the Grantor.

9. Indemnity. Grantor agrees to defend, indemnify and hold harmless the Collateral
Agent and the Secured Parties and their officers, employees, and agents against (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Security Agreement and (b) all losses or expenses in any
way suffered, incurred, or paid by any Secured Party as a result of or in any way arising out of,
following or consequential to transactions between or among the Collateral Agent, any Secured Party
and Grantor, whether under this Security Agreement or otherwise (including without limitation,
reasonable attorneys fees and expenses), except for losses arising from or out of the gross
negligence or willful misconduct of the Collateral Agent or such Secured Party, as applicable.

10. Reinstatement. This Security Agreement shall remain in full force and effect and
continue to be effective should any petition be filed by or against Grantor for liquidation or
reorganization, should Grantor become insolvent or make an assignment for the benefit of creditors
or should a receiver or trustee be appointed for all or any significant part of Grantor’s property
and assets, and shall continue to be effective or be reinstated, as the case may be, if at

 

17

 

any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant
to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or
otherwise, all as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.

11. Miscellaneous.

11.1 Waivers; Amendments. Any amendment of this Security Agreement shall require the written
consent of the Grantor, the Collateral Agent and the Majority Lenders. Each Secured Party
acknowledges that because this Security Agreement may be amended with the consent of the Majority
Lenders, each Secured Party’s rights hereunder may be amended or waived without such Secured
Party’s consent.

11.2 Termination of this Security Agreement; Release of Collateral. Subject to Section 10
hereof, this Security Agreement shall terminate upon the payment and performance in full of the
Secured Obligations. Upon the termination of this Security Agreement, upon the request and at the
sole cost and expense of the Grantor, the Collateral Agent shall execute and deliver UCC financing
statement amendments or releases as necessary to evidence such release and shall take such other
action as the Grantor may request to cause to be released and reconveyed to the Grantor such
Collateral or any part thereof to be released and to evidence or confirm that such Collateral or
any part thereof to be released has been released from the Liens of this Security Agreement or any
other Loan Document.

11.3 Successor and Assigns. This Security Agreement and all obligations of Grantor hereunder
shall be binding upon the successors and assigns of Grantor, and shall, together with the rights
and remedies of the Secured Parties hereunder, inure to the benefit of the Secured Parties, any
future holder of any of the Secured Obligations and their respective successors and assigns. No
sales of participations, other sales, assignments, transfers or other dispositions of any agreement
governing or instrument evidencing the Secured Obligations or any portion thereof or interest
therein shall in any manner affect the lien granted to the Secured Parties hereunder.

11.4 Governing Law. In all respects, including all matters of construction, validity and
performance, this Security Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of California applicable to contracts made and performed in such state,
without regard to the principles thereof regarding conflict of laws, except to the extent that the
UCC provides for the application of the law of a different jurisdiction.

[Signature pages follow.]

 

18

 

In Witness Whereof, each of the parties hereto has caused this Security Agreement to be
executed and delivered by its duly authorized officer on the date first set forth above.

	 	 	 	 	 
	 	diaDexus, Inc., a Delaware corporation, as Grantor

 	 
	 	By:  	/s/ David Foster
 	 
	 	 	Printed Name:  	 DAVID FOSTER 	 
	 
	 	Address:

343 Oyster Point Blvd.,

South San Francisco, CA 94080

VaxGen, Inc., a Delaware corporation, as Collateral 

Agent and Secured
Party

 	 
	 	By:  	/s/ James P. Panek
 	 
	 	 	Printed Name:  	 JAMES PANEK 	 
	 	 	Title:  	PRESIDENT 	 

 

19

 

In Witness Whereof, each of the parties hereto has caused this Security Agreement to
be executed and delivered by its duly authorized officer on the date first set forth above.

	 	 	 	 	 	 	 
	 	 	Baker Brothers, as Secured Party	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 
	 	 
	 

	 	 	
Printed Name: 
	 
	 	 
	 

	 	 	Title:	 
	 	 

	 	 	 	 	 
	 
	 	 	 	 
	FBB Associates

	 	667, L.P.	 	 
	By: Felix Baker, Ph.D, General Partner

	 	By: Baker Biotech Capital, L.P., (general partner)	 	 
	 

	 	By: Baker Biotech Capital (GP), LLC, (general partner)	 	 
	/s/ Felix Baker
 

	 	By: Felix Baker, Ph.D, Managing Member	 	 
	 
	 	 	 	 
	 

	 	/s/ Felix Baker
 

	 	 
	 
	 	 	 	 
	Baker Bros. Investments, L.P.

	 	Baker Brothers Life Sciences, L.P.	 	 
	By: Baker Bros. Capital, L.P., (general partner)

	 	By: Baker Brothers Life Sciences Capital, L.P., (general partner)	 	 
	By: Baker Bros. Capital (GP), LLC, (general partner)

	 	By: Baker Brothers Life Sciences Capital (GP), LLC, (general partner)	 	 
	By: Felix Baker, Ph.D, Managing Member

	 	By: Felix Baker, Ph.D, Managing Member	 	 
	 
	 	 	 	 
	/s/ Felix Baker
 

	 	/s/ Felix Baker
 

	 	 
	 
	 	 	 	 
	Baker Bros. Investments II, L.P.

	 	14159, L.P.	 	 
	By: Baker Bros. Capital, L.P., (general partner)

	 	By: 14159 Capital, L.P., (general partner)	 	 
	By: Baker Bros. Capital (GP), LLC, (general partner)

	 	By: 14159 Capital (GP), LLC, (general partner)	 	 
	By: Felix Baker, Ph.D, Managing Member

	 	By: Felix Baker, Ph.D, Managing Member	 	 
	 
	 	 	 	 
	/s/ Felix Baker
 

	 	/s/ Felix Baker
 

	 	 

 

20

 

In Witness Whereof, each of the parties hereto has caused this Security Agreement to be
executed and delivered by its duly authorized officer on the date first set forth above.

	 	 	 	 	 	 	 
	 	 	Burrill Life Sciences Capital Fund, LP, 
as Secured Party	 	 
	 
	 	 	 	 	 	 
	 	 	By: Burrill & Company (Life Sciences GP), LLC	 	 
	 	 	Its: General Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Steven Burrill
 

Printed Name: G. Steven Burrill
	 	 
	 

	 	 	 	Title: Managing Member	 	 

 

21

 

In Witness Whereof, each of the parties hereto has caused this Security Agreement to be
executed and delivered by its duly authorized officer on the date first set forth above.

	 	 	 	 	 	 	 
	 	 	Burrill Indiana Life Sciences Capital Fund, LP, as Secured Party	 	 
	 
	 	 	 	 	 	 
	 	 	By: Burrill & Company (Indiana GP), LLC	 	 
	 	 	Its: General Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ G. Steven Burrill
 

Printed Name: G. Steven Burrill
	 	 
	 

	 	 	 	Title: Managing Member	 	 

 

22

 

In Witness Whereof, each of the parties hereto has caused this Security Agreement to be
executed and delivered by its duly authorized officer on the date first set forth above.

	 	 	 	 	 	 	 
	 	 	BAVP, LP, as Secured Party	 	 
	 
	 	 	 	 	 	 
	 	 	By: Scale Venture Management I, LLC	 	 
	 	 	Its: General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Louis Bock
 

Printed Name: Louis Bock
	 	 
	 

	 	 	 	Title: Managing Director	 	 

 

23Exhibit 10.3

Exhibit 10.3

AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

FOR JAMES P. PANEK

This Amended and Restated Executive Employment Agreement (the “Agreement”)
is entered into by and between James P. Panek (hereinafter “Executive”) and VaxGen, Inc.
(hereinafter “VaxGen” or the “Company”), effective as of May 27, 2010 (the “Effective Date”). This
Agreement supersedes in its entirety all prior employment agreements between Executive and VaxGen,
whether signed or unsigned, including the Amended And Restated Executive Employment Agreement Dated
April 20, 2010 (the “Prior Agreement”). In consideration of the mutual promises made herein,
VaxGen and Executive agree as follows:

1. Employment By The Company; Board Position. VaxGen hereby agrees to continue to
employ Executive in the position of President, and Executive hereby accepts continued employment
with VaxGen in the position of President, upon the terms and conditions set forth in this
Agreement. This Agreement will not effect Executive’s position as a Director on the Company’s
Board of Directors (the “Board”).

2. Work Responsibilities and Work Schedule. 

(a) Title and Responsibilities. Executive shall continue to perform the functions and
responsibilities of President and Principle Financial Officer as may be provided for that position
in the Company’s by-laws and articles of incorporation, customarily associated with that position,
and as may be assigned from time to time by the Board. Executive will continue to report to the
Board. Executive’s primary office location will be the Company’s corporate headquarters.

(b) Work Schedule. As of the Effective Date, Executive’s new work schedule shall be 80% of
full-time (a regular work schedule of at least 32 hours a week). The parties anticipate that
Executive will be able to perform the duties of President within the above specified time
commitments. However, Executive understands that because his position is classified as exempt, on
occasion he may be required to work additional hours as required by his job duties and Executive
will not be eligible for additional compensation or overtime.

(c) Discretion to Modify. Executive’s position, title, job description, reporting
relationship, office location, work schedule, duties and responsibilities may be modified from time
to time in the sole discretion of VaxGen.

3. Compensation And Benefits.

(a) Base Salary. Effective as of the Effective Date, VaxGen will pay Executive a base salary
at the annualized rate of two hundred and sixty thousand dollars ($260,000), retroactive to
February 1, 2010, less standard payroll deductions and withholdings and payable in accordance with
the Company’s regular payroll schedule. Such compensation is subject to review and potential
change annually in the Board’s discretion.

 

1.

 

(b) Bonus Eligibility. The Company will pay Executive a one-time cash bonus equal to a
maximum of 20% of Executive’s base salary ($52,000), less standard payroll deductions and
withholdings, on the earlier of the diaDexus Merger (as defined below) or a Change of Control (as
defined below).

(i) “diaDexus Merger” means pursuant to the Agreement and Plan of Merger and Reorganization
among the Company, Violet Acquisition Corporation, a Delaware corporation, Violet Acquisition LLC,
a Delaware limited liability company), diaDexus, Inc., a Delaware corporation, and a named
representative of diaDexus as the diaDexus Stockholders’ Agent dated May [28], 2010 (the “diaDexus
Merger Agreement”) the Closing (as defined in the diaDexus Merger Agreement”) of the Transaction
(as defined in the diaDexus Merger Agreement) on the terms described in the diaDexus Merger
Agreement. If the diaDexus Merger Agreement is amended prior to the Closing, this Section 3(b)(i)
shall be deemed to include any such amended agreement.

(ii) “Change in Control” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

(1) Any natural person, entity or group within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934 (“Exchange Act Person”) becomes the owner, directly or indirectly,
of securities of the Company representing more than forty percent (40%) of the combined voting
power of the Company’s then outstanding securities other than by virtue of a merger, consolidation
or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur (i) on account of the acquisition of securities of the Company by any institutional investor,
any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a
transaction or series of related transactions that are primarily a private financing transaction
for the Company or (ii) solely because the level of ownership held by any Exchange Act Person (the
“Subject Person”) exceeds the designated percentage threshold of the outstanding voting securities
as a result of a repurchase or other acquisition of voting securities by the Company reducing the
number of shares outstanding, provided that if a Change in Control would occur (but for the
operation of this sentence) as a result of the acquisition of voting securities by the Company, and
after such share acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred, increases the
percentage of the then outstanding voting securities owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to occur;

(2) There is consummated a merger, consolidation or similar transaction involving (directly or
indirectly) the Company if, immediately after the consummation of such merger, consolidation or
similar transaction, the stockholders of the Company immediately prior thereto do not own, directly
or indirectly, either (i) outstanding voting securities representing more than fifty percent (50%)
of the combined outstanding voting power of the surviving entity in such merger, consolidation or
similar transaction or (ii) more than fifty percent (50%) of the combined outstanding voting power
of the parent of the surviving entity in such merger, consolidation or similar transaction;

 

2.

 

(3) The stockholders of the Company approve or the Board approves a plan of complete
dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company
shall otherwise occur; or

(4) There is consummated a sale, lease, license or other disposition of all or substantially
all of the consolidated assets of the Company and its subsidiaries.

The term Change in Control shall not include a sale of assets, merger or other transaction effected
exclusively for the purpose of changing the domicile of the Company.

(c) Stock Option Grant. This Agreement does not alter or affect any stock option grants
provided to Executive by the Company as of the Effective Date, except as specifically provided in
Section 10(b)(iii) hereof. Executive acknowledges that there are no commitments on behalf of the
Company to grant to Executive any additional stock options. The Board will consider, on an annual
basis and at the Board’s sole discretion, whether to grant additional stock options to Executive.

(d) Benefits. Executive shall be entitled to participate in the Company’s employee benefit
plans which may be in effect from time to time and provided by the Company to its senior officers
generally, including paid holidays, leaves of absence, health insurance, dental insurance, life
insurance, and other benefits, if any, in accordance with and subject to the eligibility
requirements of such employee benefit plans and other applicable policies and procedures.
Executive’s rights under such employee benefit plans, or the rights of Executive’s dependents,
shall be governed solely by the terms of such plans and any applicable policies and procedures. As
of the Effective Date, Executive shall accrue Paid Time Off (“PTO”) at a rate equal to 80% of the
full-time rate that otherwise would apply if he was working a full-time schedule. The dollar value
of the accrued PTO will be based on Executive’s previous full time annual base salary of
$390,000.00 (or $187.50 per hour); for example, if Executive has 50 hours of accrued and unused PTO
remaining upon termination of his employment, Executive will receive a payment of $9,375.00
(subject to payroll deductions and withholdings) for his accrued and unused PTO. The Company’s
employee benefit plans, and policies and procedures related thereto, are subject to termination,
modification or limitation at any time at the Company’s sole discretion.

(e) Business Expenses. VaxGen shall reimburse Executive for all reasonable business expenses,
including expenses incurred for travel on VaxGen business, in accordance with the policies and
procedures of VaxGen, as may be adopted or amended from time to time at VaxGen’s sole discretion.
To be eligible for reimbursement, Executive must submit business expense reimbursement requests to
VaxGen on a monthly basis, which includes supporting documentation (including receipts) reasonably
satisfactory to VaxGen.

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

 

3.

 

4. VaxGen Employment Policies.  Executive’s employment relationship will be governed
by the general employment policies and practices of the Company, and Executive agrees to abide by
all such written policies, practices and procedures, as they may from time to time be adopted or
modified by VaxGen at its sole discretion. Executive also agrees to review and abide by the
policies in VaxGen’s Employee Handbook (as they may be modified by the Company from time to time)
and to acknowledge in writing that Executive has read and will abide by the Employee Handbook.

5. Protection of Company Information. As a condition of his continued employment,
Executive agrees to sign, contemporaneously with this Agreement, and to abide by the Employee’s
Proprietary Information and Inventions Agreement (the “Proprietary Information Agreement”), a copy
of which is attached hereto as Exhibit A. The Proprietary Information Agreement shall be deemed
effective as of the commencement of Executive’s employment with the Company.

6. Indemnity Agreement. This Agreement does not alter or affect the Indemnity
Agreement previously entered into between Executive and the Company, a copy of which is attached
hereto as Exhibit B.

7. Outside Activities.

(a) Non-Company Activities. Except for any outside activities consented to in writing by the
Board, which consent will not be unreasonably withheld, Executive will not during the term of this
Agreement undertake or engage in any other employment, occupation or business enterprise, other
than ones in which Executive is a passive investor. Executive may engage in civic and
not-for-profit activities so long as such activities do not materially interfere with the
performance of Executive’s duties hereunder.

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

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

 

4.

 

8. Former Employment and Third Party Agreements. Executive represents and warrants
that Executive’s past and continued employment by the Company has not conflicted and will not
conflict with and will not be constrained by any prior employment or consulting agreement,
noncompetition agreement, proprietary information agreement or other relationship with any third
party. Executive further represents and warrants that Executive does not possess or control
confidential information arising out of prior employment, consulting, or other third party
relationships, which Executive will utilize in connection with Executive’s employment by the
Company, except as expressly authorized by that third party. Executive further warrants that by
entering into this Agreement with VaxGen, Executive is not violating any of the terms, agreements
or covenants of any agreement with any third party, including but not limited to any previous
employer, and that Executive is not under any contractual obligation that would restrict
Executive’s activities on behalf of the Company.

9. Noninterference.

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

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

(b) disclosing to any person or entity the names or addresses of, or any information
pertaining to, any current or former employees of VaxGen, to the extent such names, addresses or
other information are confidential or private; or

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

10. Termination Of Employment.

(a) At-Will Employment Relationship. Executive’s employment relationship is at-will. This
means that Executive’s employment and/or this Agreement may be terminated with or without Cause (as
defined in Section 10(d)(ii)), and with or without advance notice, at any time by either Executive
or by VaxGen. Nothing in this document shall limit the right to terminate employment at will or to
terminate this Agreement at any time. This at-will employment relationship can only be changed in
a written agreement approved by the Board and signed by Executive and the Chairman of the Board.

 

5.

 

(b) Severance Benefits Eligibility. In the event that Executive’s employment is terminated
without Cause by the Company, or if Executive resigns for Good Reason pursuant
to Section 10(c) hereof and such termination or resignation, as the case may be, is not due
either to Executive’s death or disability and further constitutes a “separation from service” under
Treasury Regulations Section 1.409A-1(h), Executive shall be eligible to receive the following as
Executive’s sole severance benefits (collectively, the “Severance Benefits”): (i) a lump sum
payment of $193,050, less standard withholdings and deductions, and payable, subject to the
provisions of this Section 10, within ten (10) business days after the later of (x) the effective
date of such separation from service, or (y) the date on which the Separation Date Release (as
defined below) becomes effective (the “Severance Payment”) (such later date, the “Payment Date”);
(ii) health insurance continuation coverage (pursuant to the federal COBRA law or applicable state
law (collectively, “COBRA”)) at the Company’s expense (including the cost of coverage for
Executive’s covered dependents, if any) for the shortest of (A) 12 months (the “Twelve-Month
Period”), (B) until Executive is eligible for coverage under another employer’s health insurance
plan, or (C) until Executive is no longer eligible for coverage under COBRA, provided that, if
within the Twelve-Month Period Executive is no longer eligible for coverage under COBRA, and also
is not eligible for coverage under another employer’s plan, the Company will reimburse Executive’s
monthly premiums for individual health insurance coverage (including the cost of coverage for his
dependents previously covered under COBRA, if any), up to a maximum reimbursement amount of $6,000
per month and subject to Executive timely submission of documentation of his monthly premium
amounts, through the earlier of the end of the Twelve-Month Period or until Executive is eligible
for coverage under another employer’s health insurance plan; (iii) all stock option grants or other
equity awards then held by Executive shall be subject to accelerated vesting such that all unvested
shares will become fully vested and exercisable effective as of the date of the separation from
service (the “Accelerated Vesting”); and (iv) payment of all accrued salary and all accrued and
unused vacation, as well as accrued benefits under any written ERISA-qualified benefit plan (e.g.,
401(k) plan), or written insurance policy, to which Executive has a vested right as of the
termination date. As a condition of and prior to the receipt of all or any of the Severance
Payment or Accelerated Vesting, Executive shall provide the Company with an effective general
release of all known and unknown claims in the form attached hereto as Exhibit C (the “Separation
Date Release”) not later than 60 days after the termination date.

(c) Good Reason Resignation. Executive may resign for Good Reason due to the occurrence of
any of the following without Executive’s consent: (i) material breach by the Company of any of the
terms and provisions of this Agreement resulting in material harm to Executive; (ii) a material
reduction of Executive’s authority, duties or responsibilities; (iii) relocation of Executive’s
place of work that would increase Executive’s one-way commuting distance by more than fifty (50)
miles over Executive’s commute immediately prior thereto; or (iv) a material reduction by VaxGen of
Executive’s then-current base salary (except where such reduction is imposed uniformly on other
senior executives of the Company). Notwithstanding the foregoing, a resignation of employment by
Executive shall not constitute a resignation for Good Reason based on the conduct described above
unless (A) within thirty (30) days following the occurrence of such conduct, Executive provides
VaxGen’s Chief Executive Officer (or the Board in the case Executive is then serving as the Chief
Executive Officer or there is no one serving as the Chief Executive Officer) with written notice
specifying (x) the particulars of such conduct and (y) that Executive deems such conduct to be
described in (i), (ii), (iii) or (iv) of this Section 10(c), (B) such conduct has not been cured
within thirty (30) days following receipt by VaxGen’s Chief Executive Officer (or the Board in the
case of Executive is

 

6.

 

then serving as the Chief Executive Officer or there is no one serving as the Chief Executive Officer) of such
notice and (C) the resignation occurs within one hundred and twenty (120) days of the occurrence of
such conduct. Executive’s resignation shall be effective on the date specified in the notice given
hereunder, which date shall not be earlier than the earliest date permitted by the preceding
sentence, nor later than the latest date permitted by the preceding sentence (unless such earlier
or later resignation date is permitted by the Company).

(d) Termination for Cause.

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

(ii) Cause Definition. For the purposes of this Agreement, “Cause” for termination shall mean
any of the following: (A) fraud or conviction (including a no contest or guilty plea) of illegal
criminal acts committed by Executive; (B) Executive’s material breach of any material provision of
any written agreement with the Company, including but not limited to this Agreement or the
Proprietary Information Agreement; (C) Executive’s material failure to perform Executive’s job
duties as determined by the Board in its reasonable judgment, and after notice of such failure has
been given to Executive by the Board and Executive has had a fifteen (15) business-day period
within which to cure such failure; or (D) a material violation of any material VaxGen employment
policy, including but not limited to the policies set forth in VaxGen’s Employee Handbook.

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

(f) Termination Due to Death or Disability. In the event of Executive’s death, Executive’s
employment will terminate on the date thereof, and Executive and Executive’s heirs or estate will
be entitled to payment of all accrued salary and accrued and unused vacation, but Executive will
not be entitled to Severance Benefits, pay in lieu of notice or any other such compensation unless
required by law. In addition, if Executive’s employment terminates due to his disability,
Executive will be entitled to payment of all accrued salary and accrued and unused vacation, but
Executive will not be entitled to Severance Benefits, pay in lieu of notice or any other such
compensation unless required by law.

(g) Excise Tax.

(i) Anything in this Agreement to the contrary notwithstanding, if any payment or benefit that
Executive would receive pursuant to this Agreement or otherwise from the Company (“Payment”) would
(i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise
tax imposed by Section 4999 of the Code (the “Excise

 

7.

 

Tax”), then such Payment shall be equal to the Reduced Amount (defined below). The “Reduced
Amount” shall be either (i) the largest portion of the Payment that would result in no portion of
the Payment being subject to the Excise Tax, or (ii) the full Payment, whichever amount after
taking into account all applicable federal, state and local employment taxes, income taxes, and the
Excise Tax, results in Executive’s receipt, on an after-tax basis, of the greatest amount of the
Payment to Executive. If a reduction in payments or benefits constituting “parachute payments” is
necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following
order: reduction of cash payments; cancellation of accelerated vesting of option grants;
cancellation of accelerated vesting of other equity awards; and reduction of employee benefits. In
the event that acceleration of vesting of equity awards is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of the date of grant.

(ii) The accounting firm engaged by the Company for general audit purposes as of the day prior
to the date on which the event that triggers the Payment occurs (the “Payment Event”) shall perform
the foregoing calculations. If the accounting firm so engaged by the Company is serving as
accountant or auditor for the individual, entity or group effecting the Payment Event, the Board
shall have the discretion to appoint a nationally recognized accounting firm to make the
determinations required hereunder. The Company shall bear all expenses with respect to the
determinations by such accounting firm required to be made hereunder.

(iii) The accounting firm engaged to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation, to the Company and Executive within
fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if
requested at that time by the Company or Executive) or such other time as reasonably requested by
the Company or Executive. If the accounting firm determines that no Excise Tax is payable with
respect to a Payment, either before or after the application of the Reduced Amount, it shall
furnish the Company and Executive with an opinion reasonably acceptable to Executive that no Excise
Tax will be imposed with respect to such Payment. The Company shall be entitled to rely upon the
accounting firm’s determinations, which shall be final and binding.

(h) Deferred Compensation. It is intended that all of the payments and benefits provided
under this Agreement satisfy, to the greatest extent possible, the exemptions from the application
of Section 409A of the Code provided under of Treasury Regulation Sections 1.409A-1(b)(4),
1.409A-1(b)(5) and 1.409A-1(b)(9), and that this Agreement will be construed to the greatest extent
possible as consistent with those provisions. If the Company (or, if applicable, the successor
entity thereto) determines that any of the severance payments or benefits provided to Executive
under this Agreement or otherwise (the “Severance Payments”) constitute “deferred compensation”
under Code Section 409A and Executive is a “specified employee” (as such term is defined in Section
409A(a)(2)(B)(i)) of the Company or any successor entity thereto upon his separation from service,
then, solely to the extent necessary to avoid the incurrence of the adverse personal tax
consequences under Section 409A as a result of the payment of compensation upon his “separation
from service”, the timing of the Severance Payments shall be delayed as follows: on the earlier to
occur of (i) the date that is six months and one day after the date of the separation from service
or (ii) the date of Executive’s death (such earlier date, the “Delayed Initial Payment Date”), the
Company (or the successor entity

 

8.

 

thereto, as applicable) shall (A) pay to Executive a lump sum amount equal to the sum of the
Severance Payments that Executive would otherwise have received through the Delayed Initial Payment
Date if the commencement of the payment of the Severance Payments had not been delayed pursuant to
this paragraph and (B) commence paying the balance of the Severance Payments in accordance with the
applicable payment schedules set forth above. All payments hereunder are intended to constitute
separate payments for purposes of Treasury Regulations Section 1.409A-2(b)(2).

(i) Board Membership. In the event Executive’s employment with VaxGen is terminated for any
reason, whether at the Company’s or Executive’s request, and Executive then is a member of the
Board, Executive agrees, unless otherwise requested by the Board, to resign Executive’s membership
on the Board effective as of the date of the termination of Executive’s employment.

11. General Provisions.

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

(b) Complete Agreement. This Agreement, including its exhibits, constitutes the complete,
final and exclusive embodiment of the entire agreement and understanding of the parties with regard
to the subject matter hereof. It is entered into without reliance on any promise, warranty or
representation other than those expressly contained herein, and it supersedes and replaces any and
all prior or contemporaneous agreements, promises or representations between VaxGen and Executive,
whether oral, written or implied, including but not limited to all previous employment agreements
between the parties, whether signed or unsigned, and any amendments thereof. The terms of this
Agreement and any changes in Executive’s employment terms (other than those employment terms
expressly reserved to the Company’s or Board’s discretion in this Agreement), require a written
amendment to the Agreement which is approved by the Board and signed by Executive and a duly
authorized officer of the Company pursuant to authority expressly granted by the Board.

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

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

 

9.

 

(e) Voluntary Agreement. Executive and VaxGen represent and warrant that each has reviewed
all aspects of this Agreement, has carefully read and fully understands all
provisions of this Agreement, and is voluntarily entering into this Agreement. Each party
represents and agrees that such party has had the opportunity to review any and all aspects of this
Agreement with the legal and tax advisors of such party’s choice before executing this Agreement,
and each party has had a full opportunity to negotiate the terms of this Agreement prior to signing
this Agreement.

(f) Headings. The headings and captions of the various paragraphs of this Agreement are
placed herein for the convenience of the parties and the reader, do not constitute a substantive
term or terms of this Agreement, and shall not be considered in the interpretation or application
of this Agreement.

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

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

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

(j) Alternative Dispute Resolution. To ensure rapid and economical resolution of any disputes
which may arise concerning the relationship between Executive and the Company, the parties hereby
agree that any and all claims, disputes or controversies of any nature whatsoever arising out of,
or relating to, this Agreement and its enforcement, application, interpretation, performance, or
execution, Executive’s employment with the Company, or the termination of such employment, shall be
resolved, to the fullest extent permitted by law, by final, binding and confidential arbitration in
San Francisco, California conducted before a single arbitrator by JAMS, Inc. (“JAMS”) or its
successor, under the then applicable JAMS arbitration rules. The parties each acknowledge that by
agreeing to this arbitration procedure, they waive the right to resolve any such dispute, claim or
demand through a trial by jury or judge or by administrative proceeding. Executive will have the
right to be represented by legal counsel at any arbitration proceeding. The arbitrator shall: (i)
have the authority to compel adequate discovery for the resolution of the dispute and to award such
relief as would otherwise be available under applicable law in a court proceeding; and (ii) issue a
written statement signed by the arbitrator regarding the disposition of each claim and the relief,
if any, awarded as to each claim, the reasons for the award, and the arbitrator’s essential
findings and conclusions on which

 

10.

 

the award is based. The Company shall bear all JAMS’ arbitration fees and administrative
costs. Nothing in this Agreement is intended to prevent either Executive or the Company from
obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any
arbitration.

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

 

11.

 

In Witness Whereof, the parties have executed this Agreement on the dates specified
below.

	 	 	 	 	 
	 	VaxGen, Inc.

 	 
	 	By:  	/s/ Lori Rafield
 	 
	 	 	Printed Name  	Lori Rafield 	 
	 	 	Title:  	Member of the Board of Directors
 	 
	 	 	Date:	 May 27, 2010  	 
	 

	 	 	 	 	 
	Accepted and agreed:

 	 	 
	/s/ James P. Panek
 	 	 
	James P. Panek 	 	 
	
May 27, 2010	 	 
	Date 	 	 
	 

Exhibit A — Employee’s Proprietary Information and Inventions Agreement

Exhibit B — Indemnity Agreement

Exhibit C — Form of Separation Date Release

 

12.

 

Exhibit A

EMPLOYEE’S PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT

EMPLOYEE’S PROPRIETARY INFORMATION

AND INVENTIONS AGREEMENT

I acknowledge that during the past period of my employment with VaxGen, Inc., a Delaware
corporation, together with its subsidiaries, affiliates, successors or assigns (hereinafter
collectively called the “Company”), and during my current and future employment with the
Company, I had, and will continue to have, access to and obtained, and will continue to obtain and
develop, proprietary information and trade secrets of the Company. In consideration of my past,
current and future employment with the Company and the compensation I have received, and will
receive, in connection therewith, and as previously agreed by me, I hereby enter into this
Employee’s Proprietary Information and Inventions Agreement (“Agreement”), which I agree is
effective retroactive to my first day of employment with the Company. I hereby agree that this
Agreement applies during my entire period of employment with the Company, and as set forth below:

	1.	 	Proprietary Information. The Company possesses and will continue to possess confidential
and proprietary information (“Proprietary Information”) that has been created,
discovered, developed, or otherwise become known to the Company (including, without
limitation, information created, discovered, developed, or made known by me during the period
of or arising out of my employment by the Company) and/or in which property rights have been
assigned or otherwise conveyed to the Company, which information has commercial value in the
business in which the Company is engaged. By way of illustration, but not limitation, such
Proprietary Information includes (i) trade secrets, processes, formulas, data, know-how,
inventions, improvements, discoveries, developments and designs, pre-clinical and clinical
data, results, reports, experiments, assays and related media and components, formulations and
procedures for producing assays and related components, and all derivatives and improvements
of the foregoing (collectively, “Inventions”); (ii) biological products and biological
material and information, both tangible and intangible, including, but not limited to,
vaccines, antibodies, proteins, tissue samples, cell lines, nucleic acids; (iii) marketing
plans, research plans, strategies, forecasts, financial data, budgets, licenses, computer
databases, standard operating procedures, personnel information, and (iv) other confidential
information, proprietary data or material applicable to the business of the Company or its
suppliers, customers (including customer lists), affiliates or collaborators (including but
not limited to Celltrion, Inc., a Korean company, and that certain joint venture established
among Company, Celltrion, Inc., and others).

	2.	 	Genentech’s Proprietary Information. By virtue of a License Agreement between the Company
and Genentech, Inc. (“Genentech”), a Services Agreement between the Company and
Genentech, and other agreement(s) that may be entered into between the Company and Genentech
(collectively, the “Genentech Agreements”), the Company and its employees have been
and will continue to be afforded substantial access to proprietary technology and information
of Genentech (collectively, “Genentech Proprietary Information”). By way of
illustration, but not limitation, Genentech Proprietary Information includes (i) trade
secrets, processes, formulas, data, ideas, know-how, inventions, improvements, discoveries,
developments and designs, pre-clinical and clinical data, results, reports, experiments,
assays and related media and components,

 

 

 

	 	 	formulations and procedures for producing assays and related components, and all derivatives
of the foregoing; (ii) biological products and biological material and information, both
tangible and intangible, including, but not limited to, vaccines, antibodies, proteins,
tissue samples, cell lines, nucleic acids; (iii) marketing plans, research plans,
strategies, forecasts, financial data, budgets, licenses, computer databases, standard
operating procedures, and (iv) other business or proprietary information or material
applicable to the business of Genentech or its affiliates, suppliers, customers (including
customer lists), or collaborators.

	 
	 	 	I acknowledge and agree that at all times during my employment with the Company and
thereafter, as between me and Genentech: (i) all Genentech Proprietary Information shall be
the sole property of Genentech and its assigns, and Genentech and its assigns shall be the
sole owner of all patents and other rights in connection therewith; (ii) I do not have and
shall not acquire any rights in any Genentech Proprietary Information; and (iii) I shall
hold in strictest confidence and will not disclose or use Genentech Proprietary Information
unless authorized to do so by an officer of the Company in writing. I understand and
acknowledge that Genentech is affording the Company and its employees substantial access to
Genentech Proprietary Information in connection with the Genentech Agreements in reliance on
the provisions set forth herein, and that breach of such provisions could result in
immediate material, irreparable harm to Genentech. As such, I acknowledge and agree that
Genentech is a third party beneficiary of this Agreement with the right to directly enforce
its rights hereunder, including without limitation, the rights granted to Company under
Paragraph 6.

	 
	3.	 	Obligations to Prior Employers or Other Parties. I represent that my performance of all the
terms of this Agreement and as an employee of the Company does not and will not breach any
agreement to keep in confidence proprietary information acquired by me in confidence or in
trust prior to my employment for the Company and I have not entered into, nor will I enter
into, any agreement (written or oral) in conflict herewith. I will not bring with me to the
Company or use in the performance of my responsibilities to the Company materials, information
or documents of any third party (including but not limited to former employers) unless I have
obtained written authorization from such party for their possession and use and have provided
Company with written copies of such authorizations concurrent to entering into this Agreement.

	 
	4.	 	No Unauthorized Use or Disclosure. I agree and acknowledge that at all times during my
employment with the Company, and thereafter: (i) all Proprietary Information shall be the sole
property of the Company and its assigns, and the Company and its assigns shall be the sole
owner of all patents and other rights in connection therewith, subject to the terms of the
Genentech Agreements; (ii) I do not have and shall not acquire any rights in any Proprietary
Information; and (ii) I shall hold in strictest confidence and will not disclose or use any
Proprietary Information unless and solely to the extent authorized to do so in writing by an
officer of the Company. I recognize that the Company has received and in the future will
receive from third parties their confidential or proprietary information subject to a duty on
the Company’s part to maintain the confidentiality of such information and to use it only for
certain limited purposes. I agree to hold all such confidential or proprietary information in
the strictest confidence and not to disclose it to any person, firm or corporation or to use
it except as necessary in carrying out my work for the Company consistent with Company’s
agreement with such third party.

 

 

 

	5.	 	Works for Hire. Original works of authorship made by me (alone or with others) within the
scope of my employment and which are protected by copyright are “works made for hire,”
pursuant to United States Copyright Act Section 101. I acknowledge and agree that this
Paragraph applies only to works made within the scope of my employment with the Company, not
to works made within the scope of any independent contractor relationship with the Company.

	 
	6.	 	Assignment. Subject to Paragraph 7 below, I agree that, as between me and the Company, all
Inventions and all trade secrets, patent, copyright and intellectual property rights worldwide
(“Proprietary Rights”) shall be the sole property of the Company and its assigns, and
the Company and its assigns shall be the sole owner of all patents and other rights in
connection herewith. I hereby assign to the Company all right, title, and interest I may have
or acquire in and to all Inventions and Proprietary Rights which are made or conceived or
reduced to practice by me (either alone or with others) during my employment with the Company.
I further agree as to all Inventions and Proprietary Rights that I will assist the Company
and Genentech in every proper way (but at the Company’s expense) to obtain and from time to
time enforce Proprietary Rights with respect to said Inventions in any and all countries. To
that end I will execute all necessary documents (including assignment of such Proprietary
Rights to the Company) and perform such acts as the Company or Genentech may desire in
association with such Proprietary Rights. My obligations to assist the Company and Genentech
with respect to such Proprietary Rights shall continue beyond the termination of my
employment, but the Company shall compensate me at a reasonable rate after such termination
for time actually spent by me at the Company’s or Genentech’s request on such assistance. I
also agree to assign to the United States government all my right, title, and interest in and
to any and all Inventions whenever such full title is required to be in the United States by a
contract between the Company and the United States or any of its agencies.

	 
	 	 	If the Company, for any reason, is unable to secure my signature on any document needed in
connection with the preceding paragraph, I hereby irrevocably designate and appoint the
Company and its officers as my agent and attorney in fact to act on my behalf to execute
such documents and to take all other lawfully permitted acts to accomplish the purposes of
the preceding paragraph.

	 
	7.	 	Labor Code Section 2870. I understand that the Company’s right with regard to certain
things invented or co-invented by me are subject to Sections 2870 of the California Labor
Code, under which I have no obligation to assign rights in an invention for which no
equipment, supplies, facilities or trade secret information of the Company was used and which
was developed entirely on my own time, and (a) which does not relate (1) to the business of
the Company or (2) to the Company’s actual or demonstrably anticipated research of
development, or (b) which does not result from any work performed by me for the Company.

	 
	8.	 	Keeping Company Informed. While I am employed by the Company, and for a period of six
months after the termination of my employment with the Company, I will promptly disclose to
the Company, or any persons designated by it, all Inventions made or conceived or reduced to
practice or learned by me, either alone or jointly with others. In connection with such
disclosures, I will advise the Company in writing of any Inventions that I believe are
governed by Section 2870 of the California Labor Code, and will provide all evidence necessary to support this belief. Furthermore, I will promptly
disclose to the Company all patent applications filed by me or on my behalf for the
twelve-month period following the termination of my employment with the Company.

 

 

 

	9.	 	Record Keeping. During the term of my employment with Company I will maintain and provide
to the Company adequate and current original written records of all Inventions and original
works of authorship developed or made by me (solely or jointly with others) during the term of
this Agreement, which such records will be and remain the sole property of Company and its
assigns, and will be in the form of notes, sketches, drawings and other formats that may be
specified by Company. Such record keeping will be complete, current, accurate, organized and
legible, and will be performed in a manner acceptable for the collection of data for
submission to, or review by, the FDA.

	 
	10.	 	Prior Inventions. As a matter of record I attach hereto as Exhibit A a complete
list of all inventions or improvements relevant to the subject matter of my employment by the
Company which have been made, conceived or reduced to practice by me alone or jointly with
others prior to my employment by the Company which I desire to remove from the operation of
this Agreement; and I covenant that such list is complete. If no such list is attached to
this Agreement, I represent that I have no such inventions or improvements at the time of
signing this Agreement. Company will not, by virtue of such listing, obtain any right, title
or interest to the inventions listed on Exhibit A. In the event that I incorporate
any such inventions into any work developed by or on behalf of Company, Company is hereby
granted a nonexclusive, royalty-free, irrevocable, perpetual, worldwide, transferable and
sublicensable license to make, have made, modify, use and sell such inventions as part of or
in connection with such work. Nothing in Paragraph will limit Company’s right to develop
information, inventions and products within the areas and type of such inventions listed on
Exhibit A.

	 
	11.	 	No Conflicting Obligations; No Solicitation. I agree that during the period of my
employment by the Company, I will not, without the Company’s express written consent, engage
in any employment or activity other than for the Company in any business in which the Company
is now or may hereafter become engaged. I agree that, during the period of my employment and
for a period of one year following termination of my employment with Company for any reason, I
will not directly or indirectly (a) solicit or in any manner encourage employees or
consultants of Company to end their relationships with Company; or (b) other than on behalf of
Company, solicit the business of any customer, business affiliate or collaborator of Company
with whom I became acquainted during the course of my employment.

	 
	12.	 	Return of Company Property. Upon demand by the Company or in any event upon any
termination of my employment by me or by the Company, I will deliver to the Company all
documents and data of any nature (and all copies thereof) pertaining to my work with the
Company, including without limitation Proprietary Information, Genentech Proprietary
Information, and Inventions, and I will not take with me any such materials. In addition, I
agree that all Company physical property, including but not limited to, computers, disks or
other storage media, desks, work areas, and filing cabinets is and will remain the property of
the Company and is subject to inspection by the Company, with or without notice, at any time.

 

 

 

	13.	 	Successors and Assigns. This Agreement shall be binding upon my heirs, executors, assigns,
administrators and me and shall inure to the benefit of the Company, its successors and
assigns.

	 
	14.	 	Survival. The provisions of this Agreement shall survive the termination of my employment
and the assignment of this Agreement by the Company to any other successor or assignee.

	 
	15.	 	Employment. I acknowledge that nothing in this Agreement confers any employment right that
alters my status as an “at-will” employee and that I, or the Company, may terminate my
employment at any time, for any reason, with or without cause and with or without notice. In
the event that I leave the employment of Company, I agree that Company may contact my new
employer to notify it of my obligations under this Agreement.

	 
	16.	 	Entire Agreement; No Waiver. This Agreement, together with my employment agreement with the
Company, contains the final and exclusive agreement between Company and me with respect to the
subject matter contained herein and supersedes all prior and contemporaneous discussions or
agreements (whether oral, written, or in any other format). This Agreement may not be
modified except in a writing signed by both parties. The failure by either party at any time
to require performance or compliance by the other of any of its obligations or agreements
shall in no way affect the right to require such performance or compliance at any time
thereafter. The waiver of a breach of any provision of this Agreement shall not be taken or
held to be a waiver of any preceding or succeeding breach of such provision or as a waiver of
the provision itself. No waiver of any kind shall be effective or binding, unless it is in
writing and is signed by the party to be charged.

	 
	17.	 	Remedies. Any breach of Employee’s confidentiality obligations to Company, or any
unauthorized use or disclosure by a party of the other party’s proprietary information or
inventions (and, in the case of Company, any proprietary information or inventions of its
affiliates, customers, or collaborators) outside the scope of this Agreement will result in
immediate and irreparable harm to the other party, for which there will be no adequate remedy
at law, and therefore in such event, the other party will be entitled to injunctive relief and
specific performance in addition to all other legal relief available to it. In the event of a
dispute or claim in connection with this Agreement, the prevailing party will be entitled to
its reasonable attorneys fees and costs.

	 
	18.	 	Severability. If, for any reason, a court of competent jurisdiction finds any provision of
this Agreement invalid or unenforceable, then that provision will be enforced to the maximum
extent permissible and the other provisions of this Agreement will remain in full force and
effect.

	 
	19.	 	Governing Law. This Agreement will be governed and interpreted under the laws of the state
of California, without regard to its conflict of law rules or principles.

	 	 	 	 	 
	 	 
	BY:  	        /s/ James P. Panek
 	 	 
	 	James P. Panek 	 	 
	 	 	 
	 

DATED: 28 January 2009

 

 

 

Exhibit A

Prior Inventions

The following is a complete list of all inventions or improvements relevant to my employment with
VaxGen, Inc. (the “Company”) that have been made or conceived or first reduced to practice
by me alone or jointly with others prior to my engagement by the Company:

None.

I understand that by leaving this Exhibit blank or not filling it out that I am attesting that
there are no such prior inventions.

 

 

 

Exhibit B

INDEMNITY AGREEMENT

This Indemnity Agreement (this “Agreement”) dated as of January 31, 2007, is made by
and between VaxGen, Inc., a Delaware corporation (the “Company”), and James P. Panek
(“Indemnitee”).

Recitals

A. The Company desires to attract and retain the services of highly qualified individuals as
directors, officers, employees and agents.

B. The Company’s bylaws (the “Bylaws”) require that the Company indemnify its directors, and
empowers the Company to indemnify its officers, employees and agents, as authorized by the Delaware
General Corporation Law, as amended (the “Code”), under which the Company is organized and such
Bylaws expressly provide that the indemnification provided therein is not exclusive and
contemplates that the Company may enter into separate agreements with its directors, officers and
other persons to set forth specific indemnification provisions.

C. Indemnitee does not regard the protection currently provided by applicable law, the
Company’s governing documents and available insurance as adequate under the present circumstances,
and the Company has determined that Indemnitee and other directors, officers, employees and agents
of the Company may not be willing to serve or continue to serve in such capacities without
additional protection.

D. The Company desires and has requested Indemnitee to serve or continue to serve as a
director, officer, employee or agent of the Company, as the case may be, and has proferred this
Agreement to Indemnitee as an additional inducement to serve in such capacity.

E. Indemnitee is willing to serve, or to continue to serve, as a director, officer, employee
or agent of the Company, as the case may be, if Indemnitee is furnished the indemnity provided for
herein by the Company.

Agreement

Now Therefore, in consideration of the mutual covenants and agreements set forth
herein, the parties hereto, intending to be legally bound, hereby agree as follows:

1. Definitions.

(a) Agent. For purposes of this Agreement, the term “agent” of the Company means any person
who: (i) is or was a director, officer, employee or other fiduciary of the Company or a subsidiary
of the Company; or (ii) is or was serving at the request or for the convenience of, or representing
the interests of, the Company or a subsidiary of the Company, as a director, officer, employee or
other fiduciary of a foreign or domestic corporation, partnership, joint venture, trust or other
enterprise.

 

 

 

(b) Expenses. For purposes of this Agreement, the term “expenses” shall be broadly construed
and shall include, without limitation, all direct and indirect costs of any type or nature
whatsoever (including, without limitation, all attorneys’, witness, or other professional fees and
related disbursements, and other out-of-pocket costs of whatever nature), actually and reasonably
incurred by Indemnitee in connection with the investigation, defense or appeal of a proceeding or
establishing or enforcing a right to indemnification under this Agreement, the Code or otherwise,
and amounts paid in settlement by or on behalf of Indemnitee, but shall not include any judgments,
fines or penalties actually levied against Indemnitee for such individual’s violations of law. The
term “expenses” shall also include reasonable compensation for time spent by Indemnitee for which
he is not compensated by the Company or any subsidiary or third party (i) for any period during
which Indemnitee is not an agent, in the employment of, or providing services for compensation to,
the Company or any subsidiary; and (ii) if the rate of compensation and estimated time involved is
approved by the directors of the Company who are not parties to any action with respect to which
expenses are incurred, for Indemnitee while an agent of, employed by, or providing services for
compensation to, the Company or any subsidiary.

(c) Proceedings. For purposes of this Agreement, the term “proceeding” shall be broadly
construed and shall include, without limitation, any threatened, pending, or completed action,
suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative
hearing or any other actual, threatened or completed proceeding, whether brought in the right of
the Company or otherwise and whether of a civil, criminal, administrative or investigative nature,
and whether formal or informal in any case, in which Indemnitee was, is or will be involved as a
party or otherwise by reason of: (i) the fact that Indemnitee is or was a director or officer of
the Company; (ii) the fact that any action taken by Indemnitee or of any action on Indemnitee’s
part while acting as director, officer, employee or agent of the Company; or (iii) the fact that
Indemnitee is or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, and in any such case described above, whether or not serving in any such capacity at
the time any liability or expense is incurred for which indemnification, reimbursement, or
advancement of expenses may be provided under this Agreement.

(d) Subsidiary. For purposes of this Agreement, the term “subsidiary” means any corporation
or limited liability company of which more than 50% of the outstanding voting securities or equity
interests are owned, directly or indirectly, by the Company and one or more of its subsidiaries,
and any other corporation, limited liability company, partnership, joint venture, trust, employee
benefit plan or other enterprise of which Indemnitee is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary.

(e) Independent Counsel. For purposes of this Agreement, the term “independent counsel”
means a law firm, or a partner (or, if applicable, member) of such a law firm, that is experienced
in matters of corporation law and neither presently is, nor in the past five (5) years has been,
retained to represent: (i) the Company or Indemnitee in any matter material to either such party,
or (ii) any other party to the proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term “independent counsel” shall not include any person who,
under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company or Indemnitee
in an action to determine Indemnitee’s rights under this Agreement.

 

 

 

2. Agreement to Serve. Indemnitee will serve, or continue to serve, as a director, officer,
employee or agent of the Company or any subsidiary, as the case may be, faithfully and to the best
of his or her ability, at the will of such corporation (or under separate agreement, if such
agreement exists), in the capacity Indemnitee currently serves as an agent of such corporation, so
long as Indemnitee is duly appointed or elected and qualified in accordance with the applicable
provisions of the bylaws or other applicable charter documents of such corporation, or until such
time as Indemnitee tenders his or her resignation in writing; provided, however, that nothing
contained in this Agreement is intended as an employment agreement between Indemnitee and the
Company or any of its subsidiaries or to create any right to continued employment of Indemnitee
with the Company or any of its subsidiaries in any capacity.

The Company acknowledges that it has entered into this Agreement and assumes the obligations
imposed on it hereby, in addition to and separate from its obligations to Indemnitee under the
Bylaws, to induce Indemnitee to serve, or continue to serve, as a director, officer, employee or
agent of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement
in serving as a director, officer, employee or agent of the Company.

3. Indemnification.

(a) Indemnification in Third Party Proceedings. Subject to Section 10 below, the Company
shall indemnify Indemnitee to the fullest extent permitted by the Code, as the same may be amended
from time to time (but, only to the extent that such amendment permits Indemnitee to broader
indemnification rights than the Code permitted prior to adoption of such amendment), if Indemnitee
is a party to or threatened to be made a party to or otherwise involved in any proceeding, for any
and all expenses, actually and reasonably incurred by Indemnitee in connection with the
investigation, defense, settlement or appeal of such proceeding.

(b) Indemnification in Derivative Actions and Direct Actions by the Company. Subject to
Section 10 below, the Company shall indemnify Indemnitee to the fullest extent permitted by the
Code, as the same may be amended from time to time (but, only to the extent that such amendment
permits Indemnitee to broader indemnification rights than the Code permitted prior to adoption of
such amendment), if Indemnitee is a party to or threatened to be made a party to or otherwise
involved in any proceeding by or in the right of the Company to procure a judgment in its favor,
against any and all expenses actually and reasonably incurred by Indemnitee in connection with the
investigation, defense, settlement, or appeal of such proceedings.

4. Indemnification of Expenses of Successful Party. Notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in
defense of any proceeding or in defense of any claim, issue or matter therein, including the
dismissal of any action without prejudice, the Company shall indemnify Indemnitee against all
expenses actually and reasonably incurred in connection with the investigation, defense or appeal
of such proceeding.

 

 

 

5. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement
to indemnification by the Company for some or a portion of any expenses actually and reasonably
incurred by Indemnitee in the investigation, defense, settlement or appeal of a proceeding, but is
precluded by applicable law or the specific terms of this Agreement to indemnification for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof
to which Indemnitee is entitled.

6. Advancement of Expenses. To the extent not prohibited by law, the Company shall advance
the expenses incurred by Indemnitee in connection with any proceeding, and such advancement shall
be made within twenty (20) days after the receipt by the Company of a statement or statements
requesting such advances (which shall include invoices received by Indemnitee in connection with
such expenses but, in the case of invoices in connection with legal services, any references to
legal work performed or to expenditures made that would cause Indemnitee to waive any privilege
accorded by applicable law shall not be included with the invoice) and upon request of the Company,
an undertaking to repay the advancement of expenses if and to the extent that it is ultimately
determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that
Indemnitee is not entitled to be indemnified by the Company. Advances shall be unsecured, interest
free and without regard to Indemnitee’s ability to repay the expenses. Advances shall include any
and all expenses actually and reasonably incurred by Indemnitee pursuing an action to enforce
Indemnitee’s right to indemnification under this Agreement, or otherwise and this right of
advancement, including expenses incurred preparing and forwarding statements to the Company to
support the advances claimed. Indemnitee acknowledges that the execution and delivery of this
Agreement shall constitute an undertaking providing that Indemnitee shall, to the fullest extent
required by law, repay the advance if and to the extent that it is ultimately determined by a court
of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not
entitled to be indemnified by the Company. The right to advances under this Section shall continue
until final disposition of any proceeding, including any appeal therein. This Section 6 shall not
apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 10(b).

7. Notice and Other Indemnification Procedures.

(a) Notification of Proceeding. Indemnitee will notify the Company in writing promptly upon
being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any proceeding or matter which may be subject to indemnification or
advancement of expenses covered hereunder. The failure of Indemnitee to so notify the Company
shall not relieve the Company of any obligation which it may have to Indemnitee under this
Agreement or otherwise.

(b) Request for Indemnification and Indemnification Payments. Indemnitee shall notify the
Company promptly in writing upon receiving notice of nay demand, judgment or other requirement for
payment that Indemnitee reasonably believes to the subject to indemnification under the terms of
this Agreement, and shall request payment thereof by the Company. Indemnification payments
requested by Indemnitee under Section 3 hereof shall be made by the Company no later than sixty
(60) days after receipt of the written request of Indemnitee. Claims for advancement of expenses
shall be made under the provisions of Section 6 herein.

 

 

 

(c) Application for Enforcement. In the event the Company fails to make timely payments as
set forth in Sections 6 or 7(b) above, Indemnitee shall have the right to apply to any court of
competent jurisdiction for the purpose of enforcing Indemnitee’s right to indemnification or
advancement of expenses pursuant to this Agreement. In such an enforcement hearing or proceeding,
the burden of proof shall be on the Company to prove by that indemnification or advancement of
expenses to Indemnitee is not required under this Agreement or permitted by applicable law. Any
determination by the Company (including its Board of Directors, stockholders or independent
counsel) that Indemnitee is not entitled to indemnification hereunder, shall not be a defense by
the Company to the action nor create any presumption that Indemnitee is not entitled to
indemnification or advancement of expenses hereunder.

(d) Indemnification of Certain Expenses. The Company shall indemnify Indemnitee against all
expenses incurred in connection with any hearing or proceeding under this Section 7 unless the
Company prevails in such hearing or proceeding on the merits in all material respects.

8. Assumption of Defense. In the event the Company shall be requested by Indemnitee to pay
the expenses of any proceeding, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, or to participate to the extent permissible in such proceeding, with
counsel reasonably acceptable to Indemnitee. Upon assumption of the defense by the Company and the
retention of such counsel by the Company, the Company shall not be liable to Indemnitee under this
Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same
proceeding, provided that Indemnitee shall have the right to employ separate counsel in such
proceeding at Indemnitee’s sole cost and expense. Notwithstanding the foregoing, if Indemnitee’s
counsel delivers a written notice to the Company stating that such counsel has reasonably concluded
that there may be a conflict of interest between the Company and Indemnitee in the conduct of any
such defense or the Company shall not, in fact, have employed counsel or otherwise actively pursued
the defense of such proceeding within a reasonable time, then in any such event the fees and
expenses of Indemnitee’s counsel to defend such proceeding shall be subject to the indemnification
and advancement of expenses provisions of this Agreement.

9. Insurance. To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, officers, employees, or agents of the Company or of
any subsidiary (“D&O Insurance”), Indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage available for any such
director, officer, employee or agent under such policy or policies. If, at the time of the receipt
of a notice of a claim pursuant to the terms hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

 

 

10. Exceptions.

(a) Certain Matters. Any provision herein to the contrary notwithstanding, the Company shall
not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee on account of any
proceeding with respect to (i) remuneration paid to Indemnitee if it is determined by final
judgment or other final adjudication that such remuneration was in violation of law (and, in this
respect, both the Company and Indemnitee have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under the federal securities laws
is against public policy and is, therefore, unenforceable and that claims for indemnification
should be submitted to appropriate courts for adjudication, as indicated in Section 10(d) below);
(ii) a final judgment rendered against Indemnitee for an accounting, disgorgement or repayment of
profits made from the purchase or sale by Indemnitee of securities of the Company against
Indemnitee pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended, or other provisions of any federal, state or local statute or rules and regulations
thereunder; (iii) a final judgment or other final adjudication that Indemnitee’s conduct was in bad
faith, knowingly fraudulent or deliberately dishonest or constituted willful misconduct (but only
to the extent of such specific determination); or (iv) on account of conduct that is established by
a final judgment as constituting a breach of Indemnitee’s duty of loyalty to the Company or
resulting in any personal profit or advantage to which Indemnitee is not legally entitled. For
purposes of the foregoing sentence, a final judgment or other adjudication may be reached in either
the underlying proceeding or action in connection with which indemnification is sought or a
separate proceeding or action to establish rights and liabilities under this Agreement.

(b) Claims Initiated by Indemnitee. Any provision herein to the contrary notwithstanding,
the Company shall not be obligated to indemnify or advance expenses to Indemnitee with respect to
proceedings or claims initiated or brought by Indemnitee against the Company or its directors,
officers, employees or other agents and not by way of defense, except (i) with respect to
proceedings brought to establish or enforce a right to indemnification under this Agreement or
under any other agreement, provision in the Bylaws or Certificate of Incorporation or applicable
law, or (ii) with respect to any other proceeding initiated by Indemnitee that is either approved
by the Board of Directors or Indemnitee’s participation is required by applicable law. However,
indemnification or advancement of expenses may be provided by the Company in specific cases if the
Board of Directors determines it to be appropriate.

(c) Unauthorized Settlements. Any provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of a proceeding effected without the
Company’s written consent. Neither the Company nor Indemnitee shall unreasonably withhold consent
to any proposed settlement; provided, however, that the Company may in any event decline to consent
to (or to otherwise admit or agree to any liability for indemnification hereunder in respect of)
any proposed settlement if the Company is also a party in such proceeding and determines in good
faith that such settlement is not in the best interests of the Company and its stockholders.

 

 

 

(d) Securities Act Liabilities. Any provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee or
otherwise act in violation of any undertaking appearing in and required
by the rules and regulations promulgated under the Securities Act of 1933, as amended (the
“Act”), or in any registration statement filed with the SEC under the Act. Indemnitee acknowledges
that paragraph (h) of Item 512 of Regulation S-K currently generally requires the Company to
undertake in connection with any registration statement filed under the Act to submit the issue of
the enforceability of Indemnitee’s rights under this Agreement in connection with any liability
under the Act on public policy grounds to a court of appropriate jurisdiction and to be governed by
any final adjudication of such issue. Indemnitee specifically agrees that any such undertaking
shall supersede the provisions of this Agreement and to be bound by any such undertaking.

11. Nonexclusivity and Survival of Rights. The provisions for indemnification and
advancement of expenses set forth in this Agreement shall not be deemed exclusive of any other
rights which Indemnitee may at any time be entitled under any provision of applicable law, the
Company’s Certificate of Incorporation, Bylaws or other agreements, both as to action in
Indemnitee’s official capacity and Indemnitee’s action as an agent of the Company, in any court in
which a proceeding is brought, and Indemnitee’s rights hereunder shall continue after Indemnitee
has ceased acting as an agent of the Company and shall inure to the benefit of the heirs,
executors, administrators and assigns of Indemnitee. The obligations and duties of the Company to
Indemnitee under this Agreement shall be binding on the Company and its successors and assigns
until terminated in accordance with its terms. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to perform if no such
succession had taken place.

No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or
restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by
such Indemnitee in his or her corporate status prior to such amendment, alteration or repeal. To
the extent that a change in the Code, whether by statute or judicial decision, permits greater
indemnification or advancement of expenses than would be afforded currently under the Company’s
Certificate of Incorporation, Bylaws and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No
right or remedy herein conferred is intended to be exclusive of any other right or remedy, and
every other right and remedy shall be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, by Indemnitee shall not prevent the
concurrent assertion or employment of any other right or remedy by Indemnitee.

12. Term. This Agreement shall continue until and terminate upon the later of: (a) five (5)
years after the date that Indemnitee shall have ceased to serve as a director or and/or officer,
employee or agent of the Company; or (b) one (1) year after the final termination of any
proceeding, including any appeal then pending, in respect to which Indemnitee was granted rights of
indemnification or advancement of expenses hereunder.

 

 

 

No legal action shall be brought and no cause of action shall be asserted by or in the right
of the Company against an Indemnitee or an Indemnitee’s estate, spouse, heirs, executors or
personal or legal representatives after the expiration of five (5) years from the date of
accrual of such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal action within such
five-year period; provided, however, that if any shorter period of limitations is otherwise
applicable to such cause of action, such shorter period shall govern.

13. Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who, at
the request and expense of the Company, shall execute all papers required and shall do everything
that may be reasonably necessary to secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce such rights.

14. Interpretation of Agreement. It is understood that the parties hereto intend this
Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the
fullest extent now or hereafter permitted by law.

15. Severability. If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable for any reason whatsoever, (a) the validity, legality and enforceability of the
remaining provisions of the Agreement (including without limitation, all portions of any paragraphs
of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired
thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including,
without limitation, all portions of any paragraph of this Agreement containing any such provision
held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable and to give effect to Section 14 hereof.

16. Amendment and Waiver. No supplement, modification, amendment, or cancellation of this
Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

17. Notice. Except as otherwise provided herein, any notice or demand which, by the
provisions hereof, is required or which may be given to or served upon the parties hereto shall be
in writing and, if by telegram, telecopy or telex, shall be deemed to have been validly served,
given or delivered when sent, if by overnight delivery, courier or personal delivery, shall be
deemed to have been validly served, given or delivered upon actual delivery and, if mailed, shall
be deemed to have been validly served, given or delivered three (3) business days after deposit in
the United States mail, as registered or certified mail, with proper postage prepaid and addressed
to the party or parties to be notified at the addresses set forth on the signature page of this
Agreement (or such other address(es) as a party may designate for itself by like notice). If to
the Company, notices and demands shall be delivered to the attention of the Secretary of the
Company.

 

 

 

18. Governing Law. This Agreement shall be governed exclusively by and construed according
to the laws of the State of California, as applied to contracts between California residents
entered into and to be performed entirely within California.

19. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall for all purposes be deemed to be an original but all of which together shall constitute but
one and the same Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.

20. Headings. The headings of the sections of this Agreement are inserted for convenience
only and shall not be deemed to constitute part of this Agreement or to affect the construction
hereof.

21. Entire Agreement. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements, understandings and
negotiations, written and oral, between the parties with respect to the subject matter of this
Agreement; provided, however, that this Agreement is a supplement to and in furtherance of the
Company’s Certificate of Incorporation, Bylaws, the Code and any other applicable law, and shall
not be deemed a substitute therefor, and does not diminish or abrogate any rights of Indemnitee
thereunder.

 

 

 

In Witness Whereof, the parties hereto have entered into this Agreement effective as
of the date first above written.

	 	 	 	 	 
	 	VaxGen, Inc.

 	 
	 	By:  	/s/ Matthew J. Pfeffer
 	 
	 	 	Name:  	Matthew J. Pfeffer   	 
	 	 	Title:  	SVP, CFO & Secretary 	 
	 
	 	INDEMNITEE

 	 
	 	/s/ James P. Panek
 	 
	 	Signature of Indemnitee 	 
	 	 	 
	 	       James P. Panek
 	 
	 	Print or Type Name of Indemnitee 	 
	 	 	 
	 

 

 

 

Exhibit C

FORM OF SEPARATION DATE RELEASE

In consideration for the Severance Benefits and other consideration provided to me by VaxGen,
Inc. (the “Company”), and as required by the Amended and Restated Executive Employment Agreement
between the Company and me effective as of February 1, 2009 (the “Agreement”), I hereby give the
following Separation Date Release (the “Separation Date Release”).

I hereby generally and completely release the Company and its directors, officers, employees,
shareholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary
entities, insurers, affiliates, and assigns (collectively, the “Released Parties”) from any and all
claims, liabilities and obligations, both known and unknown, that arise out of or are in any way
related to events, acts, conduct, or omissions occurring at any time prior to or contemporaneous
with my signing of this Separation Date Release. This general release includes, but is not limited
to: (1) all claims arising out of or in any way related to my employment with the Company or the
termination of that employment; (2) all claims related to my compensation or benefits from the
Company, including salary, bonuses, commissions, vacation pay, expense reimbursements, severance
pay, fringe benefits, stock, stock options, or any other ownership or equity interests in the
Company; (3) all claims for breach of contract, wrongful termination, and breach of the implied
covenant of good faith and fair dealing, including, but not limited to, claims based on or arising
from the Agreement; (4) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal, state, and local
statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or
other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans
with Disabilities Act of 1990, the federal Age Discrimination in Employment Act (as amended)
(“ADEA”), the federal Family and Medical Leave Act (“FMLA”), the California Family Rights Act
(“CFRA”), and the California Fair Employment and Housing Act (as amended).

Notwithstanding the foregoing, I am not releasing the Company from the following (the
“Excluded Claims”): (1) any obligation it may otherwise have to indemnify me for my acts within
the course and scope of my employment with the Company, pursuant to the articles and bylaws of the
Company, the Indemnity Agreement, or applicable law; or (2) any rights which are not waivable as a
matter of law. In addition, nothing in this Separation Date Release prevents me from filing,
cooperating with, or participating in any proceeding before the Equal Employment Opportunity
Commission, the Department of Labor, the California Department of Fair Employment and Housing, or
another government agency, except that I hereby waive my right to any monetary benefits in
connection with any such claim, charge or proceeding. I hereby represent and warrant that, other
than the Excluded Claims, I am not aware of any claims I have or might have against any of the
Released Parties that are not included in this Separation Date Release.

 

 

 

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the ADEA, and that the consideration given for the waiver and release in the preceding
paragraph is in addition to anything of value to which I am already entitled. I further
acknowledge that I have been advised by this writing that: (1) my waiver and release do not apply
to any rights or claims that may arise after the date I sign this Separation Date Release; (2) I
should consult with an attorney prior to signing this Separation Date Release (although I may
choose voluntarily not to do so); (3) I have twenty-one (21) days to consider this Separation Date
Release (although I may choose voluntarily to sign it earlier); (4) I have seven (7) days following
the date I sign this Separation Date Release to revoke it by providing written notice of revocation
to the Chairman of the Company’s Board of Directors; and (5) this Separation Date Release will not
be effective until the date upon which the revocation period has expired, which will be the eighth
calendar day after the date I sign it (the “Effective Date”).

I UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. I
acknowledge that I have read and understand Section 1542 of the California Civil Code which reads
as follows: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if known by him or
her must have materially affected his or her settlement with the debtor.” I hereby expressly waive
and relinquish all rights and benefits under that section and any law or legal principle of similar
effect in any jurisdiction with respect to my release of claims herein, including but not limited
to the release of unknown and unsuspected claims.

I hereby represent that I have been paid all compensation owed and for all hours worked, I
have received all the leave and leave benefits and protections for which I am eligible, pursuant to
FMLA, CFRA, or otherwise, and I have not suffered any on-the-job injury for which I have not
already filed a workers’ compensation claim.

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	James P. Panek 	 
	 	
Date:

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