Document:

Exhibit 10.24

                           LOAN AND SECURITY AGREEMENT

This  LOAN AND  SECURITY  AGREEMENT  ("Agreement")  dated as of this 20th day of
December,  2000 by and between VAXGEN,  INC., a Delaware  corporation having its
principal  office  at #1000  Marina  Blvd.,  Suite  #200,  Brisbane,  California
("Company")  and PHILLIP W. BERMAN,  an  individual  and resident of  California
("Borrower").

                                    RECITALS

     WHEREAS,  the  Borrower  desires to borrow  from the  Company  the  amounts
necessary to be withheld  for  statutory  taxes  associated  with success  bonus
awarded to Borrower in the form of VaxGen,  Inc. stock  ("Bonus") by the Company
("Loan Amount"); and

     WHEREAS,  the Company  has agreed to lend the Loan Amount to the  Borrower,
subject to and upon the terms and conditions set forth herein;

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
contained in this Agreement, the parties agree as follows:

1.  Purpose.  The  purpose of this  Agreement  is to provide  the Loan Amount to
Borrower  for  payment  of  statutory   withholding  taxes  to  be  withheld  in
association  with the Bonus  paid to  Borrower  by the  Company as  itemized  in
Exhibit A hereto in accordance with the terms and conditions of this Agreement.

2. Promissory  Note. In consideration  for receipt of the Loan Amount,  Borrower
shall execute a promissory note to the order of the Company in the form attached
hereto  as  Exhibit  B  ("Note"  or  "Promissory  Note").  All of the  terms and
conditions set forth in said Note are  incorporated  herein by reference and are
binding on the parties as though set forth in full herein.

3. Collateral. As security for the Borrowers' full payment and performance under
this Agreement and the Note,  Borrower hereby grants to Company and acknowledges
that Company has a first position security interest in Borrower's  VaxGen,  Inc.
stock (the "Collateral") which shall be awarded to Borrower as a Bonus and which
shall be placed in an individual brokerage account in Borrower's name subject to
the Account  Control  Agreement  entered  into by and between the  Company,  the
Borrower  and the Broker  dated as of  December  20,  2000 in the form  attached
hereto as Exhibit C ("Account Control Agreement").

4.  Conditions  Precedent to  Disbursement.  Company's  obligation to lend funds
pursuant to this Agreement is contingent upon Company having received

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the following  documents,  each of which shall be in form and content acceptable
to Company in its sole discretion:

     (a) The Promissory Note for Borrower attached hereto as Exhibit B.

     (b) The Account Control  Agreement for Borrower in the form attached hereto
as Exhibit C.

     (c) Such other documents as Company may reasonably require.

5. Interest.  The Loan Amounts shall bear interest at a semi-annual  rate of six
percent (6%).

6. Term.  The term of the loan shall be six (6) months from  December  20, 2000.
Any and all unpaid  principal  amounts  and  accrued  interest  shall be due and
payable on or before June 19, 2001 (the "Due Date"). If the loan amounts are not
paid in full by the Due Date,  Borrower authorizes payment be made to Company by
sale  of  Collateral  in  accordance  with  the  terms  of the  Account  Control
Agreement.

7.  Prepayment.  Borrower shall have the right to prepay the Loan Amount and any
accrued  interest  at any time before the Due Date.  If Borrower  elects to sell
shares of VaxGen,  Inc.  stock subject to the Control  Agreement  before the Due
Date,  Borrower  warrants that such sale shall be in compliance with the VaxGen,
Inc.  Stock  Trading  Policy  ("Trading  Policy")  governing  stock  trading  by
insiders.  Borrower expressly agrees not to instruct the securities intermediary
to sell stock in any manner or at any time in violation of the Trading Policy.

8. Extension of Term.  Company may, in its sole discretion,  extend the Due Date
for a period of six (6) additional months.

9.  Representations  and  Warranties.  To  induce  Company  to enter  into  this
Agreement, Borrower represents and warrants to Company that:

     (a)  Validity.  This  Agreement,  including the Note,  the Account  Control
Agreement,  and the grant of a security  interest in the Collateral,  constitute
valid, legal, and binding obligations of the Borrower  enforceable in accordance
with their terms, and the execution and performance of this Agreement do not and
will  not  contravene  any  applicable  law,  order,   regulation,   contractual
restriction or the like of any kind binding on Borrower.

     (b) Rights to Collateral. As of the date the Bonus is awarded by Company to
Borrower,  the Borrower own the Collateral  free of all claims rights or demands
of third parties,  and has all requisite  right and authority to grant Company a
first position security interest in such Collateral.

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     (c) Use of Funds.  Borrower will not receive the funds  directly.  Borrower
directs and  authorizes  the  Company to use the Loan  Amount on the  Borrower's
behalf solely for the purposes described above.

     (d)  Misstatements.  No  representation  or warranty by Borrower  contained
herein or in any other  document  furnished by Borrower in  connection  with the
negotiation of this Agreement or pursuant to this Agreement  contains any untrue
statement of material fact or omits to state a material  fact  necessary to make
such  representation  or warranty not  misleading in light of the  circumstances
under which it was made.

10. Savings Provision.  The invalidity or unenforceability of any one or more of
the  provisions  of this  Agreement  for any  reason  shall not affect any other
provisions  hereof,  and such other  provisions  shall  remain in full force and
effect.

11.  Survival.  The  termination of this Agreement for any cause or reason shall
not  affect  the right of Company  to  recover  from  Borrower  any money due to
Company on or before such termination or in consequence  thereof, nor shall such
termination  affect the right of Company to recover  any  damages  for breach of
this Agreement. The representations,  warranties, and covenants contained herein
shall  survive any  disbursement  of the loan  proceeds and shall remain in full
force and effect until all amounts owed to Company hereunder are paid in full.

12.  Assignments.  Company in its sole discretion shall have the right to assign
its rights hereunder. The costs of such assignment shall be borne by Company and
not charged to Borrower.  Borrower is not entitled to assign in part or in whole
their rights and obligations  hereunder  without the written consent of Company,
and no other person or persons shall have any right of action hereunder.

13.  Choice of Law.  This  Agreement  will in all  respects  be  governed by and
construed in accordance with the laws of the State of California.

14. Litigation Expenses. In any controversy, claim or dispute arising out of, or
relating to, this Agreement or the method and manner of  performance  thereof or
the breach thereof, the prevailing party shall (in addition to any other relief)
be entitled to a reasonable sum as litigation expenses. For the purposes of this
provision,  the term  "proceeding"  shall include  arbitration,  administrative,
bankruptcy, and judicial proceedings, including appeals therefrom.

15.  Incorporation of Other Documents;  Entire  Agreement.  Company and Borrower
hereby  agree that all terms and  conditions  contained  in the Account  Control
Agreement and Note are incorporated herein by reference. This Agreement together
with the Account Control Agreement and Note constitutes the entire understanding
of the parties with respect to the matters contained

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herein.  This  Agreement  together with the Account  Control  Agreement and Note
supersede  all  prior  or  contemporaneous  understandings  of the  parties.  No
alterations or  modifications  of the terms set forth herein shall be binding on
any party unless set forth in a document  duly  executed by or on behalf of such
party.

         EXECUTED as of the date set forth above.

PHILLIP W. BERMAN                                VAXGEN, INC.

                                                 By
--------------------------                         -----------------------------
                                                 Its
                                                    ----------------------------

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                                    EXHIBIT A

                             Phillip W. Berman Bonus

Compensation in Stock (Bonus)

# of Shares                                                   75,757
Closing Share Price @ 11/20/00                                 24.25
                                                           1,837,107

Total Compensation (Ordinary Income)

Income Taxes to be
  withheld on above Bonus

Lump Sum Statutory Taxes:
Federal IT @ 28%                                             514,390
CA SIT @ 6%                                                  110,226
FICA/Medicare @ 1.45%                                         26,638

     Subtotal                                                651,255

Loan Amount:                                                 651,255

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                                    EXHIBIT B
                                 PROMISSORY NOTE

$651,255                                                       December 20, 2000
                                                             Seattle, Washington

For value received,  the undersigned  Borrower hereby promises to pay to VaxGen,
Inc., a Delaware  corporation,  (the "Company") the principal sum of Six Hundred
Fifty One Thousand Two Hundred and Fifty Five Dollars ($651,255),  together with
interest on that amount,  upon the covenants,  terms and conditions  provided in
this  promissory  note (the "Note").  Capitalized  terms not  otherwise  defined
herein shall have the same meanings set forth in the Loan Agreement.

1. Interest.  The obligations under this Note shall bear interest at the rate of
six percent (6%) per annum, compounded  semi-annually.  Provided,  however, that
following and during the continuance of any default,  the obligations shall bear
an  interest  at  a  rate  of  twelve   percent  (12%)  per  annum,   compounded
semi-annually.

2. Due Date.  The  entire  principal  balance of this  Note,  together  with all
accrued and unpaid  interest and other  amounts  which may become due  hereunder
shall be due and  payable on June 19,  2001  ("Due  Date"),  provided,  however,
Company  has the  option to extend  the Due Date for a period of six (6)  months
(the "Option Period").  Interest on the Note during the Option Period will be at
same interest as stated herein.

3. Place of  Payment.  Payment  shall be made to Company at 1000  Marina  Blvd.,
Suite 200,  Brisbane,  CA 94005,  or such other  place as Company may specify in
writing.

4. Prepayment.  Borrower may prepay all or any amount owing on this Note without
penalty or  discount  at any time.  All  prepayments  shall be applied  first to
accrual and unpaid  interest  and then to the  principal  balance  owing on this
Note.

5. Default.

     5.1 Default.  The term "Default" means any of the following events,  unless
Company has agreed in writing to a deferral or waiver of the obligation:

          e.   Borrower,  at any time, fails to pay when due any sum due on this
               Note as herein agreed;

          f.   Borrower  breaches or fails to perform any other obligation under
               this Note, the Loan Agreement, or Control Agreement.

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6. Remedy. If Borrower Defaults, Company may accelerate all amounts owing on the
Note and the Note shall become immediately due and payable.

7.  Control  Agreement.  This Note is entitled to the  benefits of the  attached
Control Agreement.

8. Attorneys' Fees. Borrower promises to pay all costs,  expenses and attorneys'
fees  (including  costs  of  discovery  and all fees and  expenses  of  experts)
incurred  by the Company  hereof if this Note is  referred  to an  attorney  for
collection,  whether suit is commenced thereon or not, in any proceeding for the
collection of the debt,  or in any  litigation  or  controversy  arising from or
connected with this Note in which the Company hereof  prevails.  If judgement is
obtained  thereon,  such  attorneys'  fees,  costs and expenses shall be in such
amount as the court, arbitrator, or mediator shall deem reasonable.

9. Waiver.  Borrower  hereby  waives  presentment,  protest,  demand of payment,
dishonor,  notice of dishonor,  of nonpayment,  of acceleration  and any and all
lack of diligence or delay in collection.

BORROWER:
                                                 -------------------------------
                                                         Phillip W. Berman

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                                    EXHIBIT C

                            ACCOUNT CONTROL AGREEMENT

This ACCOUNT CONTROL AGREEMENT  ("Account Control Agreement") is entered into as
of this 20th day of  December,  2000 by and  between  VAXGEN,  INC.,  a Delaware
corporation  having its  principal  office at 1000  Marina  Blvd.,  Suite  #200,
Brisbane,   California   ("Creditor"),   PRUDENTIAL   SECURITIES,   a  _________
corporation,  having its principal office at ____________________ ("Broker") and
_____________, an individual and resident of _____________________ ("Borrower").

                                   BACKGROUND

Customer  has  granted  Creditor a security  interest  in a  securities  account
maintained by Broker for Customer (the "Account"). The parties are entering into
this agreement  ("Agreement") to perfect  Creditor's  security  interest in that
Account.

                                    AGREEMENT

1. The Account. Broker represents and warrants to Creditor that:

     (a) A securities account bearing account number  [__________] is maintained
by Broker for Customer (the "Account").

     (b) Customer has  deposited  [________]  shares of VaxGen,  Inc.  into said
Account.

     (c) Broker does not know of any claim to or interest in the Account, except
for claims and interests of the parties referred to in this Agreement.

All property  credited to the Account,  and all other rights of Customer against
Broker  arising  out of  the  Account  will  be  treated  as  financial  assets,
securities entitlements and/or investment property under Articles 8 and 9 of the
California Uniform Commercial Code.

2. Irrevocable  Instructions of Customer To Sell Stock. On June 20, 2001, unless
notified  otherwise by  Creditor,  Broker  shall sell  sufficient  shares to pay
Creditor the outstanding  principal and accrued interest owed by the Customer to
the Creditor and remit such proceeds to Creditor.  Unless notified  otherwise by
the Creditor  the amount of the  obligation  as of June 20, 2001 is  [_________]
principal and [_________] interest for a total of [___________].  Interest shall
accrue at a semi-annual  rate of six percent (6%) commencing  December 20, 2000.
The Creditor shall promptly notify Broker of any full or partial satisfaction of
the Customer's obligations.  The Creditor is the only party authorized to revoke
these instructions.

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3.  Customer's  Rights in  Account.  Customer  will  retain and shall be able to
exercise  all  other  incidents  of  ownership  over  the  Account  that are not
inconsistent with the terms and conditions  hereof,  including,  but not limited
to, the right to direct the Broker to sell  shares of the  VaxGen,  Inc.  stock;
provided that all proceeds  from such sales are remitted to Creditor  until such
time as the outstanding  balance and accrued  interest owed by such Customer has
been paid in full.

Broker will not comply with any  entitlement  order  originated by Customer that
would  require  Broker to make a free  delivery to Customer or any other person.
Customer is expressly  prohibited  from  withdrawing the stock or any funds from
the Account until the obligation to Creditor is fully satisfied.

4. Priority of Creditor's  security  interest.  Broker  subordinates in favor of
Creditor any security interest,  lien or right of setoff Broker may have, now or
in the future, against the Account or financial assets in the Account.

5. No Third Party  Control.  Broker  represents and warrants that no third party
has a right to give an  entitlement  order  regarding  financial  assets  in the
Account. Broker will not agree with any third party that Broker will comply with
entitlement orders originated by the third party.

6.  Statements,  Confirmations  and Notices of Adverse Claims.  Broker will send
copies of all statements and  confirmations  for the Account  simultaneously  to
Customer and Creditor.  Broker will use  reasonable  efforts to promptly  notify
Creditor and Customer if any other person claims that it has a property interest
in a financial  asset in the Account and that it is a violation of that person's
rights for anyone else to hold, transfer or deal with the financial asset.

7. Broker's  Responsibility.  Except for  permitting a  withdrawal,  delivery or
payment in  violation  of Section 3, Broker  will not be liable to Creditor  for
complying with  entitlement  orders from Customer that are received by Broker so
long as Broker remits  proceeds to Creditor in accordance with the terms of this
Agreement.

Broker will not be liable to Customer  for  complying  with  entitlement  orders
originated by Creditor,  even if Customer  notifies  Broker that Creditor is not
legally entitled to issue the entitlement order, unless

     (i)  Broker  takes  the  action  after  it is  served  with an  injunction,
restraining order or other legal process enjoining it from doing so, issued by a
court of competent jurisdiction,  and had a reasonable opportunity to act on the
injunction, restraining order or other legal process, or

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     (ii) Broker acts in collusion with Creditor in violating Customer's rights.

This  Agreement  does not  create  any  obligation  of Broker  except  for those
expressly  set  forth  in  this  Agreement.  In  particular,   Broker  need  not
investigate  whether  Creditor  is entitled  under  Creditor's  agreements  with
Customer  to  give  an  entitlement  order.  Broker  may  rely  on  notices  and
communications it believes given by the appropriate party.

8.  Indemnity.  Creditor and  Customer  will  indemnify  Broker,  its  officers,
directors, employees and agents against claims, liabilities and expenses arising
out of this Agreement (including  reasonable attorneys' fees and disbursements),
except to the extent the claims,  liabilities or expenses are caused by Broker's
gross  negligence or willful  misconduct.  Creditor's and  Customer's  liability
under this Section is joint and several.

9.  Termination;  Survival.  Creditor may terminate  this Agreement by notice to
Broker and Customer.  Broker may terminate  this Agreement on 30 days' notice to
Creditor and Customer.  If Creditor  notifies  Broker that  Creditor's  security
interest  in  the  Account  has  terminated,  this  Agreement  will  immediately
terminate.  Sections 7,  "Broker's  Responsibility",  and 8,  "Indemnity,"  will
survive termination of this Agreement.

10.  Governing  Law. This Agreement will be governed by the laws of the State of
California.

11. Entire Agreement;  Amendments.  This Agreement is the entire agreement,  and
supersedes any prior  agreements and  contemporaneous  oral  agreements,  of the
parties  concerning  its subject  matter.  No amendment of, or waiver of a right
under,  this Agreement will be binding unless it is in writing and signed by the
party to be charged.

12. Severability.  To the extent a provision of this Agreement is unenforceable,
this Agreement will be construed as if the unenforceable provision were omitted.

13. Successors and Assigns.  A successor to or assignee of Creditor's rights and
obligations  under the security  agreement  between  Creditor and Customer  will
succeed to Creditor's rights and obligations under this Agreement.

14.  Notices.  A notice or other  communication  to a party under this Agreement
will be in writing (except that entitlement orders may be given orally), will be
sent to the party's  address set forth  below,  or to such other  address as the
party may notify the other parties and will be effective on receipt.

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     EXECUTED as of the date set forth above.

VAXGEN, INC.

-------------------------------
By
  -----------------------------
Its
   ----------------------------
1000 Marina Blvd.
Suite #200, Brisbane, California

PRUDENTIAL SECURITIES

-------------------------------
By
  -----------------------------
Its
   ----------------------------
Address:
        -----------------------

CUSTOMER

-------------------------------
By
  -----------------------------
Its
   ----------------------------
Address:
        -----------------------

                                      109Exhibit 10.25

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT  AGREEMENT  ("Agreement") is made and entered into on January 3,
2000,  by  and  between  William  L.  Heyward,   M.D.,  a  resident  of  Georgia
("Heyward"), and VaxGen, Inc., a Delaware corporation (the "Company").

                              W I T N E S S E T H:

     WHEREAS,   the  Company  desires  to  employ  Heyward  as  Vice  President,
International Clinical Research, and Heyward desires to be so employed;

     WHEREAS,  the Company and Heyward  desire to set forth in writing the terms
of their agreement with respect to Heyward's employment with the Company;

     NOW,  THEREFORE,  in  consideration  of the  premises  and  of  the  mutual
covenants contained herein, the parties agree as follows:

1.  Employment.  The  Company  hereby  employs  Heyward  as its Vice  President,
International Clinical Research, and Heyward hereby accepts such employment upon
the terms and conditions set forth in this Agreement.

2. Term.  Heyward's  employment will begin on January 3, 2000, and will continue
for an  initial  term  of four  years  ending  December  31,  2003.  Thereafter,
Heyward's  employment  will be  automatically  renewed for  successive  one-year
terms,  unless  notice of  termination  is given by either party to the other at
least thirty days before the expiration of the then current term.

3.  Duties.  Heyward  will  perform such  executive  and  administrative  duties
consistent with his position as Vice President, International Clinical Research,
of the Company as are reasonably  assigned to him by the Board and will be given
such executive and administrative powers and authority as may be needed to carry
out those duties.  Heyward shall report directly to John G. Curd,  M.D.,  Senior
Vice President, Medical Affairs and Regulatory. Heyward will be responsible for:
the medical and scientific  supervision of the Thailand  vaccine studies working
in  partnership  with the VaxGen  clinical  operations  personnel in Thailand to
influence  and/or  supervise  personnel  as needed;  establishing  collaborative
relationships  with appropriate  researchers and institutions to conduct vaccine
studies in other  developing  countries  according the Company's  business plan;
maintaining  communication  with appropriate  national and international  public
health  organizations,   which  will  include  arranging  appropriate  meetings,
presenting at appropriate national and international symposia, and participating
in  international  meetings  where AIDS vaccines will be discussed;  and working
closely with the Company in  estimating  market size,  and  developing  delivery
strategies and funding mechanisms for HIV vaccines for the less developed world.
The Company will make reasonable  accommodation to provide Heyward the

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necessary equipment to support a home office in his Georgia home as are required
for the performance of these duties.

4. Compensation.  The Company will pay Heyward an annual base salary of $175,000
for the first year of employment.  Heyward's  annual base salary will be payable
semi-monthly. Heyward will have the opportunity for an annual bonus of up to 20%
of annual salary,  such bonus to be determined solely by the Board of Directors.
Heyward's salary and bonus will be considered annually for potential increase by
the Compensation  Committee of the Board of Directors.  As further compensation,
the Company  will pay Heyward a signing  bonus of $15,000  upon the first day of
his employment.

5.   Stock Options.

     (a) Initial  Stock  Option  Grant:  Heyward  shall  receive  incentive  and
     non-qualified  options to purchase a total of 50,000 shares of Common Stock
     of VaxGen (with as many shares allocated to an incentive stock option as is
     permissible  under applicable  laws). The exercise price will be determined
     at the first Board of Directors meeting in the year 2000. The stock options
     will be  administered  according  to the VaxGen Stock Option Plan and shall
     vest over time as  indicated  in the Stock  Option  Plan.  Heyward  will be
     eligible to receive an option to purchase an  additional  25,000  shares of
     Common  Stock of VaxGen  upon  completion  of the  enrollment  phase in the
     Thailand  study  program  (VAX003).  The options  shall  accelerate in full
     immediately upon occurrence of any of the following  events:  (i) Change of
     Control (as defined  below) of VaxGen,  or (ii)  termination  of  Heyward's
     employment  without cause or by Heyward for Good Reason (as defined below).
     Upon an occurrence of event described in (ii) above,  the right to exercise
     all nonqualified  stock options shall be extended to one year from the date
     of termination.

     (b)  Change of  Control.  In the event the  Company  undergoes  a change of
     control (a "Change of  Control")  by virtue of (a) its sale or  exchange of
     stock  (resulting in a shareholder of the Company  holding less than 50% or
     more of its  outstanding  equity and underlying  options and warrants) in a
     transaction  or series of  transactions  occurring in any 12 month  period,
     and/or (b) Genentech increases its holding in the Company to a level of 50%
     or  more  of the  Company's  outstanding  equity,  underlying  options  and
     warrants in a transaction or series of transactions,  Heyward shall receive
     a one time bonus of 12,500 shares of common stock.

6. Expenses.  The Company will reimburse  Heyward for travel,  entertainment and
other  expenses  reasonably  incurred by him in connection  with his  employment
under this Agreement upon presentation of appropriate vouchers or receipts.

7. Benefits. Heyward shall have the right, on the same basis as other members of
senior  management of Company,  to participate in and to receive  benefits under
any of

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Company's  employee  benefit  plans,  in effect from time to time.  In addition,
Heyward  shall be entitled to the benefits  afforded to other  members of senior
management   under  Company's  paid  time  off,  holiday  and  business  expense
reimbursement policies.

8.  Early  Termination  of  Employment.  Employment  under this  Agreement  will
terminate prior to expiration of the term upon any of the following:

     (a)  Death.  Heyward's employment hereunder shall terminate upon his death.

     (b)  Disability.  The Company may terminate Heyward's  employment hereunder
          if he has been unable to perform his duties  hereunder for a period of
          six consecutive  months and if he has not resumed on a full-time basis
          the performance of such duties within thirty days after written notice
          from the  Company of its intent to  terminate  his  employment  due to
          disability.

     (c)  Cause. The Company may terminate  Heyward's  employment  hereunder for
          Cause.  For purposes of this  Agreement,  the term  "Cause"  means (i)
          willful  and  repeated  failure  by  Heyward  to  perform  his  duties
          hereunder  which is not  remedied  within  thirty  days after  written
          notice from the Company,  (ii) conviction of Heyward for a felony,  or
          (iii)  Heyward's   dishonesty  that  is  demonstrably  and  materially
          injurious to the Company.

     (d)  Termination by Heyward. Heyward may terminate his employment hereunder
          for Good  Reason.  For  purposes  of this  Agreement,  the term  "Good
          Reason" shall mean (i) the Company  substantially  reducing  Heyward's
          duties,  position,  authority  or  responsibility  hereunder  and  not
          reinstating  the same  within  thirty days after  written  notice from
          Heyward,  or  (ii)  breach  by the  Company  of its  obligations  this
          Agreement if not remedied within thirty days after written notice from
          Heyward.

9.   Benefits Upon Termination.

     (a)  Voluntary  Termination,  Termination  for  Cause  for Due to  Death or
          Disability.   In  the  event  Heyward's  voluntary   termination  from
          employment  with Company or termination  of Heyward's  employment as a
          result of his  death or  disability  or for  Cause,  Heyward  shall be
          entitled to no  compensation or benefits from Company other than those
          earned under  paragraph 5 above through the date of his termination or
          in the  case of any  stock  options,  vested  through  the date of his
          termination.

     (b)  Termination Without Cause or for Good Reason. If Heyward's  employment
          is  terminated  by Company  for any reason  other than for cause or by
          Heyward for Good Reason,  Heyward  shall be entitled to the  following
          separation benefits:

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         (i)   all accrued  compensation  (including pro-rated target bonus) and
               benefits through the date of termination;

         (ii)  continued  payment of  Heyward's  salary at his Base Salary rate,
               less applicable withholding, for twelve (12) months following his
               termination; and

         (iii) acceleration  of vesting of his options as provided in  paragraph
               5 above.

10.  Restrictive Covenants.

     (a)  Confidential Information. Heyward acknowledges that, during the course
          of  his  employment   with  the  Company,   he  will  have  access  to
          confidential  information and biological materials not generally known
          outside the Company  (whether  conceived  or  developed  by Heyward or
          others)  and   confidential   information  and  biological   materials
          entrusted  to  the  Company  by  third  parties,  including,   without
          limitation, trade secrets, techniques, formulae, biological materials,
          marketing and other  business  plans,  data,  strategies and forecasts
          (collectively,    "Confidential   Information").    Any   Confidential
          Information  conceived or developed by Heyward during  employment will
          be the exclusive  property of the Company.  Except as may be necessary
          in connection with the Company's business, Heyward will not (during or
          after  his  employment   with  the  Company)   disclose   Confidential
          Information  to any third person,  firm or entity or use  Confidential
          Information  for his own  purposes  or for the  benefit  or any  third
          person,  firm or entity.  In his work for the  Company,  Heyward  will
          refrain  from  unauthorized  use  or  disclosure  of  information  and
          biological materials owned by former employers or other third parties.

     (b)  Inventions.   Heyward  will  promptly  disclose  to  the  Company  any
          discoveries,  inventions,  formulae  and  techniques,  whether  or not
          patentable,  made,  conceived  or first  reduced to  practice  by him,
          either alone or together with others,  during his employment  with the
          Company  (collectively,  the "Inventions").  Heyward hereby assigns to
          the  Company  all of  his  right,  title  and  interest  in and to any
          Inventions.  Heyward will execute such  documents  and take such other
          actions  as  may  be  reasonably  requested  by the  Company  (at  the
          Company's  expense)  to  enable  the  Company  to apply  for,  obtain,
          maintain and enforce patents on any of the Inventions or to facilitate
          the transfer or assignment of any of the Company's rights with respect
          to the Inventions and patents.

     (c)  Company  Documents.  Upon the termination of his  employment,  Heyward
          will deliver to the Company all documents and other tangible  property

                                      113
<PAGE>

          containing  Confidential  Information which are then in his possession
          or control.

     (d)  Covenant  Not  to  Compete.   Heyward  acknowledges  that  his  duties
          hereunder  and the  services  he will  provide to the Company are of a
          special, unique, unusual and extraordinary character, which gives this
          Agreement  particular  value  to the  Company,  and  that it  would be
          difficult to employ any individual or  individuals to replace  Heyward
          in the  performance  of such duties and  services.  Therefore,  during
          employment  and for a period of one year after the  termination of his
          employment with the Company, Heyward will not, directly or indirectly,
          enter into, organize,  control,  engage in, be employed by, serve as a
          consultant  to, be an  officer  or  director  of or have any direct or
          indirect investment in any business, person, partnership, association,
          firm or corporation engaged in any business activity  (including,  but
          not  limited  to,  research,  development,   manufacturing,   selling,
          leasing,  licensing or providing  services) which is competitive  with
          the  business  and/or  scientific   activities  that  the  Company  is
          developing or exploiting during Heyward's employment with the Company.
          Nothing  contained  in this  Agreement  shall be  construed to prevent
          Heyward from owning at any time, directly or indirectly, as much as 5%
          of any class of equity  securities  issued by any corporation or other
          entity which are publicly  traded and registered  under the Securities
          and Exchange Act of 1934, as amended.

11.  Indemnification.  The Company will indemnify  Heyward to the fullest extent
permitted by law and will hold harmless from and against any claim, liability or
expense  (including  reasonable  attorneys'  fees) made  against or  incurred by
Heyward in connection with his  relationship  with the Company.  This obligation
will include, without limitation, prompt payment in advance of any and all costs
of defending the same, including attorney fees.

12. No Impediment to Agreement.  Except as otherwise  disclosed herein,  Heyward
hereby represents to the Company that he is not, as of the date hereof, and will
not be, during  employment with the Company,  employed under  contract,  oral or
written, by any other person, firm or entity and is not and will not be bound by
the provisions of any restrictive  covenant or  confidentiality  agreement which
would  constitute an impediment  to, or  restriction  upon, his ability to enter
into this Agreement and to perform the duties of his employment.

13.  Notices.  Any notice  under this  Agreement  must be in writing and will be
deemed to have been given when personally  delivered or mailed by first-class or
express mail to the recipient at the following address (or such other address as
shall be specified by prior written notice):

                                      114
<PAGE>

         To the Company:                Donald P. Francis, M.D., D.Sc.
                                        President
                                        VaxGen, Inc.
                                        1000 Marina Blvd., Suite 200
                                        Brisbane, CA  94005

         Copy to:                       Ralph Pais, Esq.
                                        Fenwick & West LLP
                                        Two Palo Alto Square
                                        Palo Alto, CA 94306

         To  Heyward:                   William L. Heyward, M.D.
                                        2347 Ridge Road
                                        Darien, GA  31305

14.  Severability.  Whenever possible,  each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law. If
any provision of this Agreement is held to be invalid,  illegal or unenforceable
in any respect under any applicable law in any  jurisdiction,  such  invalidity,
illegality  or  unenforceability  will not  affect  any other  provision  or the
interpretation of this Agreement in any other jurisdiction.

15.  Governing  Law.  This  Agreement  shall be  governed  by and  construed  in
accordance with the laws of the State of Delaware,  without regard to the law of
conflicts.

16.  Successors and Assigns.  The services and duties to be performed by Heyward
hereunder are personal and may not be assigned.  This Agreement shall be binding
upon and inure to the benefit of the Company,  its successors  and assigns,  and
Heyward, his heirs and representatives.

17. Complete Agreement.  This Agreement constitutes the entire agreement between
the  parties  concerning  the subject  matter  hereof and  supersedes  all prior
agreements between the parties concerning the subject matter hereof.

18. Waiver.  Failure by either party to insist upon strict  adherence to any one
or more of the provisions of this  Agreement on one or more occasions  shall not
be  construed  as a waiver,  nor  shall it  deprive  that  party of the right to
require strict compliance thereafter.

19.  Survival.   The  obligations  set  forth  in  paragraph  10  shall  survive
termination of this Agreement.

20.  Amendments.  No amendment  hereto, or waivers or releases of obligations or
liabilities  hereunder,  shall be effective  unless  agreed to in writing by the
parties hereto.

                                      115
<PAGE>

21.  Withholding.  The Company may deduct and  withhold  from the payments to be
made to Heyward  hereunder  any amounts  required to be deducted and withheld by
the Company under the  provisions of any statute,  law,  regulation or ordinance
now or hereafter enacted.

22.  Pending  Agreement  from the  Centers  for  Disease  Control.  The  Company
understands   that  you  are  awaiting  a  formal  letter   outlining   detailed
restrictions  regarding your future employment that could  conceivably  conflict
with your prior  employment  with the Centers for  Disease  Control.  When those
restrictions  are received and appended to this agreement,  they will be honored
in full by VaxGen or your Employment Agreement will be amended.

     IN WITNESS WHEREOF,  the parties have executed this Agreement  effective as
of the date first above written.

For VaxGen, Inc.:

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

Its:
           --------------------------------------------

Heyward:
           --------------------------------------------
           William L. Heyward, M.D.

                                      116

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