Item 1.01. Entry into a Material Definitive Agreement

On June 29, 2009, Targeted Genetics Corporation (the "Company") entered into an agreement to terminate the lease for its facility in Bothell, Washington. The lease termination agreement (the "Agreement") between the Company and Arden Realty Limited Partnership, as successor to CarrAmerica Corporation, terminates the Canyon Park Building Lease between the parties dated as of June 30, 2000, as amended (the "Lease").

As of the date of the Agreement, the Lease has been terminated and the parties have been released from their respective obligations under the Lease. As consideration for the Agreement and the discharge of the Company's obligations under the Lease, including up to approximately $12 million in estimated payment obligations that would have been owed through the remaining term of the Lease, the Company has agreed to pay a termination fee of $500,000 (the "Termination Fee"). The Termination Fee will be paid in installments beginning at the execution of the Agreement and continuing through July 2010, provided that $100,000 of the Termination Fee will be accelerated in the event that the Company receives a specified product development milestone payment from a collaborator and the remaining unpaid balance of the Termination Fee will be accelerated in the event that the Company receives a specified minimum amount in net proceeds from equity and/or debt financing.

The execution of the Agreement enables the Company to record a non-cash entry reversing approximately $7 million of restructuring charge liabilities from its balance sheet.

The Lease covered 76,000 square feet of space and, under its terms, would have expired in September 2015. The facility was intended for large-scale manufacturing, but the Company never occupied or commenced construction of the facility.

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