CUSIP No. 87612M108 Page 1 of 52 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Amendment No. 2)
Under the Securities Exchange Act of 1934
Targeted Genetics Corporation
___________________________________________________________________________
(Name of Issuer)
Common Stock, $.01 par value
___________________________________________________________________________
(Title of Class of Securities)
87612M108
___________________________________________________________________________
(CUSIP Number)
Jeremy L. Curnock Cook John C. MacMurray, Esq.
Rothschild Asset Management Ltd. Reboul, MacMurray, Hewitt,
Five Arrows House Maynard & Kristol
St. Swithin's Lane 45 Rockefeller Plaza
London EC4N 8NR England New York, New York 10111
Tel. 011-171-280-5000 Tel. (212) 841-5700
___________________________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 17, 1998
___________________________________________________________________________
(Date of Event Which Requires
Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
<PAGE>
CUSIP No. 87612M108 Page 2 of 52 Pages
___________________________________________________________________________
1) Name of Reporting PersonInternational
S.S. or I.R.S. IdentificationBiotechnology
No. of Above PersonTrust plc
___________________________________________________________________________
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
___________________________________________________________________________
3) SEC Use Only
___________________________________________________________________________
4) Source of Funds WC
___________________________________________________________________________
5) Check if Disclosure of
Legal Proceedings is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
___________________________________________________________________________
6) Citizenship or Place
of Organization United Kingdom
___________________________________________________________________________
Number of 7) Sole Voting 4,450,000 shares of
Shares Beneficially Power Common Stock,
Owned by including 1,000,000
Reporting Person issuable upon
exercise of
Warrants
__________________________________________________
8) Shared Voting
Power -0-
__________________________________________________
9) Sole Disposi- 4,450,000 shares of
tive Power Common Stock,
including 1,000,000
issuable upon
exercise of
Warrants
__________________________________________________
10) Shared Dis-
positive Power -0-
__________________________________________________
<PAGE>
CUSIP No. 87612M108 Page 3 of 52 Pages
11) Aggregate Amount Beneficially 4,450,000 shares of
Owned by Each Reporting Person Common Stock,
including 1,000,000
issuable upon
exercise of
Warrants
___________________________________________________________________________
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
___________________________________________________________________________
13) Percent of Class
Represented by 14.9%
Amount in Row (11)
___________________________________________________________________________
14) Type of Reporting
PersonCO
<PAGE>
CUSIP No. 87612M108 Page 4 of 52 Pages
Amendment No. 2 to Schedule 13D
_______________________________
Reference is hereby made to the statement on Schedule 13D
originally filed with the Securities and Exchange Commission on August 1,
1995 and Amendment No. 1 thereto filed on July 16, 1996 (as so amended, the
"Schedule 13D).
The Schedule 13D is hereby amended as follows:
Item 3. Source and Amount of Funds or Other Consideration.
_________________________________________________
Item 3 is hereby amended by adding the following thereto:
This statement relates to the acquisition by IBT of 2,000,000
shares of Common Stock (the "1998 Shares") and a Warrant to Purchase
1,000,000 shares of Common Stock (the "1998 Warrant") in a private
placement by the Issuer (the "1998 Private Placement"), pursuant to a
Common Stock and Warrant Purchase Agreement dated as of April 17, 1998 by
and among the Issuer and the investors listed therein, including IBT (the
"April 1998 Purchase Agreement"). The April 1998 Purchase Agreement is
attached hereto as Exhibit A, and any description thereof is qualified in
its entirety by reference thereto. The purchase price of the 1998 Shares
was $1.50 per share, and the 1998 Warrant was issued in conjunction
therewith at no additional cost. The 1998 Warrant is immediately
exercisable, at an exercise price of $2.00 per share, and expires on April
17, 2003. The Form of the 1998 Warrant is attached hereto as Exhibit B to
the April 1998 Purchase Agreement, and any description thereof is qualified
in its entirety by reference thereto. The source of funds for such
acquisition was IBT's working capital, or funds available for investment.
Item 4.Purpose of Transaction.
______________________
Item 4 is hereby amended by adding the following thereto:
IBT acquired the 1998 Shares and the 1998 Warrant for investment
purposes.
Item 5. Interest in Securities of the Issuer.
____________________________________
Item 5 is hereby amended and restated to read in its entirety as
follows:
<PAGE>
CUSIP No. 87612M108 Page 5 of 52 Pages
(a) Based on a total of 28,883,381 shares of Common Stock
outstanding after the completion of the 1998 Private Placement, and giving
effect to the exercise of 1,000,000 presently exercisable Warrants, IBT
owns 4,450,000 shares of Common Stock, or approximately 14.9% of the Common
Stock outstanding.
(b) IBT has sole power to vote or direct the voting of and to
dispose or to direct the disposition of the shares of Common Stock referred
to in paragraph (a) above.
(c) Except as described in this statement, neither IBT nor any
of the persons identified in Item 2 above has effected any transaction in
the Common Stock in the past 60 days.
(d) No other person has the power to direct the receipt of
dividends on, or the proceeds from sales of, the shares of Common Stock
owned IBT.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings
or Relationships with Respect to
Securities of the Issuer.
_______________________________________
Item 6 is hereby amended by adding the following thereto:
As provided by the April 1998 Purchase Agreement, IBT entered
into an Investor Rights Agreement dated as of April 17, 1998 (the "Investor
Rights Agreement"), pursuant to which the Issuer has agreed to, on or
before fifteen days after the closing date under the April 1998 Purchase
Agreement, file a shelf registration statement on Form S-3 with the
Securities and Exchange Commission with respect to the 1998 Shares and the
shares of Common Stock underlying the 1998 Warrant, and to provide other
registration rights as described therein. The Investor Rights Agreement is
attached hereto as Exhibit B, and any description thereof is qualified in
its entirety by reference thereto.
As also provided by the April 1998 Purchase Agreement, IBT has
executed a Lock-Up Agreement (the "Lock-Up Agreement") pursuant to which
IBT has agreed that it will not, without the prior written consent of
GeneChem Technologies Venture Fund L.P., another investor under the April
1998 Purchase Agreement, in any way transfer or dispose of any shares of
Common Stock (or any securities convertible into or exercisable or
exchangeable for Common Stock) for a period of 180 days after the closing
date of its purchase of the 1998 Shares and the 1998 Warrant, except
pursuant to the Registration Statement. The Form of the Lock-Up Agreement
is attached hereto as Exhibit C, and any description thereof is qualified
in its entirety by reference thereto.
<PAGE>
CUSIP No. 87612M108 Page 6 of 52 Pages
Item 7. Material to be Filed as Exhibits.
________________________________
Exhibit A -- April 1998 Purchase Agreement (Appears at Page 8)
Exhibit B -- Investor Rights Agreement (Appears at Page 35)
Exhibit C -- Form of Lock-Up Agreement (Appears at Page 51)
<PAGE>
CUSIP No. 87612M108 Page 7 of 52 Pages
Signature
_________
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: April 30, 1998
INTERNATIONAL BIOTECHNOLOGY
TRUST PLC
By: /s/ Jeremy L. Curnock Cook
__________________________
Director
<PAGE>
CUSIP No. 87612M108 Page 8 of 52 Pages
EXHIBIT A
_________
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
COMMON STOCK AND WARRANT PURCHASE AGREEMENT, dated as of April 17,
1998, by and among TARGETED GENETICS CORPORATION, a Washington corporation
(the "Company"), and the investors listed on Exhibit A hereto (the
"Investors").
RECITAL
The Investors desire to purchase from the Company, and the Company
desires to sell to the Investors, shares of the Company's common stock, par
value $.01 per share (the "Common Stock"), and warrants to purchase shares
of Common Stock at an exercise price of $2.00 per share (subject to
adjustment) for a period through and including April 17, 2003 (the
"Warrants"), upon the terms and subject to the conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto agree as follows:
1.PURCHASE AND SALE OF STOCK AND ISSUANCE OF WARRANTS
1.1PURCHASE AND SALE
Upon the terms and subject to the conditions of this Agreement, the
Company shall sell and issue to each Investor, and each Investor shall
purchase from the Company, the number of shares of Common Stock set forth
opposite such Investor's name on Exhibit A hereto (the "Shares"). Each
Investor shall also receive, at no additional cost, a Warrant or Warrants
to purchase the number of shares of Common Stock set forth opposite such
Investor's name on Exhibit A hereto (the "Warrant Shares" and, together
with the Shares and the Warrants, the "Securities").
1.2PURCHASE PRICE
The purchase price for the Shares to be purchased by the Investors
shall be $1.50 per Share.
<PAGE>
CUSIP No. 87612M108 Page 9 of 52 Pages
2.CLOSING
2.1CLOSING DATE
The closing of the sale and purchase of the Shares and Warrants shall
be held at 7:00 a.m., Seattle time, on April 17, 1998, or such other time
as may be agreed to by the parties hereto (the "Closing Date").
2.2DELIVERY OF STOCK AND WARRANTS
At the Closing, subject to the terms and conditions hereof, the
Company shall deliver to each Investor (a) a certificate representing the
Shares to be purchased by such Investor from the Company and (b) a Common
Stock Purchase Warrant, in the form attached hereto as Exhibit B,
representing the Warrants to be issued to such Investor by the Company,
each of which shall be dated the Closing Date and duly registered in the
name of such Investor, against payment of the aggregate purchase price
therefor by wire transfer.
3.REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Investor that,
except as set forth on a Schedule of Exceptions attached hereto as
Exhibit C:
3.1ORGANIZATION AND QUALIFICATION
The Company is a corporation organized and validly existing under the
laws of the state of Washington and has all requisite corporate power and
authority to own its properties and carry on its business as currently
conducted and as proposed to be conducted. The Company is duly qualified
to transact business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to so qualify would have a material
adverse effect on its financial condition, results of operations, business
or properties (a "Material Adverse Effect").
3.2CAPITALIZATION
As of the date of this Agreement, the authorized capital stock of the
Company consists of (a) 6,000,000 shares of preferred stock, par value $.01
per share, no shares of which are outstanding but 400,000 shares of which
are designated as Series A Participating Cumulative Preferred Stock,
issuable upon exercise of certain preferred stock purchase rights
associated with the Common Stock, and (b) 40,000,000 shares of Common
<PAGE>
CUSIP No. 87612M108 Page 10 of 52 Pages
Stock, 20,216,714 shares of which were issued and outstanding as of
March 31, 1997, 137,016 shares of which were subject to warrants
outstanding as of March 31, 1997 and 2,156,100 shares of which were
reserved, as of March 31, 1997, for issuance upon the exercise of stock
options granted or to be granted under the Company's 1992 Restated Stock
Option Plan (the "1992 Plan") or the Company's Stock Option Plan for
Nonemployee Directors (the "NED Plan"). Except as set forth in this
Section 3.2 and as contemplated by this Agreement, and except for options
granted under the 1992 Plan or the NED Plan since March 31, 1997, there are
no outstanding options, warrants, conversion privileges, preemptive rights,
or other rights or agreements to purchase or otherwise acquire or issue any
equity securities of the Company. The Company has no obligation to
repurchase or redeem any outstanding securities.
3.3AUTHORIZATION, DUE EXECUTION AND VALIDITY
The Company has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement, the Investor Rights
Agreement and the Common Stock Purchase Warrant. All corporate action on
the part of the Company, its officers, directors and shareholders necessary
for the authorization, execution and delivery of this Agreement, the
Investor Rights Agreement and the Common Stock Purchase Warrant and the
transactions contemplated herein, the performance of all obligations of the
Company hereunder and the authorization, issuance and delivery of the
Shares and the Warrants being sold hereunder, and the Warrant Shares to be
issued upon exercise of the Warrants, have been taken or will be taken
prior to the Closing. This Agreement, the Investor Rights Agreement and
the Common Stock Purchase Warrant have been duly executed and delivered by
the Company and constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms, except as (a) such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
3.4VALID ISSUANCE OF STOCK AND WARRANTS
The Shares and the Warrants, when issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein,
will be duly and validly issued, fully paid and nonassessable and free of
any liens or encumbrances created by the Company, and will be issued in
compliance with all applicable state and federal securities laws. The
Warrant Shares, when issued, sold and delivered in accordance with the
terms of the Warrants for the consideration expressed therein, will be duly
and validly issued, fully paid and nonassessable and free of any liens or
<PAGE>
CUSIP No. 87612M108 Page 11 of 52 Pages
encumbrances created by the Company, and will be issued in compliance with
all applicable state and federal securities laws. The outstanding shares
of Common Stock are all duly and validly authorized and issued, fully paid
and nonassessable and were issued in compliance with all applicable state
and federal securities laws.
3.5GOVERNMENTAL CONSENTS
No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any federal or
state governmental authority or entity on the part of the Company is
required in connection with the consummation of the transactions
contemplated by this Agreement, the Investor Rights Agreement and the
Common Stock Purchase Warrant (including, without limitation, the issuance
of the Securities), except for applicable notice filings as are necessary
to secure an exemption from qualification or registration of the offer and
sale of the Securities under all applicable United States federal or state
securities laws.
3.6LITIGATION
There is no action, suit, claim, proceeding or investigation pending
or, to the Company's knowledge, currently threatened against the Company
that relates to or challenges the legality, validity or enforceability of
this Agreement, the Investor Rights Agreement and the Common Stock Purchase
Warrant or the Securities or that could either individually or in the
aggregate have a Material Adverse Effect. The Company is not a party to or
subject to the provisions of any order, writ, injunction, judgment or
decree of any court or other governmental authority or entity that could
have, individually and in the aggregate, a Material Adverse Effect.
3.7COMPLIANCE WITH OTHER INSTRUMENTS
The Company is not in violation of any provision of its Restated
Articles of Incorporation or its Amended and Restated Bylaws or in
violation or default of any provision of any instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound,
which violation or default would adversely affect the legality, validity,
or enforceability of this Agreement, the Investor Rights Agreement and the
Common Stock Purchase Warrant or have, individually and in the aggregate, a
Material Adverse Effect. The execution, delivery and performance of this
Agreement, the Investor Rights Agreement and the Common Stock Purchase
Warrant and the consummation of the transactions contemplated hereby will
not require any consent under or be in conflict with or constitute, with or
<PAGE>
CUSIP No. 87612M108 Page 12 of 52 Pages
without the passage of time or the giving of notice or both, either a
violation or default under any such provision, instrument, judgment, order,
writ, decree or contract or an event which results in the creation of any
lien, charge or encumbrance upon any of the Company's assets.
3.8SEC REPORTS; FINANCIAL STATEMENTS
The Company has furnished the Investors with true and complete copies
of each report, schedule, registration statement and definitive proxy
statement filed by the Company with the Securities and Exchange Commission
(the "SEC") since December 31, 1997 (the "SEC Documents"), which are all
the documents that the Company has been required to file with the SEC
during such period and each of which has been timely filed. As of their
respective dates, the SEC Documents complied with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable, and the rules and regulations of the SEC thereunder, and none
of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of
the Company included in the SEC Documents were prepared in accordance with
generally accepted accounting principles applied on a consistent basis
during the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited financial statements, as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of unaudited
financial statements, to normal recurring audit adjustments) the financial
position of the Company and its consolidated subsidiaries at the dates
thereof and the results of their operations and changes in financial
position for the periods then ended.
3.9COMPLIANCE WITH LAWS
The Company has complied, and is in compliance with, all federal,
state, county, local and foreign laws, rules, regulations, ordinances,
decrees and orders applicable to the operation of its business or to the
real property or personal property that it owns or leases (including,
without limitation, all such laws, rules, ordinances, decrees and orders
relating to federal food and drug administration, antitrust, consumer
protection, currency exchange, environmental protection, equal opportunity,
health, occupational safety, pension, securities and trading-with-the-enemy
matters), the failure to comply with which would, individually or in the
aggregate, have a Material Adverse Effect. The Company has not received
any notification of any asserted present or past unremedied failure by the
<PAGE>
CUSIP No. 87612M108 Page 13 of 53 Pages
Company to comply with any of such laws, rules, regulations, ordinances,
decrees or orders.
3.10PRIVATE OFFERING
During the six months preceding the date of this Agreement, neither
the Company nor any person acting on its behalf has, directly or through
any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of any security (as defined in the Securities Act)
that is or may be integrated with the sale of the Shares and the Warrants
in a manner that would require the registration of the Shares or the
Warrants under the Securities Act. Neither the Company nor any person
acting on its behalf has offered or sold or will offer or sell any Shares
or Warrants by means of any general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act. Assuming the
accuracy of the Investors' representations in Section 4 hereof, the
offering and sale of the Shares and the Warrants will satisfy the
requirements of Rule 506 under the Securities Act.
3.11CHANGES
Since December 31, 1997 there has not been:
(a)any damage, destruction or loss (whether or not covered by
insurance) which has had or is expected to have a Material Adverse Effect;
(b)any material change in the accounting methods or practices
followed by the Company;
(c)any material debt obligation or liability (whether absolute or
contingent) incurred by the Company (whether or not presently outstanding)
except (i) current liabilities incurred, and obligations under agreements
entered into, in the ordinary course of business and (ii) obligations or
liabilities entered into or incurred in connection with the execution of
this Agreement;
(d)any sale, lease, abandonment or other disposition by the Company
of any real property or, other than in the ordinary course of business, of
any equipment or other operating properties or, other than in the ordinary
course of business, any sale, assignment, transfer, license or other
disposition by the Company of any intellectual property or other intangible
asset; or
(e)any other event or occurrence that has had or is expected to have
a Material Adverse Effect.
<PAGE>
CUSIP No. 87612M108 Page 14 of 54 Pages
3.12CERTAIN FEES
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the sale of the
Shares and the Warrants to the Investors.
3.13MATERIAL CONTRACTS
The exhibit list to the Company's Annual Report on Form 10-K for the
year ended December 31, 1997 (the "1997 Form 10-K") contains a true and
complete list of all Material Contracts (as defined below) to which the
Company is a party or by which it or its assets may be bound. The Company
is, and, to the best of the Company's knowledge, all other parties to such
Material Contracts (other than the Company) are, in compliance in all
material respects with their obligations thereunder. "Material Contracts"
means the agreements, obligations and undertakings which are material to
the business or operations of the Company. Without limiting the generality
of the foregoing, any agreement, obligation or undertaking will be deemed
to be a Material Contract if a breach thereof or default thereunder would
have a Material Adverse Effect.
3.14TITLE TO PROPERTIES AND ASSETS, LIENS, ETC.
Other than as disclosed in the SEC Documents, the Company has good and
marketable title to its properties and assets, and good title to its
leasehold estates, in each case subject to no mortgage, pledge, lien,
lease, encumbrance, or charge, other than (i) those resulting from taxes
which have not yet become delinquent, (ii) minor liens and encumbrances
which do not materially detract from the value of the property subject
thereto or have a Material Adverse Effect on the Company, and (iii) those
that have otherwise arisen in the ordinary course of business.
3.15PATENTS AND TRADEMARKS
To the best of the Company's knowledge, the Company has sufficient
title and ownership of or rights to use such trade names, copyrights, trade
secrets, information, patents, trademarks, service marks, rights and
processes (including all applications therefor) as are necessary for its
business as now conducted and as proposed to be conducted, without any
conflict with or infringement of the rights of others. Except as set forth
in the exhibit list to the Company's 1997 Form 10-K, there are no material
options, licenses, or agreements of any kind relating to the foregoing, nor
is the Company bound by or a party to any material options, licenses or
agreements of any kind with respect to the patents, trademarks, service
<PAGE>
CUSIP No. 87612M108 Page 15 of 52 Pages
marks, trade names, copyrights, trade secrets, licenses, proprietary rights
and processes of any other person or entity. The Company has not received
any communications alleging that the Company has violated or, by conducting
its business as now conducted or proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The
Company is not aware that any of its employees is obligated under any
contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court
or administrative agency, that would interfere with the use of his or her
best efforts to promote the interests of the Company or that would conflict
with the Company's business as now conducted or proposed to be conducted.
To the best of the Company's knowledge, no person or entity is infringing
or threatening to infringe the patents, trademarks, service marks, trade
names, copyrights or trade secrets or other proprietary rights of the
Company. All employees, officers and directors, other than those employees
who are not privy to any of the Company's confidential information, are
bound by confidentiality and assignment of intellectual property and
technology agreements and such agreements and obligations do not confer on
any such person any rights of the intellectual property of the Company.
3.16LABOR MATTERS
The Company has no collective bargaining agreement with any of its
employees and there is no labor union organizing activity pending or
threatened with respect to the Company. There are no disputes pending or,
to the knowledge of the Company, threatened between the Company, on the one
hand, and any of its employees, on the other hand, other than employee
grievances arising in the ordinary course of business which would not,
individually or in the aggregate, have a Material Adverse Effect.
4.REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor hereby represents and warrants to the Company, severally
and not jointly, that:
4.1AUTHORIZATION
All acts and conditions necessary for the authorization, execution,
delivery and consummation by the Investor of this Agreement and the
transactions contemplated hereby have been, or will prior to the Closing
be, taken, performed and obtained. This Agreement constitutes a valid and
legally binding obligation of the Investor, enforceable in accordance with
its terms, except as (a) such enforceability may be limited by bankruptcy,
<PAGE>
CUSIP No. 87612M108 Page 16 of 52 Pages
insolvency or similar laws affecting creditors' rights generally and
(b) the availability of equitable remedies may be limited by equitable
principles of general applicability. The Investor has full power and
authority to execute, deliver and perform its obligations under this
Agreement and to own the Securities. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not conflict with or constitute a violation or
default under any provision of the charter or bylaws of the Investor, or of
any material agreement, indenture or other instrument to which the Investor
is a party, or by which it or its properties or assets are bound, or of any
order, judgment or decree against or binding upon such Investor.
4.2EXEMPTION FROM REGISTRATION
Except as provided in the Investor Rights Agreement, the Investor has
been advised that none of the Securities to be purchased by the Investor
hereunder are being registered under the Securities Act, or applicable
state or foreign securities laws, but are being offered and sold pursuant
to exemptions from such laws. The Investor acknowledges that the Company
is relying in part upon the Investor's representations and warranties
contained herein for the purpose of qualifying the offer and sale of the
Securities proposed to be offered and sold hereunder for applicable
exemptions from registration or qualification pursuant to federal or state
securities laws, rules and regulations.
4.3PURCHASE ENTIRELY FOR OWN ACCOUNT
The Securities to be received by the Investor will be acquired for
investment for the Investor's own account, not as a nominee or agent, and
not with a view to the distribution of any part thereof in a manner
contrary to the Securities Act or any applicable federal or state
securities law, and the Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same in a
manner contrary to the Securities Act or any applicable federal or state
securities law. The Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person with respect to any of
the Securities.
4.4INVESTMENT EXPERIENCE
The Investor qualifies as an "accredited investor" as defined in
Rule 501(a) of Regulation D promulgated by the SEC that meets the
requirements of Rule 501(a)(1), (2), (3), or (7) of said Regulation D, and
<PAGE>
CUSIP No. 87612M108 Page 17 of 52 Pages
acknowledges that an investment in the Securities involves a high degree of
risk. The Investor is able to fend for itself in the transactions
contemplated by this Agreement, can bear the economic risk of its
investment (including possible complete loss of such investment) for an
indefinite period of time and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits
and risks of the investment in the Securities. The Investor has not been
organized for the purpose of acquiring the Securities.
4.5ACCESS TO INFORMATION
The Investor has been furnished such information as it deems necessary
to evaluate an investment in the Securities. The Investor has been given
access to sufficient information regarding the Company, including
information regarding the current financial condition, results of
operations, business, properties and management of the Company and the
risks associated therewith and has utilized such access to its satisfaction
for the purpose of obtaining information or verifying information. The
Investor has either attended or been given reasonable opportunity to attend
a meeting with representatives of the Company for the purpose of asking
questions of, and receiving answers from, such representatives concerning
the terms and conditions of the offering of the Securities and to obtain
any additional information, to the extent reasonably available. The
foregoing representations in this Section 4.5 shall not be deemed to limit
the Company's representations contained in Section 3 of this Agreement.
4.6RESTRICTED SECURITIES
The Investor realizes that none of the Securities to be purchased by
the Investor hereunder have been registered under the Securities Act and
that all of such Securities are characterized under the Securities Act as
"restricted securities" and therefore cannot be sold or transferred unless
subsequently registered under the Securities Act or an exemption from such
registration is available. In this connection, the Investor represents
that it is familiar with Rule 144 under the Securities Act, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
4.7RESIDENCY
The Investor represents that it is a bona fide resident of or is
domiciled in the jurisdiction indicated on Exhibit A hereto.
<PAGE>
CUSIP No. 87612M108 Page 18 of 52 Pages
4.8LEGENDS
It is understood that the certificates evidencing the Securities may
bear legends in substantially the following form:
The securities evidenced by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), or applicable state
securities laws, and no interest therein may be sold, distributed,
assigned, offered, pledged or otherwise transferred unless (i) there is an
effective registration statement under the Act and applicable state
securities laws covering any such transaction involving said securities,
(ii) this corporation receives an opinion of legal counsel for the holder
of these securities reasonably satisfactory to this corporation stating
that such transaction is exempt from registration or (iii) this corporation
otherwise satisfies itself that such transaction is exempt from
registration.
5.CONDITIONS OF INVESTORS' OBLIGATIONS AT THE CLOSING DATE
The obligations of each Investor under Section 1 hereof are subject to
the fulfillment on or before the Closing Date of each of the following
conditions, unless waived in writing by the Investor:
5.1REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company contained in
Section 3 hereof shall be true in all material respects on and as of the
Closing Date.
5.2PERFORMANCE
The Company shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to
be performed or complied with by it on or before the Closing Date.
5.3EXEMPTION
The offer and sale of the Shares and Warrants to the Investors
pursuant to this Agreement shall be exempt from registration under the
Securities Act.
5.4COMPLIANCE CERTIFICATE
The Chief Executive Officer or the Chief Financial Officer of the
Company shall have delivered to the Investors a certificate stating that
the conditions specified in Sections 5.1 and 5.2 hereof have been
fulfilled.
<PAGE>
CUSIP No. 87612M108 Page 19 of 52 Pages
5.5PROCEEDINGS AND DOCUMENTS
All corporate and other proceedings in connection with the
transactions contemplated at the Closing Date and all documents incident
thereto shall be reasonably satisfactory to the Investors and the
Investors' legal counsel.
5.6OPINION OF COMPANY COUNSEL
Each Investor shall have received from Perkins Coie, legal counsel for
the Company, an opinion, dated as of the Closing Date, in form and
substance reasonably satisfactory to such Investor.
5.7NO INJUNCTIONS OR RESTRAINTS
There shall be no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing
consummation of the offer, sale and purchase of the Shares and Warrants
contemplated hereby.
5.8TENDER OF CONSIDERATION - INVESTOR RIGHTS AGREEMENT
Each Investor shall have tendered full consideration for all of the
Shares being purchased by it hereunder. The Company and the Investors
shall have entered into an Investor Rights Agreement in the form attached
hereto as Exhibit D.
5.9LOCK-UP AGREEMENTS
Immunex Corporation and International Biotechnology Trust plc shall
have executed and delivered Lock-Up Agreements substantially in the form
attached hereto as Exhibit E.
6.CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING DATE
The obligations of the Company under Section 1 hereof are subject to
the fulfillment on or before the Closing Date of each of the following
conditions, unless waived in writing by the Company:
6.1REPRESENTATIONS AND WARRANTIES
The representations and warranties of each Investor contained in
Section 4 hereof shall be true in all material respects on and as of the
Closing Date.
<PAGE>
CUSIP No. 87612M108 Page 20 of 52 Pages
6.2PERFORMANCE
Each Investor shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to
be performed or complied with by it on or before the Closing Date.
6.3EXEMPTION
The offer and sale of the Shares and Warrants to the Investors
pursuant to this Agreement shall be exempt from registration under the
Securities Act.
6.4NO INJUNCTIONS OR RESTRAINTS
There shall be no temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing
consummation of the offer, sale and purchase of the Shares and Warrants
contemplated hereby.
7.COVENANTS
7.1PUBLICITY
The Company shall not use or make reference to the name of any
Investor or any affiliate of any Investor in any press release or other
public document without such Investor's prior consent unless the use or
reference to the Investor or affiliate is required by law, in which event
the Company will consult with the Investor prior to such publication.
7.2USE OF PROCEEDS
The Company shall use the proceeds from the offering and sale of the
Shares and the Warrants for working capital and other general corporate
purposes.
7.3NASDAQ LISTING
The Company shall use its best efforts to cause the Shares and the
Warrant Shares to be listed on the Nasdaq Stock Market.
<PAGE>
CUSIP No. 87612M108Page 21 of 52 Pages
8.MISCELLANEOUS
8.1EXPENSES
The Company and each Investor shall each bear its own expenses with
respect to the transactions contemplated by this Agreement, except that the
Company shall reimburse each Investor for all reasonable out-of-pocket
legal fees and disbursements incurred with respect thereto. Such
reimbursement shall be paid on the Closing Date or on such other date as is
requested by an Investor in the event the Closing does not occur.
8.2ENTIRE AGREEMENT; GOVERNING LAW
This Agreement and the other documents delivered at the Closing
constitute the full and entire understanding and agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements with respect to the subject matter hereof. This Agreement shall
be governed by and construed under the laws of the state of Washington as
applied to agreements among Washington residents entered into and to be
performed entirely within the state of Washington.
8.3NOTICE
Unless otherwise provided, any notice desired or required to be given
hereunder shall be in writing given by personal delivery or certified or
registered mail, or confirmed facsimile transmission, in any such case
addressed or sent: (a) if to the Company, to Targeted Genetics
Corporation, 1100 Olive Way, Suite 100, Seattle, WA 98101, Attn:
President, Facsimile: (206) 223-0288, with a copy to Perkins Coie, 1201
Third Avenue, 40th Floor, Seattle, WA 98101, Attn: Stephen M. Graham,
Facsimile: (206) 583-8500; (b) if to an Investor, to the address or
facsimile number listed on Exhibit A hereto, with a copy to Lapointe
Rosenstein, 1250 Rene-Levesque Blvd. W., Suite 1400, Montreal, Quebec H3B
5E9, Attn: Perry Kliot, Facsimile: (514) 925-9001 and a copy to Reboul,
MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, NY
10111, Attn: Charles Uniman; or (c) to such other address or facsimile
number as any party shall have previously designated by such a notice. The
effective date of any notice or request shall be three days from the date
it is sent by the addresser with charges prepaid so long as it is in fact
received within five days, or when successful transmission is confirmed if
sent by facsimile, or when personally delivered.
<PAGE>
CUSIP No. 87612M108 Page 22 of 52 Pages
8.4AMENDMENTS AND WAIVERS
Any term of this Agreement may be amended and the observance of any
term may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the
Company and each Investor.
8.5COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which when executed and delivered
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
8.6SUCCESSORS AND ASSIGNS
Except as otherwise provided herein, the provisions hereof shall inure
to the benefit, and be binding upon, the successors and assigns of the
parties hereto.
8.7SEVERABILITY
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if
such provisions were so excluded and shall be enforceable in accordance
with its terms.
[remainder of page intentionally left blank]
<PAGE>
CUSIP No. 87612M108 Page 23 of 52 Pages
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
TARGETED GENETICS CORPORATION
By /s/ H. Stewart Parker
__________________________
Its President and Chief Executive Officer
_____________________________________
INVESTORS:
THE EQUITABLE LIFE ASSURANCE SOCIETY
By
__________________________________
Its
_______________________________
GENECHEM TECHNOLOGIES VENTURE
FUND L.P.
By
__________________________________
Its
_______________________________
INTERNATIONAL BIOTECHNOLOGY
TRUST PLC
By /s/ Jeremy L. Curnock Cook
_________________________________
Its Director
_____________________________
SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
By
__________________________________
Its
_______________________________
<PAGE>
CUSIP No. 87612M108 Page 24 of 52 Pages
EXHIBIT A
SCHEDULE OF INVESTORS
SHARES
SUBJECT TO
NAME, ADDRESS AND FACSIMILE NUMBERSHARESWARRANTS
__________________________________________________
The Equitable Life Assurance Society2,000,0001,000,000
City Place House
55 Basinghall Street
London EC2V 5DR
ENGLAND
Fax: (171) 796-4824
GeneChem Technologies Venture Fund L.P.2,000,0001,000,000
Suite 920
1001 De Maisonneuve Blvd. West
Montreal, Quebec H3A 3C8
CANADA
Fax: (514) 849-5191
International Biotechnology Trust plc2,000,0001,000,000
N.M. Rothschild Asset Management, Ltd.
Five Arrows House
St. Swithin's Lane
London EC4N 8NR
ENGLAND
Fax: (171) 623-6261
SOFINOV Societe Financiere2,666,6671,333,333
d'Innovation Inc.
1981 Avenue McGill College
Montreal, Quebec H3A 3C7
CANADA
Fax: (514) 847-2628
<PAGE>
CUSIP No. 87612M108 Page 25 of 52 Pages
EXHIBIT B
FORM OF COMMON STOCK PURCHASE WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE LAWS, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
COVERING ANY SUCH TRANSACTION OR SUCH TRANSACTION IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND LAWS.
TARGETED GENETICS CORPORATION
COMMON STOCK PURCHASE WARRANT
This certifies that for value received, , or
___________________
registered assigns, is entitled, upon the terms and subject to the
conditions hereinafter set forth, at any time on or after the date hereof
(subject to the provisions of Section 1) and at or prior to 11:59 p.m.,
Pacific time, on April 17, 2003 (the "Expiration Time"), but not
thereafter, to acquire from TARGETED GENETICS CORPORATION, a Washington
corporation (the "Company"), in whole or from time to time in part, up to a
maximum of fully paid and nonassessable shares of Common Stock
______
("Warrant Shares") at a purchase price per share (the "Exercise Price") of
$2.00. Such number of shares, type of security and Exercise Price are
subject to adjustment as provided herein, and all references to "Warrant
Shares" and "Exercise Price" herein shall be deemed to include any such
adjustment.
1.EXERCISE OF WARRANT
Subject to the termination provisions of Section 9 hereof, the
purchase rights represented by this Warrant are exercisable by the
registered holder hereof, in whole or in part, at any time and from time to
time at or prior to the Expiration Time by the surrender of this Warrant
and the Notice of Exercise form attached hereto duly executed to the office
of the Company at 1100 Olive Way, Suite 100, Seattle, Washington 98101 (or
such other office or agency of the Company as it may designate by notice in
writing to the registered holder hereof at the address of such holder
appearing on the books of the Company), and upon payment of the Exercise
Price for the shares thereby purchased (by cash or by check or bank draft
payable to the order of the Company or by cancellation of indebtedness of
the Company to the holder hereof, if any, at the time of exercise in an
amount equal to the purchase price of the shares thereby purchased);
whereupon the holder of this Warrant shall be entitled to receive from the
Company a stock certificate in proper form representing the number of
Warrant Shares so purchased.
<PAGE>
CUSIP No. 87612M108 Page 26 of 52 Pages
2.SECURITIES ACT COMPLIANCE
As a condition of its delivery of the certificates for the Warrant
Shares, the Company may require the registered holder hereof (or the
transferee, if any, of the Warrant Shares in whose name the Warrant Shares
are to be registered) to deliver to the Company, in writing,
representations regarding the purchaser's sophistication, investment
intent, acquisition for its own account and such other matters as are
reasonable and customary for purchasers of securities in an unregistered
private offering and the Company may place conspicuously upon each
certificate representing Warrant Shares a legend substantially in the
following form, the terms of which are agreed to by the registered holder
hereof (including any transferee of this Warrant or the Warrant Shares):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR APPLICABLE STATE SECURITIES LAWS, AND NO INTEREST
THEREIN MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED OR
OTHERWISE TRANSFERRED UNLESS (I) THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID
SECURITIES, (II) THIS CORPORATION RECEIVES AN OPINION OF LEGAL
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THIS CORPORATION STATING THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION, OR (III) THIS CORPORATION OTHERWISE
SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.
3.ISSUANCE OF SHARES; NO FRACTIONAL SHARES OR SCRIP
Certificates for shares purchased hereunder shall be delivered to the
holder hereof within a reasonable time after the date on which this Warrant
shall have been exercised in accordance with the terms hereof. The Company
agrees that the shares so issued shall be, and be deemed to be, issued to
such holder as the record owner of such shares as of the close of business
on the date on which this Warrant shall have been exercised in accordance
with the terms hereof. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon the exercise of this
Warrant, the Company shall pay in cash or check to the holder of this
Warrant an amount equal to such fraction multiplied by the difference
between (a) the closing sale price, as of the date immediately preceding
the date of exercise of this Warrant, of one share of the Company's Common
Stock as reported on the Nasdaq Stock Market and (b) the Exercise Price.
<PAGE>
CUSIP No. 87612M108 Page 27 of 52 Pages
4.CHARGES, TAXES AND EXPENSES
Issuance of certificates for Warrant Shares upon the exercise of this
Warrant shall be made without charge to the holder hereof 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 of this
Warrant or in such name or names as may be directed by the holder of this
Warrant; PROVIDED, HOWEVER, that in the event certificates for Warrant
Shares are to be issued in a name other than the name of the holder of this
Warrant, this Warrant when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by the holder hereof.
5.NO RIGHTS AS SHAREHOLDER
This Warrant does not entitle the holder hereof to any voting rights
or other rights as a shareholder of the Company prior to the exercise
hereof.
6.EXCHANGE AND REGISTRY OF WARRANT
This Warrant is exchangeable, upon the surrender hereof by the
registered holder at the above-mentioned office or agency of the Company,
for a new Warrant of like tenor and dated as of such exchange. The Company
shall maintain at the above-mentioned office or agency a registry showing
the name and address of the registered holder of this Warrant. This
Warrant may be surrendered for exchange, transfer or exercise, in
accordance with its terms and subject to compliance with applicable laws,
at such office or agency of the Company, and the Company shall be entitled
to rely in all respects, prior to written notice to the contrary, upon such
registry.
7.LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) upon receipt of indemnity or security
reasonably satisfactory to it, and upon reimbursement to the Company of all
reasonable expenses incidental thereto, and (in the case of mutilation)
upon surrender and cancellation of this Warrant, the Company will make and
deliver a new warrant of like tenor and dated as of such cancellation, in
lieu of this Warrant.
<PAGE>
CUSIP No. 87612M108 Page 28 of 52 Pages
8.SATURDAYS, SUNDAYS AND HOLIDAYS
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday or a
Sunday or shall be a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding day that is not a legal
holiday.
9.MERGER, SALE OF ASSETS, ETC.
If at any time the Company merges or consolidates with or into any
other corporation, effects any reorganization, or sells or conveys all or
substantially all of its assets to any other entity, in a transaction in
which the shareholders of the Company immediately before the transaction
own immediately after the transaction less than a majority of the
outstanding voting securities of the entity (or its parent) succeeding to
the business of the Company (each such transaction, a "corporate
transaction"), then this Warrant shall thereafter entitle the holder to
acquire such number and kind of securities as would have been issuable in
respect of the Warrant Shares (or other securities which were subject to
the purchase rights under this Warrant immediately prior to such corporate
transaction) as a result of such corporate transaction if this Warrant had
been exercised in full for cash immediately prior to such corporate
transaction. The Exercise Price hereunder shall be adjusted if and to the
extent necessary to reflect such change. In addition, appropriate
adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this
Warrant with respect to the rights and interest of the holder of this
Warrant after the corporate transaction to the end that the provisions of
this Warrant shall be applicable after such corporate transaction, as near
as reasonably may be.
10.RECLASSIFICATION, CONVERSION, ETC.
If the Company at any time shall, by reclassification of securities or
otherwise, change the Warrant Shares into the same or a different number of
securities of any class or classes, this Warrant shall thereafter entitle
the holder to acquire such number and kind of securities as would have been
issuable in respect of the Warrant Shares (or other securities which were
subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change) as a result of such change if this
Warrant had been exercised in full for cash immediately prior to such
change. The Exercise Price hereunder shall be adjusted if and to the
extent necessary to reflect such change. If the Warrant Shares or other
securities issuable upon exercise hereof are subdivided or combined into a
greater or smaller number of shares of such security, the number of shares
issuable hereunder shall be proportionately increased or decreased, as the
<PAGE>
CUSIP No. 87612M108 Page 29 of 52 Pages
case may be, and the Exercise Price shall be proportionately decreased or
increased, as the case may be, in both cases according to the ratio which
the total number of shares of such security to be outstanding immediately
after such event bears to the total number of shares of such security
outstanding immediately prior to such event. The Company shall give the
holder prompt written notice of any change in the type of securities
issuable hereunder, any adjustment of the Exercise Price for the securities
issuable hereunder, and any increase or decrease in the number of shares
issuable hereunder.
11.REGISTRATION RIGHTS
The Warrant Shares issuable upon exercise or conversion of this
Warrant shall be entitled to the registration rights set forth in that
certain Investor Rights Agreement, dated as of April 17, 1998, between the
Company and the parties listed on Schedule A thereto.
12.REPRESENTATIONS AND WARRANTIES
The Company hereby represents, warrants and covenants to the holder
hereof that:
(a)during the period this Warrant is outstanding, the Company
will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of Warrant Shares upon the
exercise of this Warrant;
(b)the issuance of this Warrant shall constitute full authority
to the Company's officers who are charged with the duty of executing stock
certificates to execute and issue, or cause to be issued, the necessary
certificates for the Warrant Shares issuable upon exercise of this Warrant;
(c)the Company has all requisite legal and corporate power to
execute and deliver this Warrant, to sell and issue the Warrant Shares
hereunder and perform its obligations under the terms of this Warrant; and
(d)the Warrant Shares, when issued in compliance with the
provisions of this Warrant and the Company's Restated Articles of
Incorporation and Amended and Restated Bylaws, will be validly issued,
fully paid and nonassessable, and free of any liens or encumbrances (other
than liens or encumbrances created by or imposed upon the holder of the
Warrant Shares), and will be issued in compliance with all applicable
federal and state securities laws.
14.COOPERATION
The Company will not, by amendment of its Restated Articles of
Incorporation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other action, avoid or seek to avoid the observance or performance of
<PAGE>
CUSIP No. 87612M108 Page 30 of 52 Pages
any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the
provisions of this Warrant and in the taking of all such reasonable action
as may be necessary or appropriate in order to protect the rights of the
holder of the Warrant against material impairment.
15.GOVERNING LAW
This Warrant shall be governed by and construed in accordance with the
laws of the state of Washington.
<PAGE>
CUSIP No. 87612M108 Page 31 of 52 Pages
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer.
Dated: April 17, 1998
TARGETED GENETICS CORPORATION
By /s/ H. Stewart Parker
_________________________
Title President and
Chief Executive Officer
ACCEPTED: April 17, 1998
INTERNATIONAL BIOTECHNOLOGY TRUST PLC
By /s/ Jeremy L. Curnock Cook
[Name of Holder]
Director
<PAGE>
CUSIP No. 87612M108 Page 32 of 52 Pages
NOTICE OF EXERCISE
To:Targeted Genetics Corporation
(1)The undersigned hereby elects to purchase shares of
__________
Common Stock of Targeted Genetics Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price in
full, together with all applicable transfer taxes, if any.
(2)Please issue a certificate or certificates representing said
shares of Common Stock in the name of the undersigned or in such other name
as is specified below:
________________________________
(Name)
________________________________
(Address)
(3)The undersigned represents that the aforesaid shares of Common
Stock are being acquired for the account of the undersigned for investment
and not with a view to, or for resale in connection with, the distribution
thereof and that the undersigned has no present intention of distributing
or reselling such shares.
_________________________________________________________________________
(Date)(Signature)
<PAGE>
CUSIP No. 87612M108 Page 33 of 52 Pages
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to
___________________________________________________________________________
(Please Print)
whose address is
__________________________________________________________
(Please Print)
Dated:
Holder's Signature:
Holder's Address:
Guaranteed Signature:
______________________________________________________
NOTE: The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or enlargement
or any change whatever, and must be guaranteed by a bank or trust company.
Officers of corporations and those acting in a fiduciary or other
representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
<PAGE>
CUSIP No. 87612M108 Page 34 of 52 Pages
EXHIBIT C
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions, dated April 15, 1998, is made and given,
pursuant to the Common Stock and Warrant Purchase Agreement, dated as of
April 15, 1998 (the "Agreement") by and among Targeted Genetics Corporation
(the "Company") and the purchasers of the Company's Common Stock, to the
Investors named on Exhibit A to the Agreement. Any matter set forth herein
as an exception to one section or paragraph of the Agreement shall be
deemed to constitute an exception to all other applicable sections and
paragraphs of the Agreement. Capitalized terms used but not otherwise
defined herein have the respective meanings assigned to such terms in the
Agreement.
SECTION 3.2
Pursuant to the Agreement and Plan of Merger, dated as of April 16,
1996, among the Company, TGC Acquisition Corporation and RGene
Therapeutics, Inc. ("RGene"), the Company may be required to issue (at
market price at the time of issuance) to the former shareholders of RGene
up to $2 million of Common Stock, $1 million of which would be issued upon
the start of Phase II clinical trials of the Company's tgDCC-E1A product in
the United States and the other $1 million of which would be issued upon
the start of such Phase II clinical trials in Europe, but in each such case
only if such trials start on or before December 31, 1998.
<PAGE>
CUSIP No. 87612M108 Page 35 of 52 Pages
EXHIBIT B
_________
INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT, dated as of April 17, 1998, by and among
TARGETED GENETICS CORPORATION, a Washington corporation (the "Company"),
and the parties listed on Schedule A hereto, as at any time amended (the
"Investors").
RECITALS
A.Pursuant to a Common Stock and Warrant Purchase Agreement, dated
as of April 17, 1998 (the "Purchase Agreement"), the Company has agreed to
issue and sell shares of its common stock, par value $.01 per share (the
"Common Stock"), and warrants to purchase shares of its Common Stock to The
Equitable Life Assurance Society, GeneChem Technologies Venture Fund, L.P.,
International Biotechnology Trust plc and SOFINOV Societe Financiere
d'Innovation Inc. (collectively, the "Initial Investors").
B.The execution of this Agreement by the parties hereto is a
condition to the obligation of each Investor to purchase the Common Stock
and warrants.
C.The Company and the Investors desire to enter into this Agreement
to facilitate the purchase and sale of the Common Stock and warrants.
AGREEMENT
1.CERTAIN DEFINITIONS
As used in this Agreement, the following terms not otherwise defined
in this Agreement shall have the following respective meanings:
"CLOSING DATE" shall mean the date of closing of the issuance and sale
of the Shares and Warrants from the Company to the Investors as provided in
the Purchase Agreement.
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"FIRST SHELF Period" shall mean the period commencing on the date of
effectiveness of the registration statement filed in accordance with
Section 2 hereof and ending on the date two years from the Closing Date.
<PAGE>
CUSIP No. 87612M108 Page 36 of 52 Pages
"The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement with
the Commission in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRABLE SECURITIES" shall mean the Shares and the Warrant Shares;
provided, however, that Shares or Warrant Shares shall cease to be treated
as Registrable Securities at such time as they (i) have been sold pursuant
to an effective registration statement under the Securities Act or (ii)
have otherwise been sold or transferred to or through a broker, dealer or
underwriter in a public distribution or a public securities transaction.
"REGISTRATION EXPENSES" shall mean all expenses, except as stated in
the definition of Selling Expenses, incurred by the Company in complying
with this Agreement, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company and of one special counsel to the
Investors per registration statement, and blue sky fees and expenses.
"SECOND SHELF PERIOD" shall mean the period commencing on the date two
years from the Closing Date and ending on the date seven years from the
Closing Date.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the sale of the
Registrable Securities by the Investors.
"SHARES" shall mean the shares of Common Stock to be issued and sold
by the Company to the Investors in accordance with the Purchase Agreement.
"WARRANT SHARES" shall mean the shares of Common Stock issuable upon
exercise of the Warrants.
"WARRANTS" shall mean the warrants to purchase shares of Common Stock
to be issued by the Company to the Investors in accordance with the
Purchase Agreement.
<PAGE>
CUSIP No. 87612M108 Page 37 of 52 Pages
2.FIRST SHELF REGISTRATION
On or before the date 15 days after the Closing Date, the Company
shall file a registration statement with the Commission with respect to the
registration of all the Registrable Securities held by the Investors and
shall use its best efforts to have such registration statement declared
effective within 90 days of the Closing Date or as soon as practicable
thereafter. After the effective date of such registration statement, the
Company shall use its best efforts to maintain the registration effective
for the period that ends upon the earliest of (i) the expiration of the
First Shelf Period, (ii) the time at which all Shares and Warrant Shares
(excluding any Shares or Warrant Shares that cease to be Registrable
Securities) have been sold or distributed pursuant to such registration
statement or (iii) the date after which all Shares and Warrant Shares
(excluding any Shares or Warrant Shares that cease to be Registrable
Securities) may be sold without registration in reliance on Rule 144(k)
under the Securities Act (such period, the "First Selling Period").
Without intending in any manner to diminish the obligations of the Company
under Section 6(b), if at any time during the First Shelf Period the
Company notifies the Investors that there exists or may exist material
nonpublic information which must be disclosed in order for the registration
statement not to be false or misleading, then the Company may require that
no sales may be made under the registration statement until such time as
disclosure is made or the Company determines that disclosure is not
necessary; provided, however, that the aggregate period of time during
which sales may not be made as a result of the Company's exercise of the
foregoing right shall not exceed 120 days during the First Shelf Period.
The Company shall use its best efforts to cause any required disclosure to
be made as soon as practicable.
3.SECOND SHELF REGISTRATION
The Company will have the option, in its sole discretion, to extend
the effectiveness of the registration statement filed in accordance with
Section 2 hereof, or to file a new registration statement with respect to
all the Registrable Securities held by Investors which shall be declared
effective, for a period that begins on the date two years from the Closing
Date and ends on the earliest of (i) the expiration of the Second Shelf
Period, (ii) the time at which all Registrable Securities have been sold or
distributed pursuant to such registration statement or (iii) the date after
which all Registrable Securities may be sold without registration in
reliance on Rule 144(k) under the Securities Act (such period, the "Second
Selling Period"). Without intending in any manner to diminish the
obligations of the Company under Section 6(b), if at any time during the
Second Shelf Period the Company notifies the Investors that there exists or
may exist material nonpublic information which must be disclosed in order
for the registration statement not to be false or misleading, then the
<PAGE>
CUSIP No. 87612M108 Page 38 of 52 Pages
Company may require that no sales may be made under the registration
statement until such time as disclosure is made or the Company determines
that disclosure is not necessary; provided, however, that the aggregate
period of time during which sales may not be made as a result of the
Company's exercise of the foregoing right shall not exceed 60 days in any
calendar year. The Company shall use its best efforts to cause any
required disclosure to be made as soon as practicable.
4.ADDITIONAL REGISTRATION RIGHTS
If, but only if, the Company fails or does not elect to maintain the
existing registration statement and the Company fails or does not elect to
file and maintain a new registration statement in accordance with and for
the time period described in Section 3 hereof, the Investors shall have the
registration rights provided in this Section 4; provided, however, that the
Company will have no obligation hereunder if the First Selling Period
expires prior to the date two years from the Closing Date.
4.1DEMAND RIGHTS
If at any time during the Second Selling Period the Company receives
from any Investor a written request that the Company effect a registration
with respect to Registrable Securities owned by such Investor, the Company
shall file within 15 days of receipt of such request a registration
statement covering the Registrable Securities so requested to be registered
and, as soon as practicable, effect such registration so as to permit or
facilitate the sale and distribution of all or such portion of such
Investor's Registrable Securities as are specified in such request;
provided, however, that the Company shall not be obligated to effect any
such registration pursuant to this Section 4.1 if (i) the Investor proposes
to sell Registrable Securities at an aggregate price to the public (net of
any underwriters' discounts or commissions) of less than $500,000, (ii) the
Company shall furnish to the Investor a certificate signed by the President
of the Company stating that, in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company
and its shareholders for such registration to be effected at such time, in
which event the Company will have the right to defer the filing of the
registration statement for a period of not more than 60 days after receipt
of the request of the Investor under this Section 4.1 (provided that with
respect to any individual Investor the Company shall not exercise this
right more than once in any calendar year), (iii) the Investor has
previously requested three such registrations pursuant to this Section 4.1
or (iv) the Company has, within the 12-month period preceding the date of
such request, already effected one such registration for the Investor
pursuant to this Section 4.1. For the purposes of clauses (iii) and (iv)
of the foregoing proviso, each Initial Investor and all assignees of such
Initial Investor's registration rights under this Agreement shall be
<PAGE>
CUSIP No. 87612M108 Page 39 of 52 Pages
considered one Investor. The Company shall use best efforts to cause any
registration statement filed pursuant to this Section 4.1 to remain
effective for 180 days or such shorter period of time as is required to
effect the sale of all Registrable Securities registered pursuant to such
registration statement.
4.2PIGGYBACK RIGHTS
(a)If (but without any obligation to do so) the Company proposes to
register any of its Common Stock under the Securities Act in connection
with the public offering of such stock solely for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan, or a registration on any form that does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities),
either for its own account or for the account of Investors exercising
demand registration rights pursuant to Section 4.1 hereof, the Company
shall, at each such time, promptly give each Investor written notice of
such registration. Upon the written request of an Investor given within
five days after mailing of such notice by the Company, the Company shall,
subject to the provisions of Section 4.2(b), use reasonable efforts to
cause to be registered under the Securities Act all of the Registrable
Securities that each such Investor has requested to be registered. In the
event that the Company decides for any reason not to complete the
registration of shares of Common Stock other than the Registrable
Securities, the Company shall have no obligation under this Section 4.2 to
continue with the registration of the Registrable Securities. Any request
pursuant to this Section 4.2(a) to register Registrable Securities as part
of an underwritten public offering of Common Stock shall specify that such
Registrable Securities are to be included in the underwriting on the same
terms and conditions as the shares of Common Stock otherwise being sold
through underwriters under such registration.
(b)The Company shall not be required under this Section 4.2 to
include any Investor's Registrable Securities in an underwritten offering
of the Company's securities unless such Investor accepts the terms of the
underwriting as agreed upon between the Company and the underwriters
selected by it. If the underwriters advise the Company that marketing
factors require a limitation on the number of shares, including Registrable
Securities, to be included in such offering, then the Company shall so
advise all Investors of Registrable Securities that would otherwise have
been underwritten pursuant to this Section 4.2, and the number of shares,
including Registrable Securities, that may be included in the registration
shall be apportioned first to the Company, then pro rata among the selling
Investors and any other selling shareholders according to the total amount
of Registrable Securities or other securities requested to be sold in such
<PAGE>
CUSIP No. 87612M108 Page 40 of 52 Pages
registration by such selling shareholders (including the selling
Investors), or in such other proportions as shall mutually be agreed to by
such selling shareholders (including the selling Investors), provided that
in no event shall the amount of Registrable Securities be reduced if any
securities are to be included in such underwriting for the account of any
person or entity other than the Company.
5.EXPENSES OF REGISTRATION
All Registration Expenses shall be borne by the Company. All Selling
Expenses relating to Registrable Securities registered on behalf of each
Investor shall be borne by such Investor on the basis of the number of
shares of Common Stock registered and sold.
6.OBLIGATIONS OF THE COMPANY
Whenever required under Section 2, 3 or 4 hereof to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a)Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use best efforts to cause
such registration statement to become and remain effective at the times and
for the periods provided in this Agreement.
(b)Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(c)Furnish to the Investors such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably request
in order to facilitate the disposition of all securities covered by such
registration statement.
(d)Use reasonable efforts to register and qualify the securities
covered by such registration statement under such state securities or blue
sky laws as shall be reasonably requested by the Investors, provided that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service
of process in any such states.
<PAGE>
CUSIP No. 87612M108 Page 41 of 52 Pages
(e)In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each
Investor participating in such registration shall also enter into and
perform its obligations under such an agreement.
(f)Notify each Investor of Registrable Securities covered by such
registration statement, during the time when a prospectus relating thereto
covered by such registration statement is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing and, at the request of any selling Investor, promptly furnish to
all the selling Investors a reasonable number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the selling Investors, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein necessary to make the statements therein
not misleading in the light of the circumstances under which they were
made.
7.INFORMATION BY INVESTORS
Each Investor shall furnish to the Company such information regarding
itself, the Registrable Securities it holds and the distribution proposed
by it as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
8.INDEMNIFICATION AND CONTRIBUTION
(a)INDEMNIFICATION BY THE COMPANY. Upon the registration of
Registrable Securities, the Company shall indemnify and hold harmless the
Investors and each underwriter, selling agent or other securities
professional, if any, that facilitates the disposition of such Shares, and
each of their respective officers and directors and each person who
controls the Investors, underwriter, selling agent or other securities
professional within the meaning of Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against any losses, claims, damages or liabilities, joint
or several, to which the Investors or such other persons may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
<PAGE>
CUSIP No. 87612M108 Page 42 of 52 Pages
fact contained in any registration statement under which the Registrable
Securities are to be registered under the Securities Act, or any prospectus
contained therein or furnished by the Company to the Investors or other
such person, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company hereby agrees to reimburse the
Investors or other person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company shall not be liable to the Investors or other person in any such
case to the extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement or
prospectus, or amendment or supplement, in reliance upon and in conformity
with written information furnished to the Company by the Investors or such
other person expressly for use therein.
(b)INDEMNIFICATION BY THE INVESTORS. Each Investor agrees, as a
consequence of the inclusion of the Investor in such registration, and each
underwriter, selling agent or other securities professional, if any, which
facilitates the disposition of such Registrable Securities shall agree, as
a consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless the Company,
its directors, officers who sign any registration statement with respect to
the Registrable Securities and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities to which the Company or such other persons may become subject,
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in such registration statement or prospectus, or any
amendment or supplement, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company by the Investor, underwriter, selling agent or other securities
professional expressly for use therein, and (ii) reimburse the Company for
any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(c)NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
<PAGE>
CUSIP No. 87612M108 Page 43 of 52 Pages
party under subsection (a) or (b) above of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is
to be made against an indemnifying party under this Section 8, notify such
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section 8. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, such indemnifying
party shall not be liable to such indemnified party under this Section 8
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation, unless
representation of such indemnifying party and such indemnified party by the
same counsel would be inappropriate due to actual or potential conflicting
interests between such parties. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability arising out of such action or
claim and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(d)CONTRIBUTION. If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless an indemnified
party under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), 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 the untrue or
<PAGE>
CUSIP No. 87612M108 Page 44 of 52 Pages
alleged untrue statement of a material fact or omission or alleged omission
to state a material fact relates to information supplied by such
indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Investors or any
underwriters, selling agents or other securities professionals or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations re-
ferred to in this Section 8(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities
(or actions in respect thereof) referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Investors and any underwriters,
selling agents or other securities professionals in this Section 8(d) to
contribute shall be several in proportion to the number of shares of Common
Stock registered, underwritten, or sold as the case may be, by them and not
joint.
(e)Notwithstanding any other provision of this Section 8, in no
event will (i) any Investor be required to undertake liability to any
person under this Section 8 for any amounts in excess of the dollar amount
of the proceeds to be received by the Investor from the sale of the
Investor's Registrable Securities (after deducting any fees, discounts and
commissions applicable thereto) pursuant to any registration statement
under which such Registrable Securities are to be registered under the
Securities Act and (ii) any underwriter, selling agent or other securities
professional be required to undertake liability to any person hereunder for
any amounts in excess of the discount, commission or other compensation
payable to such underwriter, selling agent or other securities professional
with respect to the Registrable Securities underwritten or sold by it.
(f)The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have to the
Investor, underwriter, selling agent or other securities professional
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and the obligations of the Investor or other such person
under this Section 8 shall be in addition to any liability which the
Investor or other person may otherwise have to the Company, its directors,
officers who sign any registration statement with respect to the
Registrable Securities and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
<PAGE>
CUSIP No. 87612M108 Page 45 of 52 Pages
of the Exchange Act. The remedies provided in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
9.DELAY OF REGISTRATION
No Investor shall have any right to obtain or seek an injunction
restraining or otherwise delaying any registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Agreement.
10.ASSIGNMENT OF REGISTRATION RIGHTS
The rights to cause the Company to register Registrable Securities
pursuant to this Agreement may be assigned by an Investor to a transferee
or assignee of such securities who shall, upon such transfer or assignment,
be deemed an "Investor" under this Agreement; provided, however, that the
Company is, within a reasonable period of time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights
are being assigned and such transferee or assignee assumes the transferor's
or assignor's obligations under this Agreement; provided, further, that
such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act and that such transferee or
assignee is either (a) a partner or retired partner of any Investor that is
a partnership, (b) a member of the immediate family or a trust for the
benefit of any Investor that is an individual, (c) an entity controlling,
controlled by or under common control with any Investor that is not an
individual, or a limited partner, general partner or other affiliate of an
Investor, (d) a constituent member of any Investor that is a limited
liability company or (e) a transferee of at least 500,000 shares of Common
Stock (as adjusted for stock splits, stock dividends, stock consolidations
and the like).
11."MARKET STAND-OFF" AGREEMENT
The Investors hereby agree that they shall not, to the extent
requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, sell or otherwise transfer or dispose (other
than to donees who agree to be similarly bound) of any Registrable
Securities for 90 days following the effective date of any registration
statement filed under the Securities Act in connection with an underwritten
public offering for the account of the Company; provided, however, that all
officers and directors of the Company (whether or not pursuant to this
Agreement) enter into similar agreements; provided, further, that the
<PAGE>
CUSIP No. 87612M108 Page 46 of 52 Pages
foregoing provision shall not limit an Investor's right to participate in
such underwritten public offering in accordance with Section 4.2 hereof.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of
the Investors (and the shares or securities of every other person subject
to the foregoing restriction) until the end of such period.
If as a result of the foregoing provisions of this Section 11 an
Investor is unable to sell any Registrable Securities proposed to be
registered pursuant to a registration statement previously filed in
accordance with Section 4.1 hereof, such registration is terminated prior
to the 60th day following the date on which such previously filed
registration statement initially became effective, and such Investor is not
permitted to sell such Registrable Securities in the Company's underwritten
public offering, then the registration statement previously filed in
accordance with Section 4.1 hereof shall not be counted as a registration
for the purposes of clauses (iii) and (iv) of Section 4.1 hereof.
12.TERMINATION OF REGISTRATION RIGHTS
The registration rights granted pursuant to this Agreement shall
terminate as to all Investors on the seventh anniversary of the Closing
Date. In addition, such rights shall terminate as to any Investor when all
Registrable Securities of such Investor have been sold or distributed or
when all Registrable Securities of such Investor may be sold without
registration in reliance on Rule 144(k) under the Securities Act.
13.BOARD REPRESENTATION AND VISITATION RIGHTS
(a)GeneChem Management Inc. and SOFINOV Societe Financiere
d'Innovation Inc. (together, the "Designating Investors") will have the
right to designate one representative to the Company's Board of Directors
(such designee, the "Investor Designee"); provided, however, that the
Nominating Committee of the Company's Board of Directors may select, in its
sole discretion, an Investor Designee if the Designating Investors are
unable to agree upon such designee (i) in the case of an Investor Designee
to be elected at an annual meeting of the Company's shareholders, by
January 31 in the year of such meeting or (ii) in the case of an Investor
Designee to be appointed to fill a vacancy resulting from the resignation,
death or removal of the preceding Investor Designee, within 30 days
following such resignation, death or removal. The Company shall use its
best efforts to nominate for election by its shareholders, to cause the
election of and thereafter to maintain in office the Investor Designee;
provided, however, that the foregoing shall not preclude the removal from
the Board of Directors of any Investor Designee to the extent required by
<PAGE>
CUSIP No. 87612M108 Page 47 of 52 Pages
applicable law or the Company's charter or bylaws. The initial Investor
Designee will be a representative of GeneChem Management Inc. and will be
appointed to the Company's Board of Directors following the Company's 1998
annual meeting of shareholders.
(b)Whichever of the Designating Investors does not have a
representative on the Company's Board of Directors will have the right to
designate a representative to attend all meetings of the Board of Directors
in a nonvoting observer capacity (provided that such representative
executes a confidentiality agreement reasonably satisfactory to the
Company) and, in this respect, the Company shall provide such
representative with copies of all notices, minutes, consents and other
material that it provides to its directors for all the meetings of the
Board of Directors. Notwithstanding the foregoing, if the Company's Board
of Directors determines that the participation of such representative as to
any particular matter, whether due to a conflict of interest, a disclosure
of privileged information or otherwise, would be detrimental to the best
interests of the Company, then such representative shall be excluded from
receiving Board information or participating in the discussion by the Board
of Directors of such matter.
(c)The provisions of this Section 13 will terminate as to either
Designating Investor as of the date on which such Designating Investor
(together with any person controlling, controlled by or under common
control with such Designating Investor) no longer holds at least 1,000,000
shares of Common Stock (as adjusted for stock splits, stock dividends,
stock consolidations and the like); such provisions shall not otherwise
terminate.
14.INFORMATION RIGHTS
The Company will deliver to such Investor each annual and quarterly
financial statements and other public information as is reasonably
requested by such Investor.
15.NOTICES
Unless otherwise provided, any notice desired or required to be given
hereunder shall be in writing given by personal delivery or certified or
registered mail, or confirmed facsimile transmission, in any such case
addressed or sent: (a) if to the Company, to Targeted Genetics
Corporation, 1100 Olive Way, Suite 100, Seattle, WA 98101, Attn:
President, Facsimile: (206) 223-0288, with a copy to Perkins Coie, 1201
Third Avenue, 40th Floor, Seattle, WA 98101, Attn: Stephen M. Graham,
Facsimile: (206) 583-8500; (b) if to an Investor, to the address or
facsimile number listed on Exhibit A hereto, with a copy to Lapointe
<PAGE>
CUSIP No. 87612M108 Page 48 of 52 Pages
Rosenstein, 1250 Rene-Levesque Blvd. W., Suite 1400, Montreal, Quebec H3B
5E9, Attn: Perry Kliot, Facsimile: (514) 925-9001 and a copy to Reboul,
MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, NY
10111, Attn: Charles Uniman; or (c) to such other address or facsimile
number as any party shall have previously designated by such a notice. The
effective date of any notice or request shall be three days from the date
it is sent by the addresser with charges prepaid so long as it is in fact
received within five days, or when successful transmission is confirmed if
sent by facsimile, or when personally delivered.
16.AMENDMENTS AND WAIVERS
Any term of this Agreement may be amended and the observance of any
term may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the
Company and the holders of 75% of the Registrable Securities outstanding;
provided any adverse effect on any Investor affects all Investor equally.
17.SEVERABILITY
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from
this Agreement, and the balance of this Agreement shall be interpreted as
if such provision were so excluded and shall be enforceable in accordance
with its terms.
18.ENTIRE AGREEMENT; GOVERNING LAW
This Agreement constitutes the full and entire understanding and
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements with respect to the subject matter hereof.
This Agreement shall be governed by and construed under the laws of the
State of Washington as applied to agreements among Washington residents
entered into and to be performed entirely within the State of Washington.
19.COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties
hereto in separate counterparts, each of which when executed and delivered
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[remainder of page intentionally left blank]
<PAGE>
CUSIP No. 87612M108 Page 49 of 52 Pages
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
TARGETED GENETICS CORPORATION
By/s/ H. Stewart Parker
________________________
H. Stewart Parker
President and Chief
Executive Officer
INVESTORS:
THE EQUITABLE LIFE ASSURANCE SOCIETY
By
__________________________________
Its
_________________________________
GENECHEM TECHNOLOGIES VENTURE FUND L.P.
By
__________________________________
Its
_________________________________
INTERNATIONAL BIOTECHNOLOGY TRUST PLC
By /s/ Jeremy L. Curnock Cook
_______________________________
Its Director
_______________________________
SOFINOV SOCIETE FINANCIERE
D'INNOVATION INC.
By
__________________________________
Its
_________________________________
<PAGE>
CUSIP No. 87612M108 Page 50 of 52 Pages
EXHIBIT A
SCHEDULE OF INVESTORS
SHARES
SUBJECT TO
NAME, ADDRESS AND FACSIMILE NUMBERSHARESWARRANTS
__________________________________________________
The Equitable Life Assurance Society2,000,0001,000,000
City Place House
55 Basinghall Street
London EC2V 5DR
ENGLAND
Fax: (171) 796-4824
GeneChem Technologies Venture Fund L.P.2,000,0001,000,000
Suite 920
1001 De Maisonneuve Blvd. West
Montreal, Quebec H3A 3C8
CANADA
Fax: (514) 849-5191
International Biotechnology Trust plc2,000,0001,000,000
N.M. Rothschild Asset Management, Ltd.
Five Arrows House
St. Swithin's Lane
London EC4N 8NR
ENGLAND
Fax: (171) 623-6261
SOFINOV Societe Financiere2,666,6671,333,333
d'Innovation Inc.
1981 Avenue McGill College
Montreal, Quebec H3A 3C7
CANADA
Fax: (514) 847-2628
<PAGE>
CUSIP No. 87612M108 Page 51 of 52 Pages
EXHIBIT C
_________
TARGETED GENETICS CORPORATION
LOCK-UP LETTER
April , 1998
__
GeneChem Technologies Venture Fund L.P.
c/o GeneChem Management Inc.
1001 De Maisonneuve Blvd. West, Suite 920
Montreal, Quebec H3A 3C8
Dear Sirs:
The undersigned understands that you and certain other investors (the
"Investors") propose to enter into a Common Stock and Warrant Purchase
Agreement (the "Purchase Agreement") providing for the purchase by the
Investors of shares (the "Shares") of common stock, par value $.01 per
share (the "Common Stock"), of Targeted Genetics Corporation (the
"Company") and warrants (the "Warrants") to purchase shares of Common Stock
(the "Warrant Shares") from the Company and that, following the purchase of
the Shares and Warrants, the Company will file a shelf registration
statement on Form S-3 (the "Registration Statement") with the Securities
and Exchange Commission (the "Commission") for the registration of the
transfer of the Shares and Warrant Shares by the Investors.
In consideration of the purchase of the Shares and Warrants by the
Investors, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the undersigned hereby
irrevocably agrees that, without the prior written consent of GeneChem
Technologies Venture Fund L.P., the undersigned will not, directly or
indirectly, sell, offer to sell, solicit an offer to buy, contract to sell
(including, without limitation, any short sale), grant any option to
purchase or right to acquire, acquire any option to dispose of, or
otherwise transfer or dispose of, any shares of Common Stock, or any
securities convertible into or exercisable or exchangeable for Common
Stock, for a period of 180 days after the closing date for the purchase of
the Shares and Warrants, except pursuant to the Registration Statement.
The undersigned agrees that the provisions of this letter agreement
shall also be binding upon the successors, assigns, heirs and personal
representatives of the undersigned.
<PAGE>
CUSIP No. 87612M108 Page 52 of 52 Pages
In furtherance of the foregoing, the Company and ChaseMellon
Shareholder Services, L.L.C., its Transfer Agent, are hereby authorized to
decline to make any transfer of securities if such transfer would
constitute a violation or breach of this letter agreement.
It is understood that, if the Purchase Agreement (other than the
provisions thereof which survive termination) shall terminate or be
terminated prior to payment for the delivery of the Shares, you will
release us from our obligations under this letter agreement. It is
understood that our obligations under this letter agreement are subject to
the condition that Immunex Corporation ("Immunex") shall have executed and
delivered to you, not later than the date hereof, a letter agreement in
form and substance substantially the same as this letter agreement and
pursuant to which Immunex, and its successors and assigns, shall be
similarly bound with respect to any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock.
Number of Shares of CommonVery truly yours,
Stock owned by the undersigned:
SharesInternational Biotechnology Trust
___________________
_________________________________
By:
______________________________
Its:
_____________________________
[THE COMPANY REQUESTS THAT THIS LOCK-UP AGREEMENT BE COMPLETED AND
DELIVERED BY FACSIMILE AS SOON AS POSSIBLE TO THE COMPANY'S COUNSEL,
STEPHEN M. GRAHAM, PERKINS COIE, 1201 THIRD AVENUE, 40TH FLOOR, SEATTLE,
WASHINGTON 98101, FACSIMILE: (206) 583-8500, WITH THE ORIGINAL FORWARDED
BY REGULAR MAIL TO THE FOREGOING ADDRESS.]
