Document:

EXHIBIT
      A

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of June 22, 2007, between (i) Targeted Genetics
      Corporation, a Washington corporation (the “Company”)
      (ii)
      each of the several purchasers signatory hereto (each such purchaser, a
“Purchaser”
and,
      collectively, the “Purchasers”)
      and
      (iii) each person or entity that subsequently becomes a party to this Agreement
      pursuant to, and in accordance with, the provisions of Section 6(p)
      hereof.

     

    WHEREAS,
      this
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof, between the Company and each Purchaser (the “Purchase
      Agreement”);
      and

    

    WHEREAS,
      the
      terms of the Purchase Agreement provide that it shall be a condition precedent
      to the closing of the transactions thereunder, for the Company and the
      Purchasers to execute and deliver this Agreement.

    

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

    

    1.
       Definitions

    

    Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase Agreement.
      As
      used in this Agreement, the following terms shall have the following
      meanings:

    

    “Advice”
shall
      have the meaning set forth in Section 6(d).

    

    “Effectiveness
      Date”
means,
      with respect to the Initial Registration Statement required to be filed
      hereunder, the 90th
      calendar
      day following the date hereof (or, in the event of a “full review” by the
      Commission, the 120th calendar day following the date hereof) and with respect
      to any additional Registration Statements which may be required pursuant to
      Section 3(c), the 90th
      calendar
      day following the date on which an additional Registration Statement is required
      to be filed hereunder; provided,
      however,
      that in
      the event the Company is notified by the Commission that one or more of the
      above Registration Statements will not be reviewed or is no longer subject
      to
      further review and comments, the Effectiveness Date as to such Registration
      Statement shall be the fifth Trading Day following the date on which the Company
      is so notified if such date precedes the dates otherwise required
      above.

    

    “Effectiveness
      Period”
shall
      have the meaning set forth in Section 2(a).

    

    “Event”
shall
      have the meaning set forth in Section 2(b).

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Event
      Date”
shall
      have the meaning set forth in Section 2(b).

    

    “Filing
      Date”
means,
      with respect to the Initial Registration Statement required hereunder, the
      30th
      calendar
      day following the date hereof and, with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the earliest
      practical date on which the Company is permitted by SEC Guidance to file such
      additional Registration Statement related to the Registrable
      Securities.

    

    “Holder”
or
      “Holders”
means
      the holder or holders, as the case may be, from time to time of Registrable
      Securities.

    

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5(c).

    

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5(c).

    

    “Initial
      Registration Statement”
means
      the initial Registration Statement filed pursuant to this
      Agreement.

    

    “Initial
      Shares”
means
      a
      number of Registrable Securities equal to the lesser of (i) the total number
      of
      Registrable Securities and (ii) one-third of the number of issued and
      outstanding shares of Common Stock that are held by non-affiliates of the
      Company on the day immediately prior to the filing date of the Initial
      Registration Statement.

    

    “Losses”
shall
      have the meaning set forth in Section 5(a).

    

    “Plan
      of Distribution”
shall
      have the meaning set forth in Section 2(a). 

    

    “Prospectus”
means
      the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated by the Commission pursuant to the Securities Act), as
      amended or supplemented by any prospectus supplement, with respect to the terms
      of the offering of any portion of the Registrable Securities covered by a
      Registration Statement, and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference or deemed to be incorporated by reference in such
      Prospectus.

    

    “Purchasers”
shall
      mean, collectively, the Purchasers and the Purchasers’ permitted transferees;
provided,
      however,
      that
      the term “Purchasers” shall not include any of such Purchasers or permitted
      transferees that do not own or hold any Registrable Securities.

    

    “Registrable
      Securities”
means
      (i) all Shares issued pursuant to the Purchase Agreement, (ii) all Warrant
      Shares (assuming on the date of determination the Warrants are exercised in
      full
      without regard to any exercise limitations therein) and (iii) any securities
      issued or issuable upon any stock split, dividend or other distribution,
      recapitalization or similar event with respect to the foregoing. 

    

    
      
        
        

      

      
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    “Registration
      Statement”
means
      the registration statement required to be filed hereunder and any additional
      registration statements contemplated by Section 3(a), including (in each case)
      the Prospectus, amendments and supplements to such registration statement or
      Prospectus, including pre- and post-effective amendments, all exhibits thereto,
      and all material incorporated by reference or deemed to be incorporated by
      reference in such registration statement.

    

    “Rule
      415”
means
      Rule 415 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “Rule
      424”
means
      Rule 424 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended or interpreted from time to time, or any similar rule or
      regulation hereafter adopted by the Commission having substantially the same
      purpose and effect as such Rule.

    

    “Selling
      Shareholder Questionnaire”
shall
      have the meaning set forth in Section 3(a).

    

    “SEC
      Guidance”
means
      (i) any publicly-available written or oral guidance, comments, requirements
      or
      requests of the Commission staff and (ii) the Securities Act.

    

    “Supermajority
      Holders”
shall
      mean, at the relevant time of reference thereto, those Purchasers holding more
      than sixty-six and two-thirds percent (66-2/3%) of the Registrable Shares held
      by, and issuable to, all of the Purchasers.

    

    2.
       Shelf
      Registration

    

    (a)  On
      or
      prior to each Filing Date, the Company shall prepare and file with the
      Commission a Registration Statement covering the resale of all or such maximum
      portion of the Registrable Securities as permitted by SEC Guidance (provided
      that the Company shall use reasonable efforts to advocate with the Commission
      for the registration of all of the Registrable Securities in accordance with
      the
      SEC Guidance, including without limitation, the Manual of Publicly Available
      Telephone Interpretations D.29) that are not then registered on an effective
      Registration Statement for an offering to be made on a continuous basis pursuant
      to Rule 415. The Registration Statement shall be on Form S-3 (except if the
      Company is not then eligible to register for resale the Registrable Securities
      on Form S-3, in which case such registration shall be on another appropriate
      form in accordance herewith) and shall contain (unless otherwise directed by
      the
      Supermajority Holders) substantially the “Plan
      of Distribution”
      attached hereto as Annex
      A.
      Subject
      to the terms of this Agreement, the Company shall use its best efforts to cause
      a Registration Statement to be declared effective under the Securities Act
      as
      promptly as possible after the filing thereof, but in any event prior to the
      applicable Effectiveness Date, and shall use its best efforts to keep such
      Registration Statement continuously effective under the Securities Act until
      the
      earlier of (i) the termination of this Agreement or (ii) all Registrable
      Securities covered by such Registration Statement have been sold, or may be
      sold
      without volume restrictions pursuant to Rule 144(k), as determined by the
      counsel to the Company pursuant to a written opinion letter to such effect,
      addressed and acceptable to the Company’s transfer agent and the affected
      Holders (the “Effectiveness
      Period”).
      After
      the Effectiveness Period, the Company shall be entitled to withdraw the
      Registration Statement and the Purchasers shall have no further right to offer
      or sell any of the Registrable Shares pursuant to the Registration Statement
      (or
      any prospectus relating thereto). The Company shall telephonically request
      effectiveness of a Registration Statement as of 5:00 p.m. New York City time
      on
      a Trading Day. The Company shall immediately notify the Holders via facsimile
      or
      by e-mail of the effectiveness of a Registration Statement on the same Trading
      Day that the Company telephonically confirms effectiveness with the Commission,
      which shall be the date requested for effectiveness of such Registration
      Statement. The Company shall, by 9:30 a.m. New York City time on the Trading
      Day
      after the effective date of such Registration Statement, file a final Prospectus
      with the Commission as required by Rule 424. Notwithstanding
      any other provision of this Agreement and subject to the payment of liquidated
      damages pursuant to Section 2(b), if any SEC Guidance sets forth a limitation
      on
      the number of Registrable Securities permitted to be registered on a particular
      Registration Statement (and notwithstanding that the Company used reasonable
      efforts to advocate with the Commission staff for the registration of all or
      a
      greater portion of Registrable Securities), unless otherwise directed in writing
      by a Holder as to its Registrable Securities, the number of Registrable
      Securities to be registered on such Registration Statement will first be reduced
      by Registrable Securities represented by Warrant Shares (applied, in the case
      that some Warrant Shares may be registered, to the Holders on a pro rata basis
      based on the total number of unregistered Warrant Shares held by such Holders),
      and second by Registrable Securities represented by the Shares issued pursuant
      to the Purchase Agreement (applied, in the case that some Shares may be
      registered to the Holders on a pro rata basis based on the total number of
      unregistered Shares held by such Holders); provided,
      however,
      that,
      prior to any reduction in the number of Registrable Securities included in
      a
      Registration Statement as set forth in this sentence, the number of shares
      of
      Common Stock set forth on Schedule 6(b) hereto which shall have been included
      on
      such Registration Statement shall be removed from such Registration
      Statement.

     

    
      
        
        

      

      
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    (b)  If:
      (i)
      the Initial Registration Statement is not filed on or prior to its Filing Date,
      (ii) the Company fails to file with the Commission a request for acceleration
      of
      a Registration Statement in accordance with Rule 461 promulgated by the
      Commission pursuant to the Securities Act, within five (5) Trading Days of
      the
      date that the Company is notified (orally or in writing, whichever is earlier)
      by the Commission that such Registration Statement will not be “reviewed” or
      will not be subject to further review, or (iii) prior to the effective date
      of a
      Registration Statement, the Company fails to file a pre-effective amendment
      and
      otherwise respond in writing to comments made by the Commission in respect
      of
      such Registration Statement within twenty (20) Trading Days after the receipt
      of
      comments by or notice from the Commission that such amendment is required in
      order for such Registration Statement to be declared effective, or (iv) as
      to,
      in the aggregate among all Holders on a pro-rata basis based on their purchase
      of the Securities pursuant to the Purchase Agreement, a Registration Statement
      registering for resale all of the Initial Shares is not declared effective
      by
      the Commission by the Effectiveness Date of the Initial Registration Statement,
      (v) all of the Registrable Securities are not registered for resale pursuant
      to
      one or more effective Registration Statements on or before December 31, 2007,
      or
      (vi) after the effective date of a Registration Statement, such Registration
      Statement ceases for any reason to remain continuously effective as to all
      Registrable Securities included in such Registration Statement, or the Holders
      are otherwise not permitted to utilize the Prospectus therein to resell such
      Registrable Securities, for more than 15 consecutive Trading Days or more than
      an aggregate of 20 Trading Days (which need not be consecutive Trading Days)
      during any 12-month period (any such failure or breach being referred to as
      an
“Event”,
      and
      for purposes of clause (i), (iv) and (v) the date on which such Event occurs,
      and for purpose of clause (ii) the date on which such five Trading Day period
      is
      exceeded, and for purpose of clause (iii) the date which such 20 Trading Day
      period is exceeded, and for purpose of clause (vi) the date on which such 15
      or
      20 Trading Day period, as applicable, is exceeded being referred to as
“Event
      Date”),
      then,
      in addition to any other rights the Holders may have hereunder or under
      applicable law, on each such Event Date and on each monthly anniversary of
      each
      such Event Date (if the applicable Event shall not have been cured by such
      date)
      until the applicable Event is cured, the Company shall pay to each Holder an
      amount in cash, as partial liquidated damages and not as a penalty, equal to
      1%
      of the aggregate purchase price paid by such Holder pursuant to the Purchase
      Agreement for any unregistered Registrable Securities then held by such Holder.
      If the Company fails to pay any partial liquidated damages pursuant to this
      Section in full within seven Trading Days after the date payable, the Company
      will pay interest thereon at a rate of 18% per annum (or such lesser maximum
      amount that is permitted to be paid by applicable law) to the Holder, accruing
      daily from the date such partial liquidated damages are due until such amounts,
      plus all such interest thereon, are paid in full. Notwithstanding the foregoing,
      the amounts payable as liquidated damages pursuant to this section shall not
      exceed in the aggregate 15% of the aggregate amount invested under the Purchase
      Agreement. The partial liquidated damages pursuant to the terms hereof shall
      apply on a daily pro rata basis for any portion of a month prior to the cure
      of
      an Event.

     

    (c)  A
      Holder,
      and only as to such Holder, shall not be entitled to a payment pursuant to
      this
      Section 2 if effectiveness of a registration statement has been delayed or
      a prospectus has been unavailable as a result of (i) a failure by such Holder
      to
      promptly provide on request by the Company the information required under the
      Purchase Agreement or this Agreement or requested by the Commission in writing
      as a condition to effectiveness of the Registration Statement or (ii) the
      provision of inaccurate or incomplete information by such Holder.

    

    3. Registration
      Procedures.
      In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

    

    
      
        
        

      

      
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    (a)  As
      expeditiously and reasonably as possible, and at the reasonable request of
      the
      Holder, furnish to each selling Holder copies of all such documents proposed
      to
      be filed with the Commission. Each Holder agrees to furnish to the Company
      a
      completed questionnaire in the form attached to this Agreement as Annex
      B
      (a
“Selling
      Shareholder Questionnaire”)
      not
      less than five (5) Trading Days prior to the Filing Date.

    

    (b)  (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the duration of the
      Effectiveness Period and prepare and file with the Commission such additional
      Registration Statements in order to register for resale under the Securities
      Act
      all of the Registrable Securities; (ii) cause the related Prospectus to be
      amended or supplemented by any required Prospectus supplement (subject to the
      terms of this Agreement), and, as so supplemented or amended, to be filed
      pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any
      comments received from the Commission with respect to a Registration Statement
      or any amendment thereto and provide as promptly as reasonably possible to
      the
      Holders true and complete copies of all correspondence from and to the
      Commission relating to a Registration Statement (provided that the Company
      may
      excise any information contained therein which would constitute material
      non-public information as to any Holder which has not executed a confidentiality
      agreement with the Company); and (iv) comply in all material respects with
      the
      provisions of the Securities Act and the Exchange Act with respect to the
      disposition of all Registrable Securities covered by a Registration Statement
      during the applicable period in accordance (subject to the terms of this
      Agreement) with the intended methods of disposition by the Holders thereof
      set
      forth in such Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

    

    (c)  If
      during
      the Effectiveness Period, the number of Registrable Securities at any time
      exceeds 100% of the number of shares of Common Stock then registered in a
      Registration Statement, then the Company shall file as soon as reasonably
      practicable, but in any case prior to the applicable Filing Date, an additional
      Registration Statement covering the resale by the Holders of not less than
      the
      number of such Registrable Securities. 

    

    (d)  Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (vi) hereof, be accompanied by an instruction to
      suspend the use of the Prospectus until the requisite changes have been made)
      as
      promptly as reasonably possible (i) (A) when a Prospectus or any Prospectus
      supplement or post-effective amendment to a Registration Statement is required
      to be filed; (B) when the Commission notifies the Company whether there will
      be
      a “review” of such Registration Statement; and (C) with respect to a
      Registration Statement or any post-effective amendment, when the same has become
      effective; (ii) of any material request by the Commission or any other federal
      or state governmental authority for amendments or supplements to a Registration
      Statement or Prospectus or for additional information; (iii) of the issuance
      by
      the Commission or any other federal or state governmental authority of any
      stop
      order suspending the effectiveness of a Registration Statement covering any
      or
      all of the Registrable Securities or the initiation of any Proceedings for
      that
      purpose; (iv) of the receipt by the Company of any notification with respect
      to
      the suspension of the qualification or exemption from qualification of any
      of
      the Registrable Securities for sale in any jurisdiction, or the initiation
      of
      any Proceeding for such purpose; and (v) of the occurrence of any event or
      passage of time that makes the financial statements included in a Registration
      Statement ineligible for inclusion therein or any statement made in a
      Registration Statement or Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading; provided that any and all of such information shall remain
      confidential to each Holder until such information otherwise becomes public,
      unless disclosure by a Holder is required by law; provided,
      further,
      that
      notwithstanding each Holder’s agreement to keep such information confidential,
      each such Holder makes no acknowledgement that any such information is material,
      non-public information.

    

    
      
        
        

      

      
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    (e)  Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order stopping or suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

    

    (f)  Furnish
      to each Holder upon the written request of such Holder, without charge, at
      least
      one conformed copy of each such Registration Statement and each amendment
      thereto, including financial statements and schedules, all documents
      incorporated or deemed to be incorporated therein by reference to the extent
      requested by such Person, and all exhibits to the extent requested by such
      Person (including those previously furnished or incorporated by reference)
      promptly after the filing of such documents with the Commission; provided,
      that
      any such item which is available on the EDGAR system need not be furnished
      in
      physical form.

    

    (g)  Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(d).

    

    (h)  
      The
      Company shall effect a filing with respect to the public offering contemplated
      by each Registration Statement (an “Issuer
      Filing”)
      with
      the National Association of Securities Dealers, Inc. (“NASD”)
      Corporate Financing Department pursuant to and in compliance with the terms
      and
      timelines of NASD Rule 2710 and pay the filing fee required by such Issuer
      Filing. The Company shall use commercially reasonable efforts to pursue the
      Issuer Filing until the NASD issues a letter confirming that it does not object
      to the terms of the offering contemplated by the Registration Statement as
      described in the Plan of Distribution attached hereto as Annex
      A.
      A copy
      of the Issuer Filing and all related correspondence to or from the NASD with
      respect thereto shall be made available to FWS.

    

    (i)  Prior
      to
      any resale of Registrable Securities by a Holder, use its commercially
      reasonable efforts to register or qualify or cooperate with the selling Holders
      in connection with the registration or qualification (or exemption from the
      Registration or qualification) of such Registrable Securities for the resale
      by
      the Holder under the securities or Blue Sky laws of such jurisdictions within
      the United States as any Holder reasonably requests in writing, to keep each
      registration or qualification (or exemption therefrom) effective during the
      Effectiveness Period and to do any and all other acts or things reasonably
      necessary to enable the disposition in such jurisdictions of the Registrable
      Securities covered by each Registration Statement; provided,
      that
      the Company shall not be required to qualify generally to do business in any
      jurisdiction where it is not then so qualified, subject the Company to any
      material tax in any such jurisdiction where it is not then so subject or file
      a
      general consent to service of process in any such jurisdiction.

    

    (j)  If
      requested by a Holder, cooperate with such Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement.

    

    (k)  Upon
      the
      occurrence of any event contemplated by Section 3(d), as promptly as reasonably
      possible under the circumstances taking into account the Company’s good faith
      assessment of any adverse consequences to the Company and its stockholders
      of
      the premature disclosure of such event, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If
      the
      Company notifies the Holders in accordance with clauses (iii) through (vi)
      of
      Section 3(d) above to suspend the use of any Prospectus until the requisite
      changes to such Prospectus have been made, then the Holders shall suspend use
      of
      such Prospectus. The Company will use its best efforts to ensure that the use
      of
      the Prospectus may be resumed as promptly as is practicable. The Company shall
      be entitled to exercise its right under this Section 3(k) to suspend the
      availability of a Registration Statement and Prospectus, subject to the payment
      of partial liquidated damages otherwise required pursuant to Section 2(b),
      for a
      period not to exceed 60 calendar days (which need not be consecutive days)
      in
      any 12 month period.

    

    
      
        
        

      

      
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    (l)  Comply
      with all applicable rules and regulations of the Commission under
      the
      Securities Act and the Exchange Act, including, without limitation, Rule 172
      under the Securities Act, file any final Prospectus, including any supplement
      or
      amendment thereof, with the Commission pursuant to Rule 424 under the Securities
      Act, promptly inform the Purchasers in writing if, at any time during the
      Effectiveness Period, the Company does not satisfy the conditions specified
      in
      Rule 172 and, as a result thereof, the Purchasers are required to deliver a
      Prospectus in connection with any disposition of Registrable Securities and
      take
      such other actions as may be reasonably necessary to facilitate the registration
      of the Registrable Securities hereunder; and make available to its security
      holders, as soon as reasonably practicable, but not later than the Availability
      Date (as defined below), an earnings statement covering a period of at least
      twelve (12) months, beginning after the effective date of each Registration
      Statement, which earnings statement shall satisfy the provisions of Section
      11(a) of the Securities Act, including Rule 158 promulgated thereunder
      (“Availability Date” means the 45th day following the end of the fourth fiscal
      quarter that includes the effective date of such Registration Statement, except
      that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal
      year, “Availability Date” means the 90th day after the end of such fourth fiscal
      quarter).

    

    (m)  The
      Company may reasonably require each selling Holder to furnish to the Company
      a
      certified statement as to the number of shares of Common Stock beneficially
      owned by such Holder and, if required by the Commission, the natural persons
      thereof that have voting and dispositive control over the shares. During any
      periods that the Company is unable to meet its obligations hereunder with
      respect to the registration of the Registrable Securities solely because any
      Holder fails to furnish such information within three Trading Days of the
      Company’s request, any liquidated damages that are accruing at such time as to
      such Holder only shall be tolled and any Event that may otherwise occur solely
      because of such delay shall be suspended as to such Holder only, until such
      information is delivered to the Company.

    

    4.
       Registration
      Expenses.
      All
      fees and expenses incident to the performance of or compliance with this
      Agreement by the Company shall be borne by the Company whether or not any
      Registrable Securities are sold pursuant to a Registration Statement. The fees
      and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses of the Company’s counsel and auditors) (A) with respect to
      filings made with the Commission, (B) with respect to filings required to be
      made with any Trading Market on which the Common Stock is then listed for
      trading, (C) in compliance with applicable state securities or Blue Sky laws
      reasonably agreed to by the Company in writing (including, without limitation,
      fees and disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities) and (D) if not
      previously paid by the Company in connection with an Issuer Filing, with respect
      to any filing that may be required to be made by any broker through which a
      Holder intends to make sales of Registrable Securities with the NASD pursuant
      to
      NASD Rule 2710, so long as the broker is receiving no more than a customary
      brokerage commission in connection with such sale, (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities), (iii) messenger, telephone and delivery expenses,
      (iv)
      fees and disbursements of counsel for the Company, (v) Securities Act liability
      insurance, if the Company so desires such insurance, and (vi) fees and expenses
      of all other Persons retained by the Company in connection with the consummation
      of the transactions contemplated by this Agreement. In addition, the Company
      shall be responsible for all of its internal expenses incurred in connection
      with the consummation of the transactions contemplated by this Agreement
      (including, without limitation, all salaries and expenses of its officers and
      employees performing legal or accounting duties), the expense of any annual
      audit and the fees and expenses incurred in connection with the listing of
      the
      Registrable Securities on any securities exchange as required hereunder. In
      no
      event shall the Company be responsible for any broker or similar commissions
      of
      any Holder or, except to the extent provided for in the Transaction Documents,
      any legal fees or other costs of the Holders.

    

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    5.
       Indemnification.

    

    (a)  Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Holder, the officers, directors, members, partners, agents,
      brokers (including brokers who offer and sell Registrable Securities as
      principal as a result of a pledge or any failure to perform under a margin
      call
      of Common Stock), investment advisors and employees (and any other Persons
      with
      a functionally equivalent role of a Person holding such titles, notwithstanding
      a lack of such title or any other title) of each of them, each Person who
      controls any such Holder (within the meaning of Section 15 of the Securities
      Act
      or Section 20 of the Exchange Act) and the officers, directors, members,
      shareholders, partners, agents and employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles, notwithstanding
      a
      lack of such title or any other title) of each such controlling Person, to
      the
      fullest extent permitted by applicable law, from and against any and all losses,
      claims, damages, liabilities, costs (including, without limitation, reasonable
      attorneys’ fees) and expenses (collectively, “Losses”),
      as
      incurred, arising out of or relating to (1) any untrue or alleged untrue
      statement of a material fact contained in a Registration Statement, any
      Prospectus or any form of prospectus or in any amendment or supplement thereto
      or in any preliminary prospectus, or arising out of or relating to any omission
      or alleged omission of a material fact required to be stated therein or
      necessary to make the statements therein (in the case of any Prospectus or
      supplement thereto, in light of the circumstances under which they were made)
      not misleading or (2) any violation or alleged violation by the Company of
      the
      Securities Act, the Exchange Act or any state securities law, or any rule or
      regulation thereunder, in connection with the performance of its obligations
      under this Agreement, except to the extent, but only to the extent, that (i)
      such indemnity agreement as contained in this Section 5(a) shall not apply
      to
      amounts paid in settlement of any such loss, claim, damage, liability or action
      if such settlement is effected without the consent of the Company (which consent
      shall not be unreasonably withheld), (ii) such untrue statements or omissions
      are based solely upon information regarding such Holder furnished in writing
      to
      the Company by such Holder expressly for use therein, or to the extent that
      such
      information relates to such Holder or such Holder’s proposed method of
      distribution of Registrable Securities and was reviewed and expressly approved
      in writing by such Holder expressly for use in a Registration Statement, such
      Prospectus or in any amendment or supplement thereto (it being understood that
      the Holder has approved Annex A hereto for this purpose) or (iii) in the case
      of
      an occurrence of an event of the type specified in Section 3(d)(iii)-(vi),
      the
      use by such Holder of an outdated or defective Prospectus after the Company
      has
notified
      the Holder in writing that the Company does not meet the conditions for use
      of
      Rule 172 and that, as a result, such Holder is required to deliver a Prospectus
      in connection with any sale or other disposition of Registrable Securities
      and delivered
      to such Holder a subsequent amendment that corrects the alleged deficiencies
      and
      prior to the receipt by such Holder of the Advice contemplated in Section 6(d).
      The Company shall notify the Holders promptly of the institution, threat or
      assertion of any Proceeding arising from or in connection with the transactions
      contemplated by this Agreement of which the Company is aware.

    

    (b)  Indemnification
      by Holders.
      Each
      Holder shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses, as incurred, to the extent arising out of or based
      solely upon: (x) such Holder’s failure to comply with the prospectus delivery
      requirements of the Securities Act after
      the
      Company has notified the Holder in writing that the Company does not meet the
      conditions for use of Rule 172 and that, as a result, such Holder is required
      to
      deliver a Prospectus in connection with any sale or other disposition of
      Registrable Securities and has delivered to such Holder a Prospectus to be
      used
      for such purpose or
      (y)
      any untrue or alleged untrue statement of a material fact contained in any
      Registration Statement, any Prospectus, or in any amendment or supplement
      thereto or arising out of or relating to any omission or alleged omission of
      a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading (i) to the extent, but only to the extent, that such
      untrue statement or omission is contained in any information so furnished in
      writing by such Holder to the Company specifically for inclusion in such
      Registration Statement or such Prospectus or (ii) to the extent that such
      information relates to such Holder’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing by
      such Holder (it being understood that the Holder has approved Annex A hereto
      for
      this purpose), such Prospectus or in any amendment or supplement thereto or
      (iii) in the case of an occurrence of an event of the type specified in Section
      3(d)(iii)-(vi), the use by such Holder of an outdated or defective Prospectus
      after the Company has notified the Holder in writing that the Company does
      not
      meet the conditions for use of Rule 172 and that, as a result, such Holder
      is
      required to deliver a Prospectus in connection with any sale or other
      disposition of Registrable Securities and delivered to such Holder a subsequent
      amendment that corrects the alleged deficiencies and prior to the receipt by
      such Holder of the Advice contemplated in Section 6(d). In no event shall the
      liability of any selling Holder hereunder be greater in amount than the dollar
      amount of the net proceeds received by such Holder upon the sale of the
      Registrable Securities giving rise to such indemnification
      obligation.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (c)  Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall have the right to assume the defense
      thereof, including the employment of counsel reasonably satisfactory to the
      Indemnified Party and the payment of all fees and expenses incurred in
      connection with defense thereof; provided, that the failure of any Indemnified
      Party to give such notice shall not relieve the Indemnifying Party of its
      obligations or liabilities pursuant to this Agreement, except (and only) to
      the
      extent that it shall be finally determined by a court of competent jurisdiction
      (which determination is not subject to appeal or further review) that such
      failure shall have prejudiced the Indemnifying Party.

    

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; (2) the Indemnifying Party shall have failed promptly to assume the
      defense of such Proceeding and to employ counsel reasonably satisfactory to
      such
      Indemnified Party in any such Proceeding; or (3) the named parties to any such
      Proceeding (including any impleaded parties) include both such Indemnified
      Party
      and the Indemnifying Party, and counsel to the Indemnified Party shall
      reasonably believe that a material conflict of interest is likely to exist
      if
      the same counsel were to represent such Indemnified Party and the Indemnifying
      Party (in which case, if such Indemnified Party notifies the Indemnifying Party
      in writing that it elects to employ separate counsel at the expense of the
      Indemnifying Party, the Indemnifying Party shall not have the right to assume
      the defense thereof and the reasonable fees and expenses of no more than one
      separate counsel shall be at the expense of the Indemnifying Party). The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld or delayed. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, effect any settlement of any pending
      Proceeding in respect of which any Indemnified Party is a party, unless such
      settlement includes an unconditional release of such Indemnified Party from
      all
      liability on claims that are the subject matter of such Proceeding.

    

    Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within ten (10) Trading Days of written notice thereof
      to
      the Indemnifying Party; provided, that the Indemnified Party shall promptly
      reimburse the Indemnifying Party for that portion of such fees and expenses
      applicable to such actions for which such Indemnified Party is judicially
      determined to be not entitled to indemnification hereunder.

    

    (d)  Contribution.
      If the
      indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
      Party or insufficient to hold an Indemnified Party harmless for any Losses,
      then
      each Indemnifying Party shall contribute to the amount paid or payable by such
      Indemnified Party, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or relates to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in this Agreement, any reasonable attorneys’ or other fees or expenses incurred
      by such party in connection with any Proceeding to the extent such party would
      have been indemnified for such fees or expenses if the indemnification provided
      for in this Section was available to such party in accordance with its
      terms.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 5(d), no Holder shall be required
      to contribute, in the aggregate, any amount in excess of the amount by which
      the
      net proceeds actually received by such Holder from the sale of the Registrable
      Securities subject to the Proceeding exceeds the amount of any damages that
      such
      Holder has otherwise been required to pay by reason of such untrue or alleged
      untrue statement or omission or alleged omission.

    

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    

    6.
       Miscellaneous.

    

    (a)  Remedies.
      In the
      event of a breach by the Company or by a Holder of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, shall be entitled to
      specific performance of its rights under this Agreement. The Company and each
      Holder agree that monetary damages would not provide adequate compensation
      for
      any losses incurred by reason of a breach by it of any of the provisions of
      this
      Agreement and hereby further agrees that, in the event of any action for
      specific performance in respect of such breach, it shall not assert or shall
      waive the defense that a remedy at law would be adequate.

    

    (b)  No
      Piggyback on Registrations; Prohibition on Filing Other Registration
      Statements.
      Neither
      the Company nor any of its security holders (other than the Holders in such
      capacity pursuant hereto) may include securities of the Company in any
      Registration Statements other than the Registrable Securities. Unless waived
      by
      a vote of the Supermajority Holders, the Company shall not file any other
      registration statements until all Registrable Securities are registered pursuant
      to a Registration Statement that is declared effective by the Commission,
      provided that this Section 6(b) shall not prohibit the Company from filing
      amendments to registration statements filed prior to the date of this
      Agreement.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (c)  Compliance.
      Each
      Holder covenants and agrees that, after
      the
      Company has notified the Holder in writing that the Company does not meet the
      conditions for use of Rule 172 and that, as a result, such Holder is required
      to
      deliver a Prospectus in connection with any sale or other disposition of
      Registrable Securities and has delivered to such Holder a Prospectus to be
      used
      for such purpose,
      it will
      comply with the prospectus delivery requirements of the Securities Act as
      applicable to it in connection with sales of Registrable Securities pursuant
      to
      a Registration Statement.

    

    (d)  Discontinued
      Disposition.
      By its
      acquisition of Registrable Securities, each Holder agrees that, upon receipt
      of
      a notice from the Company of the occurrence of any event of the kind described
      in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
      disposition of such Registrable Securities under a Registration Statement until
      it is advised in writing (the “Advice”)
      by the
      Company that the use of the applicable Prospectus (as it may have been
      supplemented or amended) may be resumed. The Company will use its best efforts
      to ensure that the use of the Prospectus may be resumed as promptly as it
      practicable. The Company agrees and acknowledges that any periods during which
      the Holder is required to discontinue the disposition of the Registrable
      Securities hereunder shall be subject to the provisions of Section
      2(b).

    

    (e)  Piggy-Back
      Registrations.
      If, at
      any time during the Effectiveness Period, there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with the Company’s stock option or other employee benefit plans, then
      the Company shall deliver to each Holder a written notice of such determination
      and, if within fifteen days after the date of the delivery of such notice,
      any
      such Holder shall so request in writing, the Company shall include in such
      registration statement all or any part of such Registrable Securities such
      Holder requests to be registered; provided,
      however,
      that
      the Company shall not be required to register any Registrable Securities
      pursuant to this Section 6(e) that are eligible for resale pursuant to Rule
      144(k) promulgated by the Commission pursuant to the Securities Act or that
      are
      the subject of a then effective Registration Statement.

    

    (f)  Amendments
      and Waivers.
      The
      provisions of this Agreement, including the provisions of this sentence, may
      not
      be amended, modified or supplemented, and waivers or consents to departures
      from
      the provisions hereof may not be given, unless the same shall be in writing
      and
      signed by the Company and the Supermajority Holders (including, for this purpose
      any Registrable Securities issuable upon exercise or conversion of any
      Security). If a Registration Statement does not register all of the Registrable
      Securities pursuant to a waiver or amendment done in compliance with the
      previous sentence, then the number of Registrable Securities to be registered
      for each Holder shall be reduced pro rata among all Holders and each Holder
      shall have the right to designate which of its Registrable Securities shall
      be
      omitted from such Registration Statement. Notwithstanding the foregoing, a
      waiver or consent to depart from the provisions hereof with respect to a matter
      that relates exclusively to the rights of a Holder or some Holders and that
      does
      not directly or indirectly affect the rights of other Holders may be given
      by
      such Holder or Holders of all of the Registrable Securities to which such waiver
      or consent relates; provided,
      however,
      that
      the provisions of this sentence may not be amended, modified, or supplemented
      except in accordance with the provisions of the first sentence of this Section
      6(f). 

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (g)  Notices.
      Any and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be delivered as set forth in the Purchase Agreement.
      

    

    (h)  Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties and shall inure to the benefit of
      each
      Holder. The Company may not assign its rights or obligations hereunder other
      than in connection with a Fundamental Transaction (as such term is defined
      in
      the Warrant) or without the prior written consent of the Supermajority
      Purchasers. Each Holder may not assign its respective rights hereunder except
      in
      the manner as permitted under Section 6(p) below.

    

    (i)  No
      Inconsistent Agreements.
      Neither
      the Company nor any of its Subsidiaries has entered, as of the date hereof,
      nor
      shall the Company or any of its Subsidiaries, on or after the date of this
      Agreement, enter into any agreement with respect to its securities, that would
      have the effect of impairing the rights granted to the Holders in this Agreement
      or otherwise conflicts with the provisions hereof. Except as set forth in the
      Disclosure Schedules attached to the Purchase Agreement, neither the Company
      nor
      any of its Subsidiaries has previously entered into any agreement granting
      any
      registration rights with respect to any of its securities to any Person that
      have not been satisfied in full.

    

    (j)  Execution
      and Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof.

    

    (k)  Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be determined in accordance with the provisions of
      the
      Purchase Agreement.

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    (l)  Cumulative
      Remedies.
      The
      remedies provided herein are cumulative and not exclusive of any other remedies
      provided by law.

    

    (m)  Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their commercially reasonable
      efforts to find and employ an alternative means to achieve the same or
      substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    

    (n)  Headings.
      The
      headings in this Agreement are for convenience only, do not constitute a part
      of
      the Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    (o)  Independent
      Nature of Holders’ Obligations and Rights.
      The
      obligations of each Holder hereunder are several and not joint with the
      obligations of any other Holder hereunder, and no Holder shall be responsible
      in
      any way for the performance of the obligations of any other Holder hereunder.
      Nothing contained herein or in any other agreement or document delivered at
      any
      closing, and no action taken by any Holder pursuant hereto or thereto, shall
      be
      deemed to constitute the Holders as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Holders
      are in any way acting in concert with respect to such obligations or the
      transactions contemplated by this Agreement. Each Holder shall be entitled
      to
      protect and enforce its rights, including without limitation the rights arising
      out of this Agreement, and it shall not be necessary for any other Holder to
      be
      joined as an additional party in any proceeding for such purpose.

    

    (p)  Transfer
      of Registration Rights.
      None of
      the rights of any Purchaser under this Agreement shall be transferred or
      assigned to any person unless such transfer or assignment shall comply with
      applicable securities laws. None of the rights of any Purchaser under this
      Agreement shall be transferred or assigned to any person that acquires
      Registrable Shares in the event that and to the extent that such person is
      eligible to resell such Registrable Shares pursuant to Rule 144(k) of the
      Securities Act or may otherwise freely resell such Registrable Shares without
      restriction pursuant to an exemption from the registration provisions of the
      Securities Act. 

    

    (q)  Effectiveness;
      Termination.
      This
      Agreement shall become effective and legally binding only if the Closing occurs.
      This Agreement shall terminate and be of no further force or effect,
      automatically and without any action being required of any party hereto, upon
      the termination of the Purchase Agreement pursuant to Section 5.1
      thereof.

     

    ********************

    

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

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

    

    
      	 	TARGETED
              GENETICS CORPORATION
	 	 	 
	 	 	 
	 	By:	
               

            
	 	 	
              
                

              

              Name:
                H. Stewart Parker

              Title:
                Chief Executive Officer &
President

            

    

         

    

    

    

    

    

    

    

    

    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    SIGNATURE
      PAGE OF HOLDERS TO TGEN RRA

    

     

    Name
      of
      Holder: __________________________

    

    Signature
      of Authorized Signatory of Holder:
      __________________________

    

    Name
      of
      Authorized Signatory: _________________________

    

    Title
      of
      Authorized Signatory: __________________________

     

    

    

    [SIGNATURE
      PAGES CONTINUE]

    

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    Annex
      A

    

    Plan
      of Distribution

    

    Each
      Selling Stockholder (the “Selling
      Stockholders”)
      of the
      common stock and any of their pledgees, assignees and successors-in-interest
      may, from time to time, sell any or all of their shares of common stock on
      the
      NASDAQ Capital Market or any other stock exchange, market or trading facility
      on
      which the shares are traded or in private transactions. These sales may be
      at
      fixed or negotiated prices. A Selling Stockholder may use any one or more of
      the
      following methods when selling shares:

     

    
      	·  	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            

    

     

    
      	·  	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            

    

     

    
      	·  	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            

    

     

    
      	·  	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            

    

     

    
      	·  	
              privately
                negotiated transactions;

            

    

     

    
      	·  	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a part;

            

    

     

    
      	·  	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            

    

     

    
      	·  	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            

    

     

    
      	·  	
              a
                combination of any such methods of sale;
                or

            

    

     

    
      	·  	
              any
                other method permitted pursuant to applicable
                law.

            

    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities
      Act”),
      if
      available, rather than under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the Selling Stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated, but,
      except as set forth in a supplement to this Prospectus, in the case of an agency
      transaction not in excess of a customary brokerage commission in compliance
      with
      NASDR Rule 2440; and in the case of a principal transaction a markup or markdown
      in compliance with NASDR IM-2440. 

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume. The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities. The Selling
      Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales. In such event, any commissions
      received by such broker-dealers or agents and any profit on the resale of the
      shares purchased by them may be deemed to be underwriting commissions or
      discounts under the Securities Act. Each Selling Stockholder has informed the
      Company that it does not have any written or oral agreement or understanding,
      directly or indirectly, with any person to distribute the Common Stock. In
      no
      event shall any broker-dealer receive fees, commissions and markups which,
      in
      the aggregate, would exceed eight percent (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares. The Company has agreed to indemnify
      the Selling Stockholders against certain losses, claims, damages and
      liabilities, including liabilities under the Securities Act. 

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder. In addition, any securities
      covered by this prospectus which qualify for sale pursuant to Rule 144 under
      the
      Securities Act may be sold under Rule 144 rather than under this prospectus.
      There is no underwriter or coordinating broker acting in connection with the
      proposed sale of the resale shares by the Selling Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the termination
      of
      the Registration Rights Agreement, dated as of June _, 2007 by and between
      the
      Company and certain Purchasers, (ii) the date on which the shares may be resold
      by the Selling Stockholders without registration and without regard to any
      volume limitations by reason of Rule 144(k) under the Securities Act or any
      other rule of similar effect or (iii) all of the shares have been sold pursuant
      to this prospectus or Rule 144 under the Securities Act or any other rule of
      similar effect. The resale shares will be sold only through registered or
      licensed brokers or dealers if required under applicable state securities laws.
      In addition, in certain states, the resale shares may not be sold unless they
      have been registered or qualified for sale in the applicable state or an
      exemption from the registration or qualification requirement is available and
      is
      complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution. In addition, the Selling Stockholders will be subject to
      applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person. We will make copies of this prospectus available to the Selling
      Stockholders and have informed them of the need to deliver a copy of this
      prospectus to each purchaser at or prior to the time of sale (including by
      compliance with Rule 172 under the Securities Act).

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    Annex
      B

     

    TARGETED
      GENETICS CORPORATION

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Registrable
      Securities”)
      of
      Targeted Genetics Corporation, a Washington corporation (the “Company”),
      understands that the Company has filed or intends to file with the Securities
      and Exchange Commission (the “Commission”)
      a
      registration statement (the “Registration
      Statement”)
      for
      the registration and resale under Rule 415 of the Securities Act of 1933, as
      amended (the “Securities
      Act”),
      of
      the Registrable Securities, in accordance with the terms of the Registration
      Rights Agreement (the “Registration
      Rights Agreement”)
      to
      which this document is annexed. A copy of the Registration Rights Agreement
      is
      available from the Company upon request at the address set forth below. All
      capitalized terms not otherwise defined herein shall have the meanings ascribed
      thereto in the Registration Rights Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus. Accordingly, holders and
      beneficial owners of Registrable Securities are advised to consult their own
      securities law counsel regarding the consequences of being named or not being
      named as a selling securityholder in the Registration Statement and the related
      prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling
      Securityholder”)
      of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it in the Registration Statement.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    1. Name.

     

    
      	 	
              (a)

            	
              Full
                Legal Name of Selling
                Securityholder

            

    

    
      	 	 	 

    

    
      	 	 	 

    

     

    
      	 	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are held:

            

      	 	 	 

      	 	 	 

    

     

    
      	 	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by this
                Questionnaire):

            

      	 	 	 

      	 	 	 

    

     

    2.
      Address for Notices to Selling Securityholder:

     

    
      	 
	 
	 
	
              Telephone:
                _____________________________________________

            
	
              Fax:
                ___________________________________________________

            
	
              Contact
                Person:
                __________________________________________

            

    

    

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    3.
      Broker-Dealer Status:

     

    
      	 	
              (a)

            	
              Are
                you a broker-dealer?

            

    

     

    Yes
      oNo
o

     

    
      	 	
              (b)

            	
              If
                “yes” to Section 3(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company?

            

    

     

    Yes
oNo
o

     

    
      	 	
              Note:

            	
              If
                “no” to Section 3(b), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    
      	 	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            

    

     

    Yes
oNo
o

     

    
      	 	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                purchased
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            

    

     

    Yes
oNo
o

     

    
      	 	
              Note:

            	
              If
                “no” to Section 3(d), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            

    

     

    4.
      Beneficial Ownership of Securities of the Company Owned by the Selling
      Securityholder.

     

    Except
      as set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

     

    
      	 	
              (a)

            	
              Type
                and Amount of other securities beneficially owned by the Selling
                Securityholder:

            

    

     

    
      	 
	 
	 

    

    

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    5.
      Relationships with the Company:

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    State
      any
      exceptions here:

     

    
      	 
	 
	 

    

    

     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein (other than the undersigned’s beneficial
      ownership of the Company’s securities) that may occur subsequent to the date
      hereof at any time while the Registration Statement remains
      effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus
and
      any
      amendments or supplements thereto.
      The
      undersigned understands that such information will be relied upon by the Company
      in connection with the preparation or amendment of the Registration Statement
      and the related prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

    
      	 	 	 
	 
Date:
              _________________________	Beneficial
              Owner:
              _____________________________
	 	 
	 	 
	  	By:  	    
	 	
              ________________________________________

              Name:

            
	 	Title 

    

    
 

    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    
      	
               

              1100
                Olive Way, Suite 100

              Seattle,
                WA 98101

              Attention:
                 H.
                Stewart Parker

              Chief
                Executive Officer & President

              Facsimile: (206)
                623-7064

            	
              with
                a copy to:

              Orrick,
                Herrington & Sutcliffe LLP

              719
                Second Avenue, Suite 900

              Seattle,
                WA 98104

              Attention:
                Stephen M. Graham, Esq.

              Facsimile: (206)
                839-4301

            

    

    

     

    
      
        
        

      

      
        21EXHIBIT
      C

     

    THIS
      WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD,
      ASSIGNED, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
      EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM REGISTRATION UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY,
      UPON DELIVERY OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
      THAT THE PROPOSED TRANSFER IS EXEMPT FROM SAID ACT.

    

    COMMON
      STOCK PURCHASE WARRANT

    

    TARGETED
      GENETICS CORPORATION

     

    Warrant
      No. _______

    
      	
               

            	
               

            
	
              Warrant
                Shares: _______

            	
              Issue
                Date: June ___, 2007

            

    

     

    

    THIS
      COMMON STOCK PURCHASE WARRANT
      (the
“Warrant”)
      certifies that, for value received, _____________ (the “Holder”)
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the five (5) year anniversary of the
      Initial Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from Targeted Genetics
      Corporation, a Washington corporation (the “Company”),
      up to
      ______ shares (the “Warrant
      Shares”)
      of
      Common Stock. The purchase price of one share of Common Stock under this Warrant
      shall be equal to the Exercise Price, as defined in Section 2(b).

     

    Section
      1. Definitions.
      Capitalized terms used and not otherwise defined herein shall have the meanings
      set forth in that certain Securities Purchase Agreement (the “Purchase
      Agreement”),
      dated
      June 22, 2007, among the Company and the purchasers signatory
      thereto.

     

    Section
      2. Exercise.

     

    a)  Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date,
      and on or before the Termination Date by delivery to the Company of a duly
      executed facsimile copy of the Notice of Exercise Form annexed hereto (or such
      other office or agency of the Company in the United States as it may designate
      by notice in writing to the registered Holder at the address of the Holder
      appearing on the books of the Company); and, within three (3) Trading Days
      of
      the date said Notice of Exercise is delivered to the Company, the Company shall
      have received payment of the aggregate Exercise Price of the shares thereby
      purchased by wire transfer or cashier’s check drawn on a United States bank, or
      pursuant to the Cashless Exercise provision below in Section 1(c).
      Notwithstanding anything herein to the contrary, the Holder shall not be
      required to physically surrender this Warrant to the Company until the Holder
      has purchased all of the Warrant Shares available hereunder and the Warrant
      has
      been exercised in full, in which case, the Holder shall surrender this Warrant
      to the Company for cancellation within three (3) Trading Days of the date the
      final Notice of Exercise is delivered to the Company. Partial exercises of
      this
      Warrant resulting in purchases of a portion of the total number of Warrant
      Shares available hereunder shall have the effect of lowering the outstanding
      number of Warrant Shares purchasable hereunder in an amount equal to the
      applicable number of Warrant Shares purchased. The Holder and the Company shall
      maintain records showing the number of Warrant Shares purchased and the date
      of
      such purchases. The Company shall deliver any objection to any Notice of
      Exercise Form within two (2) Trading Days. The
      Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
      that, by reason of the provisions of this paragraph, following the purchase
      of a
      portion of the Warrant Shares hereunder, the number of Warrant Shares available
      for purchase hereunder at any given time may be less than the amount stated
      on
      the face hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    b)  Exercise
      Price.
      The
      exercise price per share of the Common Stock under this Warrant shall be
$3.25,
      subject to adjustment hereunder (the “Exercise
      Price”).

     

    c)  Cashless
      Exercise.
      If, at
      any time after the earlier of (i) one (1) year from the Closing and (ii) such
      date as the Warrant Shares are eligible for resale pursuant to Rule 144 upon
      a
      cashless exercise, there is no effective Registration Statement registering,
      or
      no current prospectus available for, the resale of the Warrant Shares by the
      Holder, then this Warrant may become exercisable at such time by means of a
      “cashless exercise” in which the Holder, at its option, shall be entitled to
      receive a certificate for the number of Warrant Shares equal to the quotient
      obtained by dividing [(A-B) (X)] by (A), where:

     

    
      	 	(A) =	
              
                the
                  VWAP on the Trading Day immediately preceding the date of such
                  election;

              

            

      	 	 	 

      	 	
              (B)
                =

            	
              the
                Exercise Price of this Warrant, as adjusted; and
                

            

      	 	 	 

      	 	(X) =	
              the
                number of Warrant Shares issuable upon
                exercise of this Warrant in accordance with the terms of this Warrant
                by
                means of a cash exercise rather than a cashless exercise, or, if
                only a
                portion of the Warrant is being exercised, the portion of the Warrant
                being cancelled (at the date of such
                calculation).

            

    

     

    d)  Holder’s
      Restrictions.
      Except
      if waived as permitted herein, the Company shall not effect any exercise of
      this
      Warrant, and the Holder shall not have the right to exercise any portion of
      this
      Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
      effect to such issuance after exercise as set forth on the applicable Notice
      of
      Exercise, the Holder (together with the Holder’s Affiliates, and any other
      person or entity acting as a group together with the Holder or any of the
      Holder’s Affiliates), would beneficially own in excess of the Beneficial
      Ownership Limitation (as defined below).  For purposes of the foregoing
      sentence, the number of shares of Common Stock beneficially owned by the Holder
      and its Affiliates shall include the number of shares of Common Stock issuable
      upon exercise of this Warrant with respect to which such determination is being
      made, but shall exclude the number of shares of Common Stock which would be
      issuable upon (A) exercise of the remaining, nonexercised portion of this
      Warrant beneficially owned by the Holder or any of its Affiliates and (B)
      exercise or conversion of the unexercised or nonconverted portion of any other
      securities of the Company (including, without limitation, any other Common
      Stock
      Equivalents) subject to a limitation on conversion or exercise analogous to
      the
      limitation contained herein beneficially owned by the Holder or any of its
      affiliates.  Except as set forth in the preceding sentence, for purposes of
      this Section 2(d), beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder, it being acknowledged by the Holder that the Company is not
      representing to the Holder that such calculation is in compliance with Section
      13(d) of the Exchange Act and the Holder is solely responsible for any schedules
      required to be filed in accordance therewith. To the extent that the limitation
      contained in this Section 2(d) applies, the determination of whether this
      Warrant is exercisable (in relation to other securities owned by the Holder
      together with any Affiliates) and of which portion of this Warrant is
      exercisable shall be in the sole discretion of the Holder, and the submission
      of
      a Notice of Exercise shall be deemed to be the Holder’s determination of whether
      this Warrant is exercisable (in relation to other securities owned by the Holder
      together with any Affiliates) and of which portion of this Warrant is
      exercisable, in each case subject to the Beneficial Ownership Limitation, and
      the Company shall have no obligation to verify or confirm the accuracy of such
      determination. In addition, a determination as to any group status as
      contemplated above shall be determined in accordance with Section 13(d) of
      the
      Exchange Act and the rules and regulations promulgated thereunder. For purposes
      of this Section 2(d), in determining the number of outstanding shares of Common
      Stock, the Holder may rely on the number of outstanding shares of Common Stock
      as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the
      case may be, (y) a more recent public announcement by the Company or (z) any
      other notice by the Company or the Company’s Transfer Agent setting forth the
      number of shares of Common Stock outstanding.  Upon the written or oral
      request of the Holder, the Company shall within five (5) Trading Days confirm
      orally or in writing to the Holder the number of shares of Common Stock then
      outstanding.  In any case, the number of outstanding shares of Common Stock
      shall be determined after giving effect to the conversion or exercise of
      securities of the Company, including this Warrant, by the Holder or its
      Affiliates since the date as of which such number of outstanding shares of
      Common Stock was reported. The “Beneficial
      Ownership Limitation”
shall
      be 4.99% of the number of shares of the Common Stock outstanding immediately
      after giving effect to the issuance of shares of Common Stock issuable upon
      exercise of this Warrant. The Beneficial Ownership Limitation provisions of
      this
      Section 2(d) may be waived by the Holder, at the election of the Holder, upon
      not less than 61 days’ prior notice to the Company to change the Beneficial
      Ownership Limitation to 9.99% of the number of shares of the Common Stock
      outstanding immediately after giving effect to the issuance of shares of Common
      Stock upon exercise of this Warrant, and the provisions of this Section 2(d)
      shall continue to apply. Upon such a change by the Holder of the Beneficial
      Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the
      Beneficial Ownership Limitation may not be further waived by the Holder. The
      provisions of this paragraph shall be construed and implemented in a manner
      otherwise than in strict conformity with the terms of this Section 2(d) to
      correct this paragraph (or any portion hereof) which may be defective or
      inconsistent with the intended Beneficial Ownership Limitation herein contained
      or to make changes or supplements necessary or desirable to properly give effect
      to such limitation. The limitations contained in this paragraph shall apply
      to a
      successor holder of this Warrant.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    e)  Mechanics
      of Exercise.
      

     

    i.  Delivery
      of Certificates Upon Exercise.
      Unless
      the Holder otherwise requests in writing, certificates for shares purchased
      hereunder shall be transmitted by the transfer agent of the Company to the
      Holder by crediting the account of the Holder’s prime broker with the Depository
      Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”)
      system
      if the Company is a participant in such system and there is an effective
      Registration Statement permitting the resale of the Warrant Shares by the
      Holder, or by physical delivery to the address specified by the Holder in the
      Notice of Exercise within three (3) Trading Days from the delivery to the
      Company of the Notice of Exercise Form, surrender of this Warrant (if required)
      and payment of the aggregate Exercise Price as set forth above (“Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised on the date the payment for
      the
      Exercise Price and a completed Notice of Exercise, in the form attached hereto
      and in substance acceptable to the Company, are received by the Company. The
      Warrant Shares shall be deemed to have been issued, and Holder or any other
      person so designated to be named therein shall be deemed to have become a holder
      of record of such shares for all purposes, as of the date the Warrant has been
      exercised by payment to the Company of the Exercise Price (or by cashless
      exercise, if permitted) and all taxes required to be paid by the Holder, if
      any,
      pursuant to Section 2(e)(vi) prior to the issuance of such shares, have been
      paid. If the Company fails for any reason to deliver to the Holder certificates
      evidencing the Warrant Shares subject to a Notice of Exercise by the Warrant
      Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated
      damages and not as a penalty, for each $2,000 of Warrant Shares subject to
      such
      exercise (based on the VWAP of the Common Stock on the date of the applicable
      Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day
      on
      the fifth Trading Day after such liquidated damages begin to accrue) for each
      Trading Day after such second Trading Day following the Warrant Share Delivery
      Date until such certificates are delivered. 

     

    ii.  Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the request
      of
      the Holder and upon surrender of this Warrant certificate, at the time of
      delivery of the certificate or certificates representing Warrant Shares, deliver
      to Holder a new Warrant evidencing the rights of Holder to purchase the
      unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
      in all other respects be identical with this Warrant.

     

    iii.  Rescission
      Rights.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to this
      Section 2(e) by the fourth Trading Day following the Warrant Share Delivery
      Date, then the Holder will have the right to rescind such exercise.

     

    iv.  Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Exercise.
      If the
      Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to an
      exercise on or before the fourth Trading Day following the Warrant Share
      Delivery Date, and if after such date the Holder is required by its broker
      to
      purchase (in an open market transaction or otherwise) or the Holder’s brokerage
      firm otherwise purchases, shares of Common Stock to deliver in satisfaction
      of a
      sale by the Holder of the Warrant Shares which the Holder anticipated receiving
      upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the
      Holder the amount by which (x) the Holder’s total purchase price (including
      brokerage commissions, if any) for the shares of Common Stock so purchased
      exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares
      that the Company was required to deliver to the Holder in connection with the
      exercise at issue times (B) the price at which the sell order giving rise to
      such purchase obligation was executed, and (2) at the option of the Holder,
      either reinstate the portion of the Warrant and equivalent number of Warrant
      Shares for which such exercise was not honored or deliver to the Holder the
      number of shares of Common Stock that would have been issued had the Company
      timely complied with its exercise and delivery obligations hereunder. For
      example, if the Holder purchases Common Stock having a total purchase price
      of
      $11,000 to cover a Buy-In with respect to an attempted exercise of shares of
      Common Stock with an aggregate sale price giving rise to such purchase
      obligation of $10,000, under clause (1) of the immediately preceding sentence
      the Company shall be required to pay the Holder $1,000. The Holder shall provide
      the Company written notice, in form and substance acceptable to the Company,
      indicating the amounts payable to the Holder in respect of the Buy-In and,
      upon
      request of the Company, evidence of the amount of such loss. Nothing herein
      shall limit the Holder’s right to pursue any equitable remedies available to it
      hereunder including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company’s failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the Warrant
      as
      required pursuant to the terms hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    v.  No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall pay
      a
      cash adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Exercise Price

     

    vi.  Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder;
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    vii.  Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    Section
      3. Certain Adjustments.

     

    a)  Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (A) pays a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company upon exercise of this Warrant),
      (B)
      subdivides outstanding shares of Common Stock into a larger number of shares,
      (C) combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by reclassification
      of shares of the Common Stock any shares of capital stock of the Company, then
      in each case the Exercise Price shall be multiplied by a fraction of which
      the
      numerator shall be the number of shares of Common Stock (excluding treasury
      shares, if any) outstanding immediately before such event and of which the
      denominator shall be the number of shares of Common Stock outstanding
      immediately after such event and the number of shares issuable upon exercise
      of
      this Warrant shall be proportionately adjusted such that the aggregate Exercise
      Price of this Warrant shall remain unchanged. Any adjustment made pursuant
      to
      this Section 3(a) shall become effective immediately after the record date
      for
      the determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective date
      in
      the case of a subdivision, combination or re-classification.

     

    b)  In
      case
      the Company shall fix a payment date for the making of a distribution to all
      holders of Common Stock (including any such distribution made in connection
      with
      a consolidation or merger in which the Company is the continuing corporation)
      of
      evidences of indebtedness or assets (other than cash dividends or cash
      distributions payable out of consolidated earnings or earned surplus or
      dividends or distributions referred to in Section 3(a)), or subscription rights
      or warrants, the Exercise Price to be in effect after such payment date shall
      be
      determined by multiplying the Exercise Price in effect immediately prior to
      such
      payment date by a fraction, the numerator of which shall be the total number
      of
      shares of Common Stock outstanding multiplied by the Market Price (as defined
      below) per share of Common Stock immediately prior to such payment date, less
      the fair market value (as determined by the Company’s Board of Directors in good
      faith) of said assets or evidences of indebtedness so distributed, or of such
      subscription rights or warrants, and the denominator of which shall be the
      total
      number of shares of Common Stock outstanding multiplied by such Market Price
      per
      share of Common Stock immediately prior to such payment date. “Market Price” as
      of a particular date (the “Valuation Date”) shall mean the following: (a) if the
      Common Stock is then listed on the Nasdaq Global Market or the Nasdaq Capital
      Market (“Nasdaq”) or any other national stock exchange, the closing sale price
      of one share of Common Stock on such exchange on the last trading day prior
      to
      the Valuation Date; (b) if the Common Stock is then quoted on the National
      Association of Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin
      Board”) or such similar quotation system or association, the closing sale price
      of one share of Common Stock on the Bulletin Board or such other quotation
      system or association on the last trading day prior to the Valuation Date or,
      if
      no such closing sale price is available, the average of the high bid and the
      low
      asked price quoted thereon on the last trading day prior to the Valuation Date;
      or (c) if the Common Stock is not then listed on a national stock exchange
      or
      quoted on the Bulletin Board or such other quotation system or association,
      the
      fair market value of one share of Common Stock as of the Valuation Date, as
      determined in good faith by the Board of Directors of the Company and the
      Holder. If the Common Stock is not then listed on a national securities
      exchange, the Bulletin Board or such other quotation system or association,
      the
      Board of Directors of the Company shall respond promptly, in writing, to an
      inquiry by the Holder prior to the exercise hereunder as to the fair market
      value of a share of Common Stock as determined by the Board of Directors of
      the
      Company. In the event that the Board of Directors of the Company and the Holder
      are unable to agree upon the fair market value in respect of subpart (c) of
      this
      paragraph, the Company and the Holder shall jointly select an appraiser, who
      is
      experienced in such matters. The decision of such appraiser shall be final
      and
      conclusive, and the cost of such appraiser shall be borne equally by the Company
      and the Holder. Such adjustment shall be made successively whenever such a
      payment date is fixed.

     

    c)  [INTENTIONALLY
      DELETED]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    d)  Subsequent
      Rights Offerings.
      The
      Company shall not effect a rights offering until after the three (3) year
      anniversary of the Initial Exercise Date without the consent of the
      Supermajority Purchasers. 

     

    e)  Pro
      Rata Distributions.
      The
      Company shall not distribute to all holders of Common Stock evidences of its
      indebtedness or assets (including cash and cash dividends) until after the
      three
      (3) year anniversary of the Initial Exercise Date without the consent of the
      Supermajority Purchasers.

     

    f)  Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property, or (D) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (each “Fundamental
      Transaction”),
      then,
      upon any subsequent exercise of this Warrant, the Holder shall have the right
      to
      receive, for each Warrant Share that would have been issuable upon such exercise
      immediately prior to the occurrence of such Fundamental Transaction, the number
      of shares of Common Stock of the successor or acquiring corporation or of the
      Company, if it is the surviving corporation, and any additional consideration
      (the “Alternate
      Consideration”)
      receivable as a result of such merger, consolidation or disposition of assets
      by
      a holder of the number of shares of Common Stock for which this Warrant is
      exercisable immediately prior to such event. For purposes of any such exercise,
      the determination of the Exercise Price shall be appropriately adjusted to
      apply
      to such Alternate Consideration based on the amount of Alternate Consideration
      issuable in respect of one share of Common Stock in such Fundamental
      Transaction, and the Company shall apportion the Exercise Price among the
      Alternate Consideration in a reasonable manner reflecting the relative value
      of
      any different components of the Alternate Consideration. If holders of Common
      Stock are given any choice as to the securities, cash or property to be received
      in a Fundamental Transaction, then the Holder shall be given the same choice
      as
      to the Alternate Consideration it receives upon any exercise of this Warrant
      following such Fundamental Transaction. To the extent necessary to effectuate
      the foregoing provisions, any successor to the Company or surviving entity
      in
      such Fundamental Transaction shall issue to the Holder a new warrant consistent
      with the foregoing provisions and evidencing the Holder’s right to exercise such
      warrant into Alternate Consideration. The terms of any agreement pursuant to
      which a Fundamental Transaction is effected shall include terms requiring any
      such successor or surviving entity to comply with the provisions of this Section
      3(e) and insuring that this Warrant (or any such replacement security) will
      be
      similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction. Notwithstanding anything to the contrary, in the event of a
      Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3
      transaction” as defined in Rule 13e-3 under the Securities Exchange Act of 1934,
      as amended, or (3) a Fundamental Transaction involving a person or entity not
      traded on a national securities exchange, the Nasdaq Global Select Market,
      the
      Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor
      entity shall pay at the Holder’s option, exercisable at any time concurrently
      with or within 30 days after the consummation of the Fundamental Transaction,
      an
      amount of cash equal to the value of this Warrant as determined in accordance
      with the Black Scholes Option Pricing Model obtained from the “OV” function on
      Bloomberg L.P. using (i) a price per share of Common Stock equal to the VWAP
      of
      the Common Stock for the Trading Day immediately preceding the date of
      consummation of the applicable Fundamental Transaction, (ii) a risk-free
      interest rate corresponding to the U.S. Treasury rate for a period equal to
      the
      remaining term of this Warrant as of the date of consummation of the applicable
      Fundamental Transaction and (iii) an expected volatility equal to the 100 day
      volatility obtained from the “HVT” function on Bloomberg L.P. determined as of
      the Trading Day immediately following the public announcement of the applicable
      Fundamental Transaction.

     

    g)  Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

    h)  [INTENTIONALLY
      DELETED].

     

    i)  Notice
      to Holder.
      

     

    i.  Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to any provision of this
      Section 3, the Company shall promptly mail to the Holder a notice setting forth
      the Exercise Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment. 

     

    ii.  Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Stock; (B) the Company shall declare a special nonrecurring
      cash dividend on or a redemption of the Common Stock; (C) the Company shall
      authorize the granting to all holders of the Common Stock rights or warrants
      to
      subscribe for or purchase any shares of capital stock of any class or of any
      rights; (D) the approval of any stockholders of the Company shall be required
      in
      connection with any reclassification of the Common Stock, any consolidation
      or
      merger to which the Company is a party, any sale or transfer of all or
      substantially all of the assets of the Company, of any compulsory share exchange
      whereby the Common Stock is converted into other securities, cash or property;
      (E) the Company shall authorize the voluntary or involuntary dissolution,
      liquidation or winding up of the affairs of the Company; then, in each case,
      the
      Company shall cause to be mailed to the Holder at its last address as it shall
      appear upon the Warrant Register of the Company, at least 20 calendar days
      prior
      to the applicable record or effective date hereinafter specified, a notice
      stating (x) the date on which a record is to be taken for the purpose of such
      dividend, distribution, redemption, rights or warrants, or if a record is not
      to
      be taken, the date as of which the holders of the Common Stock of record to
      be
      entitled to such dividend, distributions, redemption, rights or warrants are
      to
      be determined or (y) the date on which such reclassification, consolidation,
      merger, sale, transfer or share exchange is expected to become effective or
      close, and the date as of which it is expected that holders of the Common Stock
      of record shall be entitled to exchange their shares of the Common Stock for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange; provided that the
      failure to mail such notice or any defect therein or in the mailing thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to exercise this Warrant during the
      period commencing on the date of such notice to the effective date of the event
      triggering such notice.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      4. Transfer
      of Warrant.

     

    a)  Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase
      Agreement, this Warrant and all rights hereunder (including, without limitation,
      any registration rights) are transferable, in whole or in part, upon surrender
      of this Warrant at the principal office of the Company or its designated agent,
      together with a written assignment of this Warrant substantially in the form
      attached hereto duly executed by the Holder or its agent or attorney and funds
      sufficient to pay any transfer taxes payable upon the making of such transfer.
      Upon such surrender and, if required, such payment, the Company shall execute
      and deliver a new Warrant or Warrants in the name of the assignee or assignees
      and in the denomination or denominations specified in such instrument of
      assignment, and shall issue to the assignor a new Warrant evidencing the portion
      of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
      A
      Warrant, if properly assigned pursuant to the terms of this section, may be
      exercised by a new holder for the purchase of Warrant Shares without having
      a
      new Warrant issued. 

     

    b)  New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice. Subject to applicable securities laws, Warrants issued on
      transfers or exchanges shall be dated the original Issue Date and shall be
      identical with this Warrant except as to the number of Warrant Shares issuable
      pursuant thereto. 

     

    c)  Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    d)  Transfer
      Restrictions.
      If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be registered pursuant to an effective
      registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer, that the Holder or transferee of this
      Warrant, as the case may be, comply
      with the provisions of Section 5.7 of the Purchase Agreement.

     

    Section
      5. Miscellaneous.

     

    a)  No
      Rights as Shareholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      shareholder of the Company prior to the exercise hereof as set forth in Section
      2(e)(i). 

     

    b)  Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

     

    c)  Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a Business Day, then such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

    d)  Authorized
      Shares.
      The
      Company covenants that it will reserve from its authorized and unissued Common
      Stock a sufficient number of shares to provide for the issuance of the Warrant
      Shares upon the exercise of any purchase rights under this Warrant. The Company
      further covenants that its issuance of this Warrant shall constitute full
      authority to its officers who are charged with the duty of executing stock
      certificates to execute and issue the necessary certificates for the Warrant
      Shares upon the exercise of the purchase rights under this Warrant. The Company
      will take all such reasonable action as may be necessary to assure that such
      Warrant Shares may be issued as provided herein without violation of any
      applicable law or regulation, or of any requirements of the Trading Market
      upon
      which the Common Stock may be listed. The Company covenants that all Warrant
      Shares which may be issued upon the exercise of the purchase rights represented
      by this Warrant will, upon exercise of the purchase rights represented by this
      Warrant, be duly authorized, validly issued, fully paid and nonassessable and
      free from all taxes, liens and charges created by the Company in respect of
      the
      issue thereof (other than taxes in respect of any transfer occurring
      contemporaneously with such issue). 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (a) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (b)
      take all such action as may be necessary or appropriate in order that the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant, and (c) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof as may be necessary to enable
      the Company to perform its obligations under this Warrant.

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    e)  Jurisdiction.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be determined in accordance with the provisions of the
      Purchase Agreement.

     

    f)  Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    g)  Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. If the Company willfully and
      knowingly fails to comply with any provision of this Warrant, which results
      in
      any material damages to the Holder, the Company shall pay to Holder such amounts
      as shall be sufficient to cover any costs and expenses including, but not
      limited to, reasonable attorneys’ fees, including those of appellate
      proceedings, incurred by Holder in collecting any amounts due pursuant hereto
      or
      in otherwise enforcing any of its rights, powers or remedies
      hereunder.

     

    h)  Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    i)  Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant to purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    j)  Remedies.
      Holder,
      in addition to being entitled to exercise all rights granted by law, including
      recovery of damages, will be entitled to specific performance of its rights
      under this Warrant. The Company agrees that monetary damages would not be
      adequate compensation for any loss incurred by reason of a breach by it of
      the
      provisions of this Warrant and hereby agrees to waive and not to assert the
      defense in any action for specific performance that a remedy at law would be
      adequate.

     

    k)  Successors
      and Assigns.
      Subject
      to applicable securities laws and Section 4(a) of this Warrant, this Warrant
      and
      the rights and obligations evidenced hereby shall inure to the benefit of and
      be
      binding upon the successors of the Company and the successors and permitted
      assigns of Holder. The provisions of this Warrant are intended to be for the
      benefit of all Holders from time to time of this Warrant and shall be
      enforceable by any the Holder or holder of Warrant Shares.

     

    l)  Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and the Holder.

     

    m)  Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    n)  Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    

    ********************

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized as of the date first above
      indicated.

     

    

     

    
      	 	TARGETED
              GENETICS CORPORATION
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	
            	
              
                

              

              Name:
                H. Stewart Parker

              Title:
                Chief Executive Officer &
President

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    NOTICE
      OF EXERCISE

    

    TO: TARGETED
      GENETICS CORPORATION

    

    (1)  The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2)  Payment
      shall take the form of (check applicable box):

     

    [
      ] in
      lawful money of the United States; or

     

    [
      ] the
      cancellation of such number of Warrant Shares as is necessary, in accordance
      with the formula set forth in subsection 2(c), to exercise this Warrant with
      respect to the maximum number of Warrant Shares purchasable pursuant to the
      cashless exercise procedure set forth in subsection 2(c).

     

    (3)  Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

     

    

    The
      Warrant Shares shall be delivered to the following DWAC Account Number or by
      physical delivery of a certificate to:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (4)
      Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    

    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    ASSIGNMENT
      FORM

    

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    

    

     

    FOR
      VALUE
      RECEIVED, ______________________ (the “Assignor”)
      hereby
      sells, assigns and transfers all of the rights of the undersigned Assignor
      under
      the attached Warrant with respect to the number of shares of common stock of
      Targeted Genetics Corporation (the “Company”)
      covered thereby set forth below, to the following “Assignee”
and,
      in
      connection with such transfer, represents and warrants to the Company that
      the
      transfer is in compliance with Section 4 of the Warrant:

     

    

    
      	
              NAME
                OF ASSIGNEE

            	
              ADDRESS/FAX
                NUMBER

            
	 	 
	 	 
	
              Dated:
                ____________________________

            	
              Signature:
                ____________________________________

               

              Witness:  
                ____________________________________

            

    

     

    

    ASSIGNEE
      ACKNOWLEDGMENT

     

     

    The
      undersigned Assignee acknowledges that it has reviewed the attached
      Warrant.

     

    
      
        	 	 
	
                 

              	
                Signature:
                  ____________________________________

                 

                
                  By:
                    _________________________________________

                  Its:
                    _________________________________________

                  Address:
                    ____________________________________

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