FORM OF AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

EXHIBIT 10.1

FORM OF

AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

FOR ___________________

This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is entered into by and between _______________ (hereinafter “Executive”) and VaxGen, Inc. (hereinafter “VaxGen” or the “Company”), as of the date that it has been signed by both parties (the “Effective Date”). In consideration of the mutual promises made herein, VaxGen and Executive agree as follows:

1.              EMPLOYMENT BY THE COMPANY . VaxGen continues to employ Executive, and Executive hereby accepts continued employment with VaxGen upon the terms and conditions set forth in this Agreement, as of the Effective Date. Executive is employed as the Company’s [ title of executive position ]. [This Agreement does not affect or alter Executive’s current status as a member of the Company’s Board of Directors (the “Board”).]

2.              WORK RESPONSIBILITIES. As [ title of executive position ], Executive shall perform the functions and responsibilities 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 Company’s [President and Chief Executive Officer (“CEO”)][Board]. Executive will report to the [CEO][Board]. Executive shall devote the whole of Executive’s professional time, attention and energies to the performance of Executive’s work responsibilities (except as otherwise permitted by the Company’s general employment policies or by this Agreement). Executive’s primary office location will be the Company’s corporate headquarters. Executive’s position, title, job description, reporting relationship, office location, duties and responsibilities may be modified from time to time in the sole discretion of VaxGen.

(a)            Base Salary. [Effective retroactive to January 1, 2006][Effective retroactive to August 1, 2006], VaxGen will pay Executive a base salary at the annualized rate of $___________, 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 Company’s discretion.

(b)            Bonus Potential. Executive is eligible to receive an annual performance bonus of up to thirty percent (30%) of Executive’s annual base salary. Such bonuses, if any, are awarded at the sole discretion of the Company’s Board of Directors (the “Board”) based on its assessment of Executive’s performance, as measured by the performance standards [set by the CEO][previously approved by the Board], as well as the Company’s performance . No bonuses are earned until the Board or its delegate confirms such bonuses in writing. The Company shall

have the sole discretion to change or eliminate the annual bonus program at any time, and to determine the amount of bonus earned by Executive, if any.

(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, vacation 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. 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.

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 Executive’s 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”) attached hereto as Exhibit A , which shall be deemed effective as of the commencement of Executive’s employment with the Company.

6.              INDEMNITY AGREEMENT. Executive and the Company agree to enter into the Indemnity Agreement attached hereto as Exhibit B .

(a)            Non-Company Activities. Except for [any activities] [the outside activities listed on Exhibit ___ which were previously approved by the Board, and any additional outside activities] consented to in writing by the [CEO][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 Company’s [CEO][Board].

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.

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 an officer of the Company, 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.

(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(e)(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 [CEO][Chairman of the Board].

(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, Executive shall be eligible to receive the following as Executive’s sole severance benefits (collectively, the “Severance Benefits”): (i) severance pay in the amount of twelve (12) months of Executive’s base salary in effect as of the termination date (such severance being limited strictly to base salary and will not include any amount paid or payable as a bonus or stock option grant), less standard withholdings and deductions, and payable in the Company’s ordinary payroll cycle as salary continuation until fully paid; (ii) health insurance continuation coverage (pursuant to the federal COBRA law or applicable state law) at Executive’s own expense; (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 employment termination date (the “Accelerated Vesting”); and (iv) payment of all accrued salary and all accrued and unused vacation, as well as 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. If, within thirteen (13) months after a Change in Control (defined in Section 10(d)), Executive’s employment is terminate