VULCAN VENTURES INC
SC 13D/A, 1999-12-16
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

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

                                 SCHEDULE 13D/A

                    Under the Securities Exchange Act of 1934

                               (Amendment No. 2)*

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

                                  VAXGEN, INC.
                                (Name of Issuer)

                                  COMMON STOCK
                         (Title of Class of Securities)

                                    922390208
                                 (CUSIP Number)

William D. Savoy                           Gail J. Gordon
Vulcan Ventures Incorporated               Foster Pepper & Shefelman PLLC
110-110th Avenue N.E., Suite 550           1111 Third Avenue, Suite 3400
Bellevue, WA  98004                        Seattle, WA  98101
(206) 453-1940                             (206) 447-4400

      (Name, Address and Telephone Number of Persons Authorized to Receive
                          Notices and Communications)

                              December 14, 1999
             (Date of Event which Requires Filing of This Statement)

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

     If the filing  person has  previously  filed a statement on Schedule 13G to
     report the  acquisition  that is the subject of this  Schedule  13D, and is
     filing  this  schedule  because  of ss.ss.  240.13d-1(e),  240.13d-1(f)  or
     240.13d-1(g), check the following box. |_|

     Note:  Schedules  filed in paper  format  shall  include a signed  original
     and five  copies of the  schedule including all exhibits.  See ss.240.13d-7
     for other parties to whom copies are to be sent.

     *The  remainder  of this cover  page  shall be filled  out for a  reporting
     person's  initial  filing on this form with respect to the subject class of
     securities,  and for any subsequent amendment containing  information which
     would alter disclosures provided in a prior cover page.

     The  information  required on the remainder of this cover page shall not be
     deemed to be  "filed"  for the  purpose  of  Section  18 of the  Securities
     Exchange  Act of 1934 ("Act") or otherwise  subject to the  liabilities  of
     that section of the Act but shall be subject to all other provisions of the
     Act (however, see the Notes).


<PAGE>





- -------------------------------------------------------------------------------
 CUSIP NO. 922390208                    13D                   Page 2 of 8 Pages

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


- -------- ----------------------------------------------------------------------
   1     NAME OF REPORTING PERSON
         S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

                  Vulcan Ventures Incorporated   91-1374788
- -------- ----------------------------------------------------------------------
   2     CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*     (a) |_|
                                                               (b) |_|
- -------- ----------------------------------------------------------------------
   3     SEC USE ONLY


- -------- ----------------------------------------------------------------------
   4     SOURCE OF FUNDS*

                  WC
- -------- ----------------------------------------------------------------------
   5     CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
         ITEMS 2(d) OR 2(E)


- -------- ----------------------------------------------------------------------
   6     CITIZENSHIP OR PLACE OF ORGANIZATION

                  State of Washington
- -------- ----------------------------------------------------------------------
     NUMBER OF SHARES         7    SOLE VOTING POWER
  BENEFICIALLY OWNED BY                              -0- shares
           EACH
     REPORTING PERSON
           WITH
                            ------ --------------------------------------------
                              8    SHARED VOTING POWER
                                                     2,955,992 - shares  (1)

                            ------ --------------------------------------------
                              9    SOLE DISPOSITIVE POWER
                                                     -0- shares

                            ------ --------------------------------------------
                             10                      SHARED   DISPOSITIVE  POWER
                                                     2,955,992 shares (1)

- --------------------------- ------ --------------------------------------------
   11     AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

                   2,955,992 shares  (1)
- --------- ----------------------------------------------------------------------
   12     CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*


- --------- ---------------------------------------------------------------------
   13     PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

                   20.8%
- --------- ---------------------------------------------------------------------
   14     TYPE OF REPORTING PERSON*

                   CO
- --------- ---------------------------------------------------------------------
- ---------------
(1) Directly owned by Vulcan  Ventures  Incorporated.  Paul G. Allen is the sole
shareholder  of Vulcan  Ventures  Incorporated  and may be deemed to have shared
voting and dispositive power with respect to such shares.

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!


<PAGE>






- -------------------------------------------------------------------------------
CUSIP NO. 922390208               13D                        Page 3 of 8 Pages

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



- --------- ---------------------------------------------------------------------
   1      NAME OF REPORTING PERSON
          S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

                   Paul G. Allen
- --------- ---------------------------------------------------------------------
   2      CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*       (a) |_|
                                                                  (b) |_|

- --------- ---------------------------------------------------------------------
   3      SEC USE ONLY


- --------- ---------------------------------------------------------------------
   4      SOURCE OF FUNDS*

                   AF
- --------- ---------------------------------------------------------------------
   5      CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
          ITEMS 2(d) OR 2(E)


- --------- ---------------------------------------------------------------------
   6      CITIZENSHIP OR PLACE OF ORGANIZATION

                   United States of America
- --------- ---------------------------------------------------------------------
  NUMBER OF SHARES BENEFICIALLY      7     SOLE VOTING POWER
            OWNED BY                       -0- shares
              EACH
        REPORTING PERSON
              WITH
                                   ------- ------------------------------------
                                     8     SHARED VOTING POWER
                                           2,955,992 shares (1)

                                   ------- ------------------------------------
                                     9     SOLE DISPOSITIVE POWER
                                           -0- shares

                                   ------- ------------------------------------
                                     10     SHARED  DISPOSITIVE POWER
                                            2,955,992 shares (1)

- ---------------------------------- ------- ------------------------------------
   11     AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

                   2,955,992 shares  (1)
- --------- ---------------------------------------------------------------------
   12     CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*


- --------- ---------------------------------------------------------------------
   13     PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

                   20.8%
- --------- ---------------------------------------------------------------------
   14     TYPE OF REPORTING PERSON*

                   IN
- --------- ---------------------------------------------------------------------
- ---------------
(1) Directly owned by Vulcan  Ventures  Incorporated.  Paul G. Allen is the sole
shareholder  of Vulcan  Ventures  Incorporated  and may be deemed to have shared
voting and dispositive power with respect to such shares.

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!


<PAGE>


Introductory Note

         This  Amendment  No. 2 (the  "Amendment")  amends and  supplements  the
statement on Schedule 13D, filed July 12, 1999, as previously amended,  relating
to common stock, $0.01 par value per share (the "Common Stock") of VaxGen, Inc.,
a Delaware Corporation (the "Issuer").

Item 3:  Source and Amount of Funds or Other Consideration

         On December 14, 1999, Vulcan Ventures Incorporated ( "Vulcan Ventures")
acquired  2,173,913  shares of Common Stock  pursuant to a Common Stock Purchase
Agreement  dated as of October 15, 1999 between the Issuer and Vulcan  Ventures.
Vulcan  Ventures  paid cash  consideration  of $11.50 per share for an aggregate
purchase price of  $24,999,999.50.  None of the purchase price consists of funds
or other  consideration  borrowed  or  otherwise  obtained  for the  purpose  of
acquiring,  holding,  trading  or voting  the  shares of Common  Stock  acquired
pursuant to Stock Purchase Agreement.

Item 4.  Purpose of Transaction

         Vulcan  Ventures and Mr. Allen  acquired the Issuer's  Common Stock for
investment purposes. Vulcan Ventures or Mr. Allen may purchase additional shares
of common  stock from time to time,  depending  on various  factors,  including,
without  limitation,  the price of the common stock, stock market conditions and
the  business  prospects of the Issuer.  Vulcan  Ventures and Mr. Allen may also
determine to dispose of some or all of their beneficial holdings of the Issuer's
securities.  They  reserve the right to increase or decrease  their  holdings on
such  terms  and at such  times  as they  may  decide,  subject  to  contractual
limitations as set forth in Item 6.

         Except  as set forth in this  Item 4 and as  contemplated  by the Stock
Purchase Agreement described in Item 6 below, Vulcan Ventures and Mr. Allen have
no  present  plan  or  proposal  that  relates  to or  would  result  in (i) the
acquisition  of additional  securities or the  disposition  of securities of the
Issuer by any person,  (ii) an extraordinary  corporate  transaction,  such as a
merger, reorganization, liquidation, or sale or transfer of a material amount of
assets involving the Issuer or any of its subsidiaries,  (iii) any change in the
Issuer's  present Board of Directors or management,  (iv) any material change in
the Issuer's  present  capitalization  or dividend  policy or any other material
change in the Issuer's  business or corporate  structure,  (v) any change in the
Issuer's  charter or by-laws or other actions that may impede the acquisition of
control of the Issuer by any person,  (vi) any change  that would  result in the
Issuer's  common stock becoming  eligible for  termination  of its  registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended,
or to cease to be  authorized  to be quoted  in  Nasdaq,  or (vii)  any  similar
action.

Item 5.  Interest in Securities of the Issuer

         Vulcan Ventures and Mr. Allen  beneficially own 2,955,992 shares of the
Issuer's common stock. These shares represent  approximately 20.8% of the shares
of the class outstanding based upon 11,250,152 shares  outstanding as of October
15, 1999,  prior to the issuance of shares of Common Stock pursuant to the Stock
Purchase  Agreement,  as  reported  to Vulcan  Ventures  by the  Issuer.  Vulcan
Ventures  and Mr.  Allen  share the power to vote and to direct the vote of, and
the power to dispose and to direct the disposition of, all 2,955,992 shares.

         To the best knowledge of  Vulcan  Ventures and Mr. Allen,  none of the
other parties named in Item 2 owns any of the Issuer's common stock.

         Except as set forth in Item 4 of this  Amendment,  Vulcan  Ventures and
Mr.  Allen have not,  nor, to the  knowledge  of Vulcan  Ventures has any of its
executive officers,  directors or controlling persons, effected any transactions
in the Issuer's common stock during the past sixty days.

                                 Page 4 of 8


<PAGE>


Item 6.  Contracts, Arrangements, Understandings or Relationships with Respect
         to Securities of the Issuer.

         Under a Registration  Rights Agreement by and among the Issuer,  Vulcan
Ventures and certain  other of the Issuer's  stockholders  entered in connection
with the Issuer's 1998 common stock offering,  the holders of 40% or more of the
registrable securities,  including the shares of common stock beneficially owned
by Vulcan  Ventures  are  entitled  to demand  that the  Issuer  register  their
registrable  securities under the Securities Act of 1933, as amended. The Issuer
is not  required to effect more than two  registrations  pursuant to such demand
registration  rights. The holders of the registrable  securities are entitled to
require  the  Issuer  to  include   their   registrable   securities  in  future
registration  statements that the Issuer may file. The Issuer is not required to
effect more that three  registrations  pursuant to such  piggyback  registration
rights.  These  registration  rights  are  subject  to  various  conditions  and
limitations, including the right of the underwriters of an offering to limit the
number of  registrable  securities  that may be  included  in the  offering.  In
addition,  holders of all of these shares are restricted from  exercising  their
demand rights until one year has elapsed from June 29, 1999,  the effective date
of the Issuer's  initial public  offering.  The Issuer  generally is required to
bear all of the expenses of these registrations,  except underwriting  discounts
and selling commissions.  Registration of any of the registrable securities held
by security holders with registration rights will result in such shares becoming
freely tradable  without  restriction  under the Securities Act immediately upon
the effectiveness of such registration.

         Vulcan  Ventures  has  agreed not to offer to sell,  sell or  otherwise
dispose of, directly or indirectly, any shares of common stock during the period
ending 180 days after June 29, 1999,  the date of the prospectus in the Issuer's
initial  public   offering,   without  the  consent  of  Prudential   Securities
Incorporated on behalf of the underwriters.

         Under the Stock  Purchase  Agreement,  the Issuer has granted to Vulcan
Ventures for one year following the closing of the  transaction a right of first
refusal to purchase  its pro rata share of "New  Securities."  "New  Securities"
means any of the Issuer's  common stock issued in exchange for cash in a private
placement  transaction  other than (i)  securities  issuable  upon  exercise  of
existing  rights to acquire common stock issued to consultants or vendors of the
Issuer,  or (ii) any other  issuances of 268,481 shares of common stock or less,
or securities of the Issuer  exercisable for or convertible  into 268,481 shares
of common stock or less.

         Under a Registration  Rights Agreement into which the Issuer and Vulcan
Ventures  entered as of October 1, 1999,  Vulcan  Ventures  and certain  related
parties to whom it may transfer shares of the common stock that it has agreed to
purchase  under  the  Stock  Purchase  Agreement  are  entitled  to  demand  one
registration  of such shares under the Securities Act. The Issuer must receive a
written  request  from the holders of at least 80% of such  shares  outstanding.
These  registration  rights are subject to various  conditions and  limitations,
including the right of the underwriters in an underwritten offering to limit the
number of  registrable  securities  that may be  included in the  offering.  The
Issuer generally is required to bear all of the expenses of these registrations,
except underwriting  discounts and selling  commissions.  Registration of any of
the registrable  securities held by security  holders with  registration  rights
will result in such shares becoming freely tradable  without  restriction  under
the Securities Act immediately upon the effectiveness of such registration.

         Except as set forth in this Item 6, Vulcan  Ventures  and Mr.  Allen do
not have,  nor, to the  knowledge of Vulcan  Ventures  does any of the executive
officers,  directors  or  controlling  persons  of  Vulcan  Ventures  have,  any
contracts,  arrangements,  understandings or relationships  (legal or otherwise)
with any person with respect to any  securities  of the Issuer,  finder's  fees,
joint ventures, loan or option agreements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.

                                 Page 5 of 8

<PAGE>


Item 7.  Material To Be Filed as Exhibits.

         Exhibit           Description



             99.1          Joint Filing Agreement (Previously filed as Exhibit 1
                           to the Schedule 13D.)

             99.2          Form of Lock-up Agreement(Previously filed as Exhibit
                           2 to the Schedule 13D.)

             99.3          Power of Attorney  (Incorporated  by reference to the
                           Reporting  Persons'  Schedule 13G  for  Pathogenesis
                           Corporation filed August 30, 1999.)

             99.4          Common Stock Purchase Agreement  dated as of October
                           15, 1999  between  VaxGen,  Inc. and Vulcan  Ventures
                           Incorporated.

                                 Page 6 of 8


<PAGE>



                                   SIGNATURES

         After reasonable  inquiry and to the best of my knowledge and belief, I
certify that the information  set forth in this statement is true,  complete and
correct.

                                 VULCAN VENTURES INCORPORATED



         December 14, 1999        By: /s/ William D. Savoy
- ---------------------------        --------------------------------------------
(Date)                              William D. Savoy, Vice President


         December 14, 1999                *
- ---------------------------        --------------------------------------------
(Date)                             Paul G. Allen


                                  *By: /s/ William D. Savoy
                                       ----------------------------------------
                                       William D. Savoy, Attorney-in-Fact


                                 Page 7 of 8


<PAGE>



                                  EXHIBIT INDEX


         Exhibit           Description


             99.1          Joint Filing Agreement (Previously filed as Exhibit 1
                           to the Schedule 13D.)

             99.2          Form of Lock-up Agreement(Previously filed as Exhibit
                           2 to the Schedule 13D.)

             99.3          Power of Attorney  (Incorporated  by reference to the
                           Reporting  Persons'  Schedule 13G  for  Pathogenesis
                           Corporation filed August 30, 1999.)

             99.4          Common Stock Purchase  Agreement dated as of October
                           15, 1999  between  VaxGen,  Inc. and Vulcan  Ventures
                           Incorporated.

                                 Page 8 of 8









                                  VAXGEN, INC.


                         COMMON STOCK PURCHASE AGREEMENT




                                 $24,999,999.50












                                October 15, 1999













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



<PAGE>



                         COMMON STOCK PURCHASE AGREEMENT



         THIS COMMON STOCK PURCHASE  AGREEMENT (the "Agreement") is entered into
as of this 15th day of October,  1999,  by and among  VAXGEN,  INC.,  a Delaware
corporation (the "Company"), and VULCAN VENTURES, INC., a Washington corporation
(the "Purchaser"), in connection with the Company's offering (the "Offering") of
Common Stock.

1.       PURCHASE AND SALE OF COMMON STOCK.

1.1 Sale and  Issuance  of Common  Stock.  Subject  to the terms and  conditions
hereof,  Purchaser agrees to purchase,  and the Company agrees to sell and issue
to  Purchaser,  two million one hundred  seventy  three  thousand  nine  hundred
thirteen  (2,173,913) shares of common stock of the Company (the "Common Stock")
at a price  per  share of  eleven  dollars  and  fifty  cents  ($11.50),  for an
aggregate  purchase  price of twenty  four  million  nine  hundred  ninety  nine
thousand nine hundred ninety nine dollars and fifty cents ($24,999,999.50).

1.2 Closing.  The closing of the purchase and sale of the Common Stock hereunder
will take place (the "Closing") within two business days after all conditions to
closing have been satisfied (the "Closing Date"). The place of the Closing shall
be at the  offices of Graham & James  LLP/Riddell  Williams  P.S.,  1001  Fourth
Avenue Plaza,  Suite 4500,  Seattle,  Washington  98154,  or such other place as
Purchaser and the Company may mutually agree.

1.3 Escrow.  Subject to the terms and conditions of the Escrow  Agreement by and
among Chase Manhattan Trust Co., National  Association (the "Escrow Agent"), the
Company and  Purchaser,  dated as of October 15, 1999 (the "Escrow  Agreement"),
Purchaser will deposit with Escrow Agent $24,999,999.50 in immediately available
funds  to be  released  to the  Company  pursuant  to the  terms  of the  Escrow
Agreement after all conditions to closing have been satisfied.  The Company will
deposit with Escrow Agent an  irrevocable  letter of  instruction to ChaseMellon
Shareholder  Services,  Inc. (the "Transfer Agent") directing  Transfer Agent to
issue stock  certificate(s),  registered in such names and in such denominations
as Purchaser shall request, representing 2,173,913 shares of Common Stock of the
Company to be  released to  Transfer  Agent  pursuant to the terms of the Escrow
Agreement after all conditions to closing have been satisfied.

2.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to Purchaser as follows:

2.1  Organization  and  Corporate  Power.  The  Company  is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to execute, deliver
and perform this Agreement and to issue, sell and deliver the Common Stock.

2.2  Capitalization.  As of October  11,  1999,  the  authorized  capital of the
Company consists of:

(a) Preferred Stock.  20,000,000 shares of preferred stock having a par value of
$0.01 per share (the "Preferred Stock"), of which no shares are outstanding.



(b) Common Stock.  20,000,000 shares of Common Stock having a par value of $0.01
per share, 11,250,152 shares of which are issued and outstanding.

2.3  Authorization.  The execution,  delivery and  performance by the Company of
this Agreement and the issuance, execution and delivery of the Common Stock have
been duly authorized by all requisite corporate action.

2.4  Validity.  This  Agreement  and the  Escrow  Agreement  (collectively,  the
"Transaction  Agreements")  have been duly executed and delivered by the Company
and  constitute  the  legal,  valid  and  binding  obligations  of the  Company,
enforceable  in accordance  with their terms,  subject to the laws of bankruptcy
and the laws  affecting  creditors'  rights  generally and the  availability  of
equitable  remedies.  The Common  Stock,  when  issued,  sold and  delivered  in
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued,  fully paid and  nonassessable and free of any liens or
encumbrances.

2.5 Disclosure Documents. The Prospectus dated June 29, 1999 (the "Prospectus"),
filed by the Company  pursuant to Rule  424(b)(2)  under the  Securities  Act of
1933,  as amended (the  "Securities  Act"),  in  connection  with the  Company's
Initial Public Offering,  and the Company's Quarterly Report on Form 10-Q, filed
with the  Securities  and Exchange  Commission on August 12, 1999  (collectively
with the  Prospectus,  the  "Disclosure  Documents"),  contained all  statements
required  to be stated  therein  and in  accordance  with,  and  complied in all
material  respects with the  requirements of the Securities Act and the Exchange
Act of 1934, as amended (the "Exchange  Act"),  and the rules and regulations of
the Securities and Exchange Commission thereunder and did not include any untrue
statement of a material fact or meant to state a material fact necessary to make
the statements therein not misleading as of the date of such documents, provided
however,  that the foregoing  provisions do not apply to statements or omissions
made in the  Prospectus  in  reliance  upon  and in  conformity  to  information
provided to the Company by the Purchaser or its representatives for use therein.
Since  the  respective  date of the  Disclosure  Documents,  there  has  been no
material  adverse change or prospective  material  adverse change in the assets,
liquidity, liabilities, financial condition, results of operations or properties
of the Company.

2.6      Conflicts, Notification.

(a) The  execution  and delivery of this  Agreement by the Company does not, and
the  performance of this Agreement by the company will not, (i) conflict with or
violate the Certificate of Incorporation or Bylaws of the Company, (ii) conflict
with or violate any law, rule, regulation,  order, judgment or decree applicable
to the Company or by which any of its properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice or
lapse of time or both would  become a default)  under,  or impair the  Company's
rights or alter the rights or obligations  of any third party under,  or give to
others any rights of termination,  amendment,  acceleration or cancellation  of,
any material contract, or result in the creation of a lien or encumbrance on any
of the  properties  or assets  of the  Company  pursuant  to,  any  note,  bond,
mortgage,  indenture,  contract, agreement, lease, license, permit, franchise or
other  instrument  or obligation to which the Company is a party or by which the
Company or any of its  properties  are bound or affected,  except with regard to
(ii) and (iii) above, for any such conflicts,  violations, breaches, defaults or
other  occurrences  that would not,  individually  or in the  aggregate,  have a
material adverse effect.

(b) The  execution  and delivery of this  Agreement by the Company does not, and
the performance of this Agreement by the Company will not,  require any consent,
approval,  authorization  or permit of, or filing with or  notification  to, any
governmental  or  regulatory  authority,  domestic  or  foreign,  except (i) for
applicable  requirements,  if any, of the Securities  Act, the Exchange Act, the
rules of the Nasdaq National Market, state securities laws ("Blue Sky Laws") and
the pre-merger  notification  requirements  of the  Hart-Scott-Rodino  Antitrust
Improvements  Act of  1976,  as  amended  (the  "HSR  Act")  and the  rules  and
regulations  thereunder,  (ii)  where  the  failure  to  obtain  such  consents,
approvals,  authorizations or permits, or to make such filings or notifications,
would not prevent or delay the Company from  performing  its  obligations  under
this Agreement, or would not otherwise have a material adverse effect.

3.       REPRESENTATIONS AND WARRANTIES OF PURCHASER.

3.1  Authorization.  Purchaser  represents  and  warrants  to the  Company  that
Purchaser has full power and authority to enter into the Transaction  Agreements
and that the  Transaction  Agreements  constitute the valid and legally  binding
obligation of Purchaser.

3.2 Purchase Entirely for Own Account.  Purchaser represents and warrants to the
Company  that  Purchaser  is  acquiring  the  Common  Stock for  investment  for
Purchaser's  own  account  and not  with a view to the  resale  or  distribution
thereof, and that the Purchaser has no present intention of selling or otherwise
effecting a distribution of the same.

3.3 Reliance Upon Purchasers'  Representations.  Purchaser  understands that the
Common  Stock has not been  registered  under  the  Securities  Act of 1933,  as
amended (the  "Securities  Act"),  by reason of their  issuance in a transaction
exempt from the  registration  requirements  of the  Securities  Act pursuant to
Section 4(2) thereof and Regulation D promulgated  under the Securities Act, and
that the  Company's  reliance on such  exemption is  predicated  on  Purchaser's
representations contained in this Agreement.

3.4 Investment Experience. Purchaser represents that Purchaser is experienced in
evaluating  development-stage  bio-technology  companies such as the Company, is
able to fend for itself in  transactions  such as the one  contemplated  by this
Agreement,  has such knowledge and experience in financial and business  matters
that it is  capable  of  evaluating  the  merits  and  risks of its  prospective
investment in the Company, and has the ability to bear the economic risks of the
investment.

3.5 Receipt of Information. Purchaser represents that Purchaser has reviewed the
Disclosure  Documents  and has had an  opportunity  to ask  questions  of and to
receive answers from the Company regarding the business,  properties,  prospects
and financial condition of the Company and to obtain additional  information (to
the extent the Company  possesses  such  information or could acquire it without
unreasonable  effort  or  expense)  necessary  to  verify  the  accuracy  of the
information furnished to the Purchaser or to which the Purchaser had access.

3.6  Legends.  Each  certificate  representing  shares  of Common  Stock  issued
pursuant to this Agreement shall be endorsed with a legend in substantially  the
following  form,  and  Purchaser  covenants  that,  except  to the  extent  such
restrictions  are waived by the Company,  such Purchaser  shall not transfer the
Common Stock without  complying with the  restrictions on transfer  described in
the legend:



         THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
         1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES ACT (COLLECTIVELY,
         THE  "SECURITIES  LAWS").  THESE  SECURITIES  HAVE  BEEN  ACQUIRED  FOR
         INVESTMENT  AND  MAY  NOT  BE  SOLD,  OFFERED  FOR  SALE  OR  OTHERWISE
         TRANSFERRED UNLESS THEY (I) ARE REGISTERED UNDER THE SECURITIES LAWS OR
         (II) ARE EXEMPT FROM  REGISTRATION  UNDER THE  SECURITIES  LAWS AND THE
         CORPORATION  IS  PROVIDED  AN OPINION OF  COUNSEL  SATISFACTORY  TO THE
         CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

     3.7 Accredited Investor.  Purchaser is an "accredited  investor" within the
meaning  of Rule  501 of  Regulation  D as  promulgated  by the  Securities  and
Exchange Commission and as presently in effect.

     3.8  Domicile.  Purchaser  represents  that it has its  principal  place of
business in the state set forth on the signature page.

4.       RIGHT OF FIRST REFUSAL.

         Subject to the terms and  conditions  specified  in this Section 4, the
Company  hereby  grants to Purchaser  for the period of one year  following  the
Closing  Date,  a right of first  refusal to purchase  its pro rata share of New
Securities  (as defined in this Section 4) which the Company  may,  from time to
time,  propose to sell and issue.  Purchaser's  pro rata share,  for purposes of
this right of first refusal, is the ratio of the number of outstanding shares of
Common  Stock and Common  Stock  issuable  upon  conversion  of any  convertible
security  held of record by Purchaser  immediately  prior to the issuance of New
Securities to the total number of shares of Common Stock  outstanding and Common
Stock  issuable  upon  conversion  of  any  convertible   security   outstanding
immediately prior to the issuance of New Securities. This right of first refusal
shall be subject to the following provisions:

4.1 "New  Securities"  shall mean any Common  Stock of the  Company  whether now
authorized  or  not,  issued  in  exchange  for  cash  in  a  private  placement
transaction.  New  Securities  shall not include (i)  securities  issuable  upon
exercise of existing  rights to acquire  Common Stock issued to  consultants  or
vendors of the  Company,  or (ii) any other  issuances  of capital  stock of the
Company, or rights to acquire capital stock of the Company,  which do not exceed
an aggregate  of 268,481  shares of Common  Stock,  or the issuance of rights to
acquire such number of shares of Common Stock,  or securities  convertible  into
such number of shares of Common Stock.

4.2  In  the  event  the  Company  proposes  to  undertake  an  issuance  of New
Securities, it shall give Purchaser written notice of its intention,  describing
the type of New Securities, and their price and the general terms upon which the
Company proposes to issue the same.  Purchaser shall have 20 days after any such
notice is effective to agree to purchase  Purchaser's pro rata share of such New
Securities  for the price and upon the terms  specified  in the notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased.

4.3 In the event  Purchaser  fails to exercise  fully the right of first refusal
within said 20-day period, the Company shall have 120 days thereafter to sell or
enter into an agreement  (pursuant to which the sale of New  Securities  covered
thereby  shall be  closed,  if at all,  within  120  days  from the date of said
agreement) to sell the New  Securities  respecting  which  Purchaser's  right of
first refusal option set forth in this Section 4 was not  exercised,  at a price
and upon terms no more favorable to the purchasers thereof than specified in the
Company's  notice to  Purchaser  pursuant to Section 4. In the event the Company
has not entered into an agreement to sell the New Securities within said 120-day
period (or sold and issued  New  Securities  in  accordance  with the  foregoing
within  120  days  from the  date of said  agreement),  the  Company  shall  not
thereafter  issue or sell any New Securities,  without first again offering such
securities to Purchaser in the manner provided in Section 4 above.

5. CONDITIONS TO purchaser's obligation to CLOSe.

         Purchaser's  obligations  to purchase  the Common  Stock at the Closing
are, at the option of Purchaser,  subject to the  fulfillment on or prior to the
Closing Date of the following conditions:

5.1 Representations  and Warranties Correct.  The representations and warranties
made by the  Company  in  Section  2 hereof  shall be true  and  correct  in all
material  respects  when made,  and shall be true and  correct  in all  material
respects on the Closing  Date with the same force and effect as if they had been
made on and as of said date, except for  representations  and warranties made as
of a specific date, which shall be true and correct in all material  respects as
of such date.

5.2  Covenants.  All  covenants,  agreements  and  conditions  contained in this
Agreement  to be performed by the Company on or prior to such Closing Date shall
have been performed or complied with in all material respects, and all consents,
permits  and waivers  required  to be  obtained  by the Company  shall have been
obtained.

5.3 Registration Rights Agreement. The Company shall have executed and delivered
to Purchaser a Registration Rights Agreement, in substantially the form attached
hereto as Exhibit A.

5.4 Proceedings and Documents. All corporate and other proceedings in connection
with the  transactions  contemplated at the Closing hereby and all documents and
instruments  incident to such transactions  shall be reasonably  satisfactory in
form and substance to Purchaser  and its counsel,  and Purchaser and its counsel
shall have received all such counterpart  originals or certified or other copies
of such documents as it may reasonably request.

6. CONDITIONS TO company's obligation to CLOSe.

         The  Company's  obligation  to sell and issue the  Common  Stock at the
Closing  is, at the option of the  Company,  subject to the  fulfillment  of the
following conditions either before or on the Closing Date:

6.1  Representations  and  Warranties  Correct.   The  representations  made  by
Purchaser in Section 3 hereof shall be true and correct in all material respects
when made, and shall be true and correct in all material respects on the Closing
Date with the same  force and  effect as if they had been made on and as of said
date,  except for  representations  and  warranties  made as of a specific date,
which shall be true and correct in all material respects as of such date.

6.2 Blue Sky. The Company shall have obtained all necessary Blue Sky law permits
and  qualifications,  or secured an  exemption  therefrom  pursuant to each such
state's  counterpart  to Regulation D as promulgated  under the Securities  Act,
required by any state for the offer and sale of the Common Stock, or shall do so
within the applicable time periods.

6.3 Waiver of Preemptive  Rights.  All holders of  preemptive  rights to acquire
common stock of the Company, if any, shall have waived such rights in writing in
connection with the transactions contemplated herein.

6.4 Registration  Rights Agreement.  Purchaser shall have executed and delivered
to the  Company a  Registration  Rights  Agreement,  in  substantially  the form
attached hereto as Exhibit A.

6.5 Nasdaq National Market  Approval.  The Common Stock to be issued pursuant to
this  Agreement  shall have been  approved  for  trading on the Nasdaq  National
Market subject to notice of issuance.

6.6 HSR Act. The waiting  period (and any extension  thereof)  applicable to the
consummation  of the  transactions  contemplated  herein under the HSR Act shall
have expired or shall have been terminated.

7.       CONDITIONS OF CLOSING.

7.1  Pre-Closing  Covenants.  The parties  agree that  Purchaser and the Company
shall promptly and in good faith (i) prepare and file any and all notifications,
shall  cooperate  with the  Company in  effecting  any and all filings and shall
otherwise  comply with the applicable  requirements of the HSR Act in connection
with such  notifications  and  filings;  and (ii)  prepare  and file any and all
required  applications  for approval for trading on the Nasdaq  National  Market
subject to notice of issuance of the Common Stock to be issued  pursuant to this
Agreement.

7.2  Deliveries  at  Closing.  Upon  satisfaction  of  the  parties'  respective
obligations   to  close,   the  parties   agree  to  execute  the  Joint  Escrow
Instructions,  in  substantially  the for  attached  as  Exhibit A to the Escrow
Agreement  directing  Escrow  Agent to release  and  deliver the Escrow Fund (as
defined  in  the  Escrow   Agreement),   and  that  the   Instructions  and  the
Consideration  (as  each  term is  defined  in the  Escrow  Agreement)  shall be
distributed pursuant to the terms of the Escrow Agreement.

8.       MISCELLANEOUS.

8.1 Survival of  Agreements.  All  covenants,  agreements,  representations  and
warranties  made in this  Agreement  shall survive the execution and delivery of
this Agreement and the Closing.

8.2  Parties in  Interest;  Assignability.  The rights  and  obligations  of the
parties hereto may not be assigned.  All covenants and  agreements  contained in
this  Agreement  by or on behalf of any of the parties to this  Agreement  shall
bind and inure to the benefit of the respective successors and permitted assigns
of the parties to this Agreement whether or not so expressed.

8.3 Professional Fees and Expenses. Private placement fees and commissions shall
be paid by the Company out of the gross  proceeds of this  offering.  Each party
will bear its own expenses in connection with this offering.

8.4 Governing Law;  Venue.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington without regard to principles
of conflict  of laws.  It is agreed and  understood  that if any action or other
proceeding be brought on or in connection with this Agreement, venue shall be in
King County, Washington.

8.5 Entire  Agreement;  Modifications.  This  Agreement  constitutes  the entire
agreement of the parties with respect to the subject  matter  hereof and may not
be  modified  or amended  except in  writing  signed by the  Company  and by the
holders of a majority of the outstanding Common Stock purchased hereby.

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

8.7  Severability.  Should any  provisions or portion of this  Agreement be held
unenforceable or invalid for any reason,  the remaining  provisions and portions
shall be unaffected by such holding.

8.8  Attorneys'  Fees. In the event that it is necessary for any party to engage
an attorney to enforce the terms of this Agreement,  the prevailing party shall,
in  addition  to any other  relief,  be  entitled  to recover  from the party in
default reasonable attorneys' fees and costs, including any on appeal.

8.9  Notice.  To be  effective,  any  notice  under this  Agreement  shall be in
writing,  delivered in person,  via facsimile (with  confirmation copy mailed by
certified  or  registered  mail,  postage  prepaid),  or mailed by  certified or
registered  mail,  postage  prepaid,  to  the  following  addresses:  (a)  if to
Purchaser,  at 110 - 110th Avenue NE, Suite 550,  Bellevue,  Washington,  98004,
attn:  Mr.  William D.  Savoy,  or at such  other  address  as  Purchaser  shall
designate by ten (10) days advance  written  notice to the other parties to this
Agreement,  or (b) if to the  Company,  at 1000  Marina  Boulevard,  Suite  200,
Brisbane,  California, 94005, attn: Robert C. Nowinski, or at such other address
as the Company shall  designate by ten (10) days advance  written  notice to the
other parties to this Agreement.  Unless otherwise  specified in this Agreement,
all such notices and other  written  communications  shall be  effective  (x) if
delivered,   upon  delivery,  (y)  if  by  facsimile,   upon  transmission  with
confirmation of receipt by the receiving party's facsimile  terminal,  or (z) if
mailed, three (3) days after mailing.

8.10 Specific  Performance.  Each of the Company and Purchaser  acknowledges and
agrees that the other party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached.  Accordingly, each of the Company and Purchaser
agrees that the other party shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement and the terms and provisions  hereof in any action  instituted in
any court of the United States or any state thereof having jurisdiction over the
Company, Purchaser and the matter, in addition to any other remedy to which they
may be entitled, at law or in equity.







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<PAGE>


         IN WITNESS  WHEREOF,  the  parties  have  executed  this  Common  Stock
Purchase Agreement as of the date and year first above written.

"COMPANY"                VAXGEN, INC.

                         By: /s/ Robert C. Nowinski
                             --------------------------------------------
                               Robert C. Nowinski, Chairman of the Board
                               and Chief Executive Officer

                         VULCAN VENTURES, INC.

                         No. of Shares Purchased:  2,173,913

                         Total Price ($11.50 per share):  $24,999,999.50



                         VULCAN VENTURES, INC.

                         By:  /s/ William D. Savoy
                             ---------------------------------------------
                             William D. Savoy
                             Its: President


                            Tax Identification Number

                         State of Formation: Washington
                    Address: 110 - 110th Avenue NE, Suite 550
                               Bellevue, WA 98004

                                Telephone Number













                SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT




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