EXHIBIT 10.3  















“[ * ]” = Portions of this
exhibit have been omitted pursuant to a request for confidential treatment filed with the
Securities and Exchange Commission or SEC. The omitted portions of this exhibit have been
filed separately with the SEC. 



























FIFTH LEASE AMENDMENT 



between



BENAROYA CAPITAL COMPANY, LLC 




and 



TARGETED GENETICS CORPORATION  



This Fifth Lease Amendment dated
January 2, 2004, is attached to and made part of that certain Lease dated October 7, 1996,
as amended in that Fourth Lease Amendment dated March 28, 2001, that Third Lease Amendment
dated April 19, 2000, that Second Lease Amendment dated February 25, 2000, and that First
Lease Amendment, dated May 12, 1997 (the “Lease”), by and between Benaroya
Capital Company, LLC, a Washington limited liability company (the “Lessor”), and
Targeted Genetics Corporation, a Washington corporation (the “Lessee”), covering
Suites 100 and 1200 located in the property commonly known as the Metropolitan Park West
Tower, located at 1100 Olive Way, Seattle, Washington (the “Premises”). The
Premises are more particularly described in the Lease. The terms used herein shall have
the same definitions as set forth in the Lease. 



NOW THEREFORE, in consideration of
the mutual covenants and promises contained in this Fifth Lease Amendment and the Lease,
Lessor and Lessee agree as follows: 



	1. 	  	Section
1, Premises. Effective April 1, 2004, Section 1,           Premises, of
the Lease is deleted and replaced with the following:  






	  	
“Lessor
does hereby lease to Lessee those certain Premises, to wit: approximately [*] square feet
of office space located on the first floor in Suite 100 ([*] square feet) and on the
twelfth floor in Suite 1200 ([*] square feet) as outlined on Exhibit A and Exhibit A-1,
respectively, attached to this Fifth Lease Amendment (hereinafter called the
“Premises”) being situated within the project known as the Metropolitan Park
West Tower.” The useable square foot area of suite 100 is [*] square feet and the
current load factor per 1996 BOMA is 3.42%. The useable area for suite 1200 is [*] useable
square feet and the current load factor per 1996 BOMA is 10.36%. 






	2.  	  	Section
2, Term. The term of the Lease is hereby extended                for five
(5) years, commencing April 1, 2004 and expiring March 31, 2009.  






	3.  	  	Section
3, Monthly Minimum Rent. Section 3, Monthly Minimum                Rent,
is amended as follows:  









	
Period 	
Monthly Minimum Rent 
	April 1, 2004 - March 31, 2005	 	$[*]	 
	April 1, 2005 - March 31, 2006	 	$[*]	 
	April 1, 2006 - March 31, 2007	 	$[*]	 
	April 1, 2007 - March 31, 2008	 	$[*]	 
	April 1, 2008 - March 31, 2009	 	$[*]	 







	4.  	  	Section
10, Additional Rent and Monthly Operating Expense                Adjustments.
Section 10 of the Lease, as previously amended, is                hereby further amended
as follows:  






	  	
a)  Effective
April 1, 2004, Lessee’s prorata share of operating expenses will           be [*].  









1 































	  	
b)  Effective
April 1, 2004, the Base Year for operating expenses will be changed to           2004.  






	5.  	  	Exhibit
G, Paragraph 1, Option to Renew. Exhibit G,                Paragraph 1,
Option to Renew is hereby deleted and replaced with the following:  






	  	
“Provided
Lessee is not in default of any material term or condition of the Lease (unless the
default was cured within the applicable cure period), Lessee shall have two (2)
consecutive Options to Extend the lease term, one (1) period of thirty-six (36) months
and, if exercised, followed by one (1) additional period of twenty-four (24) months
(“Option Terms”), upon the same terms and conditions as are set forth in the
Lease, except for the Monthly Minimum Rent which shall be determined as set forth below
and except that the Option to Cancel provisions shall not thereafter apply. The first
option shall be exercised, if at all, by written notice to Lessor before August 1, 2008,
and if applicable, the second option shall be exercised, if at all, by written notice to
Lessor before August 1, 2011 






	  	
The
rent shall be the fair market rent as agreed by Lessee and Lessor. Upon receipt of
Lessee’s notice to extend, Lessor shall provide Lessee notice stating the rental rate
it would be willing to accept for the extended term (the “Lessor’s Notice
Rate”). Lessee shall have ten (10) days after receipt of Lessor’s Notice Rate to
accept or reject such rate. In the event Lessee rejects the Lessor’s Notice Rate such
rejection shall state the rate that Lessee would be willing to pay for the extended term
(the “Lessee’s Notice Rate”). If the parties fail to agree on the fair
market rental rate, then within two (2) days thereafter each party shall select an
appraiser and the two appraisers shall within ten (10) days appoint a third appraiser (the
“Determining Appraiser”). The Determining Appraiser shall make an independent
determination of the rental rate for the extended term (the “New Rent”) which
shall be the average prevailing rental rate for comparable space. The parties agree that
for purposes of determining the New Rent, they will attempt to obtain the economic terms
of any leases signed within the prior six (6) months for space on the first floors and the
upper 35% of the floors of facilities within the perimeter of Denny Road to the North,
Pike Street to the South, Interstate 5 to the East and 3rd Avenue to the West.
New Rent will be computed based on facilities within such geographic perimeter of
comparable size,, condition, age, in-building parking facilities, freeway access, central
HVAC systems, views and for comparable floors and square footage. No leases in buildings
without central HVAC and modern in-building parking will be considered. The Determining
Appraiser will be instructed to contact the owners of those buildings, obtain the most
recent lease rates for the applicable space, average the result (if there are more than
one) and produce the figure which shall be considered the “New Rent” and which
determination will be binding on the parties. The party whose Notice Rate is furthest from
the appraiser’s New Rent shall pay the fee of the appraiser. Lessor shall prepare and
Lessee shall execute a lease amendment for extension within thirty (30) days after
determination of the New Rent.” 






	6.  	  	Exhibit
G, Paragraph 2, Right of First Offer.  Provided                Lessee is
not in default of any material term or condition of the Lease (unless                the
default was cured within the applicable cure period), Lessee shall have the
               Right of First Offer to lease any space that is or will become available
for                lease on the first, twelfth, and adjacent floors of the Metropolitan
Park West                Tower, subject to any rights existing prior to the date of this
Lease Amendment.                Lessee shall have the Right of First offer for the term
of the Lease. Prior to                entering into negotiations for the space that
Lessee has a Right of First offer                on, Lessor shall provide Lessee with
written notification specifying when the                space shall be available for
occupancy and the terms and conditions under which                Lessor will lease the
space (the “First Right Notice”). Lessee shall                respond within
ten (10) days of written notification by Lessor if Lessee wishes                to lease
the space. If Lessee does not respond  











2 












































	  	
within
ten (10) days, Lessee shall be deemed to have rejected the offer to lease the space.
Should Lessee accept such offer to lease, Lessee shall execute a Lease Amendment to such
effect within ten (10) days after delivery of the Lease Amendment to Lessee. If Lessee
does not accept the offer, then Lessor shall be free to lease the space to a third party
on terms that are not materially more favorable to the tenant than those specified in the
First Right Notice. For the purpose of this provision “materially more
favorable” shall mean that the net effective rental rate (including tenant
improvement allowances and other economic concessions, if any), to the third party would
be more than [*] less than the net effective rate after factoring in all concessions
provided, or not, by Lessor under the terms contained in the First Right Notice. In the
event that the net effective rental rate to the third party would be materially more
favorable than that provided in the First Right Notice, Lessor will provide Lessee with a
new notice (the “Revised First Right Notice”) offering to lease the space to
Lessee on the terms specified in the third party proposal. The same procedure will apply
with regard to the Revised First Right Notice; except the notice period which will be five
(5) business days following receipt rather than ten (10) days. 






	7.  	  	Exhibit
G, Paragraph 4, Parking. Effective April 1, 2004,                Lessee
shall be entitled to lease a total of fourteen (14) parking stalls for                the
term of the Lease. All parking shall be located in the Building Garage, in
               the Metropolitan North Garage, Metropolitan East Garage, or on nearby
surface                lots and will be at market rates.  






	8. 	  	Option
to Cancel Lease. Provided Lessee has not been in                default of
any material term or condition of the Lease on the date of the notice
               described below on or before the date of Lease cancellation, Lessee shall
have                the Option to Cancel this Lease at any time after April 1, 2006.
Lessee shall                provide not less than eight (8) months prior written notice
of its election to                cancel. Along with its cancellation notice, Lessee
shall pay Lessor a Lease                cancellation fee in an amount equal to the sum
of: (i) [*] of Rent due from the                effective date of the lease cancellation
through April 1, 2007, if any, plus                (ii) [*] of the Rent for the period
from April 1, 2007 to March 31, 2009, plus                (iii) the unamortized portion
of the lease commission.  






	9.  	  	Lessee
Broker Representation . Both parties acknowledge                that
Lessee has engaged Staubach to represent it in this Agreement, hereinafter
               referred to as “Broker.” Broker’s sole compensation for
               representing Lessee shall be paid by Lessor in accordance with the terms
of the                Commission Agreement dated November 10, 2003 between Broker and
Lessor.  






Except as otherwise modified by the
terms of this Fifth Lease Amendment, all other terms and conditions of the Lease remain
unchanged and in full force and effect. 




	
LESSOR:



BENAROYA CAPITAL COMPANY, LLC





/s/ Larry Benaroya
           
           
           


By:   Larry Benaroya 






Its:   Manager




Date:  
1/9/04
         
         


	
LESSEE:



TARGETED GENETICS CORPORATION





/s/ Todd Simpson
           
           
           

         (SIGNATURE)



By:  
Todd Simpson          
         
            

      (PLEASE PRINT)




Its:  VP Finance & CFO



Date:  
January 8, 2004         
           
        












3 































	
STATE OF WASHINGTON




COUNTY OF KING	
)

)

)	


ss.

 













        I
certify that I know or have satisfactory evidence that Larry R. Benaroya is the person who
appeared before me, a Notary Public in and for the State of Washington duly commissioned
and sworn, and acknowledged that he is the Manager of Benaroya Capital Company, LLC, a
Washington limited liability company, who executed the within and foregoing instrument,
and acknowledged the instrument to be the free and voluntary act and deed of said company
for the uses and purposes therein mentioned, and on oath stated that affiant is authorized
to execute said instrument on behalf of said company. 



IN WITNESS WHEREOF I have hereunto
set my hand and affixed my official seal this 9th day of January, 2004. 




	  	

Lori Jo Goodman       
       

Notary Public in and for the

State of Washington

residing at Seattle

Commission expires 4/9/07

Print Name Lori Jo Goodman
 
















	
STATE OF WASHINGTON




COUNTY OF KING	
)

)

)	


ss.

 








        I
certify that I know or have satisfactory evidence that Todd E. Simpson is the person
who appeared before me, a Notary Public in and for the State of Washington duly
commissioned and sworn, and acknowledged that he/she is the VP Finance & CFO of
Targeted Genetics Corporation, a Washington Corporation, who executed the within and
foregoing instrument, and acknowledged the instrument to be the free and voluntary act and
deed of said corporation for the uses and purposes therein mentioned, and on oath stated
that affiant is authorized to execute said instrument on behalf of said corporation. 



IN WITNESS WHEREOF I have hereunto
set my hand and affixed my official seal this 8tyh day of January, 2004. 



	  	

/s/ Beverly J. Eckert      
        

Notary Public in and for the

State of Washington

residing at 6115 Harborcrest Dr. N.E., Bainbridge Is.

Commission expires 3/19/05

Print Name  Beverly J. Eckert
 












4 








































EXHIBIT A 

FLOOR PLAN OF PREMISES 













EXHIBIT A-1 

FLOOR PLAN OF PREMISES