
<PAGE>   1

                                3,500,000 Shares

                          TARGETED GENETICS CORPORATION

                                  Common Stock

                             UNDERWRITING AGREEMENT

                                                                   June 19, 1996

VECTOR SECURITIES INTERNATIONAL, INC.
GENESIS MERCHANT GROUP SECURITIES

     As Representatives of the Several Underwriters

c/o  VECTOR SECURITIES INTERNATIONAL, INC.
     1751 Lake Cook Road, Suite 350
     Deerfield, Illinois  60015

Ladies and Gentlemen:

         Targeted Genetics Corporation, a Washington corporation (the
"Company"), proposes to issue and sell an aggregate of 3,500,000 shares of its
common stock, par value $0.01 per share, (the "Initial Securities") to the
several Underwriters named in Schedule I hereto (the "Underwriters") for whom
Vector Securities International, Inc. ("Vector") and Genesis Merchant Group
Securities are acting as representatives (collectively, the "Representatives").
In addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the several Underwriters, upon the terms and conditions set
forth in Section 2 hereof, an option to purchase up to an additional 525,000
shares of Common Stock of the Company (the "Option Securities"). The Initial
Securities and the Option Securities are hereinafter collectively referred to as
the "Securities." The Company's common stock, par value $0.01 per share,
including the Securities, is hereinafter referred to as the "Common Stock." The
Company wishes to confirm as follows its agreements with you and the other
Underwriters on 

<PAGE>   2
whose behalf you are acting in connection with the several purchases by the
Underwriters of the Securities:

         1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") a
registration statement on Form S-1 (No. 333-3592) covering the registration of
the Securities under the Securities Act of 1933, as amended (the "1933 Act"),
including the related preliminary prospectus, or prospectuses, and either (A)
has prepared and filed, prior to the effective date of such registration
statement, an amendment to such registration statement, including a final
prospectus or (B) if the Company has elected to rely upon Rule 430A ("Rule
430A") of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"), will prepare and file a prospectus, in accordance with
the provisions of Rule 430A and Rule 424(b) ("Rule 424(b)") of the 1933 Act
Regulations, promptly after execution and delivery of this Agreement.
Additionally, if the Company has elected to rely upon Rule 434 ("Rule 434") of
the 1933 Act Regulations, the Company will prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b),
promptly after execution and delivery of this Agreement. The information, if
any, included in such prospectus or in such Term Sheet, that was omitted from
such registration statement at the time it became effective but that is deemed
to be part of such registration statement at the time it becomes effective (a)
pursuant to paragraph (b) of Rule 430A, is referred to herein as the "Rule 430A
Information," or (b) pursuant to paragraph (d) of Rule 434, is referred to
herein as the "Rule 434 Information." Each prospectus used before the time such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information that was used
after effectiveness and prior to the execution and delivery of this Agreement is
herein called a "preliminary prospectus." Such registration statement, including
the exhibits thereto, at the time it became effective and including, if
applicable, the Rule 430A Information or the Rule 434 Information, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term Registration
Statement shall include the Rule 462(b) Registration Statement. The final
prospectus in the form first furnished to the Underwriters for use in connection
with the offering of the Securities 



                                       2
<PAGE>   3

is herein referred to as the "Prospectus." If Rule 434 is relied upon, the term
"Prospectus" shall refer to the preliminary prospectus last furnished to the
Underwriters in connection with the offering of the Securities, together with
the Term Sheet, and all references to the date of the Prospectus shall mean the
date of the Term Sheet. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, the Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed to
include the copy, if any, filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("EDGAR").

         2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the
representations, warranties and agreements contained herein and subject to all
the terms and conditions set forth herein, the Company hereby agrees to issue
and sell to each Underwriter and each Underwriter agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $       per share 
(the "Purchase Price Per Share"), the number of Initial Securities set forth in
Schedule I opposite the name of such Underwriter under the column "Number of
Initial Securities to be Purchased from the Company" (or such number of Initial
Securities increased as set forth in Section 10 hereof).

         Upon the basis of the representations, warranties and agreements
contained herein and subject to all the terms and conditions set forth herein,
the Company hereby grants an option (the "Over-Allotment Option") to the
Underwriters to purchase from the Company, at the Purchase Price Per Share, up
to an aggregate of 525,000 Option Securities. Option Securities may be purchased
solely for the purpose of covering over-allotments made in connection with the
offering of the Securities. Such option shall expire at 5:00 P.M., Chicago time,
on the 30th day after the date of this Agreement (or, if such 30th day shall be
a Saturday or Sunday or a holiday, on the next business day thereafter when the
New York Stock Exchange is open for trading). Such over-allotment option may be
exercised at any time or from time to time until its expiration. Upon any
exercise of the Over-Allotment Option, each Underwriter, severally and not
jointly, agrees to purchase from the Company that proportion of the total number
of Option Securities as is equal to the percentage of Initial Securities that
such Underwriter is purchasing from the Company (or such number of Initial
Securities increased as set forth in Section 10 hereof), 



                                       3
<PAGE>   4
subject to such adjustments as you may determine to avoid fractional shares.

         3. TERMS OF PUBLIC OFFERING. The Company has been advised by you that
the Underwriters propose to make a public offering of the Securities as soon
after the Registration Statement and this Agreement have become effective as in
your judgment is advisable and initially to offer the Securities upon the terms
set forth in the Prospectus.

         4. DELIVERY OF THE SECURITIES AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment for the Initial Securities shall be made at the
office of Perkins Coie, 1201 Third Avenue, 40th Floor, Seattle, Washington
98101, at 7:00 A.M., Seattle time, on the third (fourth, if the pricing occurs
after 4:30 p.m. (Eastern Time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 10 hereof)
(the "Closing Date"). The place of closing for the Initial Securities and the
Closing Date may be varied by agreement among you and the Company.

         Delivery to the Underwriters of and payment for any Option Securities
to be purchased by the Underwriters shall be made at the aforementioned office
of Perkins Coie at such time on such date (an "Option Closing Date"), which may
be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than two nor later than ten business days after the
giving of the notice hereinafter referred to, as shall be specified in a written
notice from you on behalf of the Underwriters to the Company of the
Underwriters' determination to purchase a number, specified in such notice, of
Option Securities. The place of closing for any Option Securities and the Option
Closing Date for such Option Securities may be varied by agreement between you
and the Company.

         Certificates for the Initial Securities and for any Option Securities
to be purchased hereunder shall be registered in such names and in such
denominations as you shall request by written notice (it being understood that a
facsimile transmission shall be deemed written notice) prior to 9:30 A.M.,
Chicago time, on the second business day preceding the Closing Date or any
Option Closing Date, as the case may be. Such certificates shall be made
available to you in Chicago, Illinois or New York, New York, as 



                                       4
<PAGE>   5
requested by you in the aforesaid notice, for inspection and packaging not later
than 9:30 A.M., Chicago time, on the business day next preceding the Closing
Date or any Option Closing Date, as the case may be. The certificates evidencing
the Initial Securities and any Option Securities to be purchased hereunder shall
be delivered to you on the Closing Date or the Option Closing Date, as the case
may be, against payment of the purchase price therefor by certified or official
bank check or checks payable in New York Clearing House (next day) funds to the
order of the Company. It is understood that each Underwriter has authorized you,
for its account, to accept delivery of, acknowledge receipt of, and make payment
of the purchase price for, the Initial Securities and the Option Securities, if
any, which it has agreed to purchase. Vector, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose check has not been
received by the Closing Date or the Option Closing Date, as the case may be, but
such payment shall not relieve such Underwriter from its obligations hereunder.

         5. AGREEMENTS OF THE COMPANY. The Company covenants and agrees with the
several Underwriters as follows:

                  a. The Company will notify the Representatives immediately,
and confirm the notice in writing, (i) of the effectiveness of the Registration
Statement and any amendment thereto, (ii) of the receipt of any comments from
the Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, (iv) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the suspension of
qualification of the Securities for offering or sale in any jurisdiction or the
initiation of any proceedings for such purpose and (v) during the period when
the Prospectus is required to be delivered under the 1933 Act or Securities
Exchange Act of 1934, as amended (the "1934 Act"), of any change, or any event
or occurrence which could result in such a change, in the Company's condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company or the happening of any event, including the filing of any
information, documents or reports pursuant to the 1934 Act, that makes any
statement of a material fact made in the Registra-


                                       5
<PAGE>   6
tion Statement or the Prospectus (as then amended or supplemented) untrue or
which requires the making of any additions to or changes in the Registration
Statement or the Prospectus in order to state a material fact required by the
1933 Act or the 1933 Act Regulations to be stated therein or necessary in order
to make the statements therein not misleading, or of the necessity to amend or
supplement the Prospectus to comply with the 1933 Act, the 1933 Act Regulations
or any other law. The Company shall use its best efforts to prevent the issuance
of any stop order or order suspending the qualification or exemption of the
Securities under any state securities or Blue Sky laws, and, if at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption of the
Securities under any state securities or Blue Sky laws, the Company shall use
every reasonable effort to obtain the withdrawal or lifting of such order at the
earliest possible time.

                  b. The Company will give the Underwriters notice of its
intention to prepare or file any amendment to the Registration Statement
(including any post-effective amendment), any Rule 462(b) Registration
Statement, any Term Sheet or any amendment or supplement to the Prospectus
(including any revised prospectus or Term Sheet and preliminary prospectus which
the Company proposes for use by the Underwriters in connection with the offering
of the Securities which differs from the prospectus on file at the Commission at
the time the Registration Statement becomes effective, whether or not such
revised prospectus or Term Sheet and preliminary prospectus is required to be
filed pursuant to Rule 424(b)), whether pursuant to the 1933 Act, the 1934 Act
or otherwise, will furnish the Underwriters with copies of any Rule 462(b)
Registration Statement, Term Sheet, amendment or supplement a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file any such Rule 462(b) Registration Statement, Term Sheet, amendment or
supplement or use any such prospectus to which the Underwriters or counsel for
the Underwriters shall object.

                  c. The Company has furnished or will deliver to the
Underwriters and their counsel, without charge, as many signed and conformed
copies of the Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith 



                                       6
<PAGE>   7
or incorporated by reference therein) as the Underwriters may reasonably
request. If applicable, the copies of the Registration Statement and each
amendment thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.

                  d. The Company will furnish to each Underwriter, without
charge, from time to time during the period when the Prospectus is required to
be delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request for the purposes contemplated by the 1933 Act, the 1934 Act, the 1933
Act Regulations or the rules and regulations of the Commission under the 1934
Act (the "1934 Act Regulations"). If applicable, the Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T.

                  e. The Company will comply with the 1933 Act and the 1933 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act, the 1934 Act, the 1933 Act Regulations
or the 1934 Act Regulations to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 5(b) of the 1933 Act, such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply with
such requirements and the Company will 


                                       7
<PAGE>   8
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.

                  f. During the period of five years hereafter, the Company will
furnish to you (i) as soon as available, a copy of each report of the Company
mailed to shareholders or filed with the Commission or the Nasdaq National
Market ("NASDAQ"), and (ii) from time to time such other information concerning
the Company as you may request, subject to appropriate confidentiality
provisions with respect to any material nonpublic information so furnished.

                  g. The Company will use its best efforts, in cooperation with
counsel to the Underwriters, to qualify the Securities for offering and sale
under the applicable securities or Blue Sky laws of such states and other
jurisdictions of the United States as the Representatives may designate and to
maintain such qualifications in effect for a period of not less than one year
from the later of the effective date of the Registration Statement and any Rule
462(b) Registration Statement; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation in any jurisdiction in which it is
not so qualified. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.

                  h. The Company will make generally available to its security
holders as soon as practicable, but not later than 45 days after the close of
the period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the "effective date" (as defined in said Rule 158) of the
Registration Statement.

                  i. The Company will use the net proceeds received by it from
the sale of the Securities in the manner specified in the Prospectus under "Use
of Proceeds."

                  j. If, at the time that the Registration Statement becomes
effective, any Rule 430A Information or Rule 434 Informa-



                                       8
<PAGE>   9
tion shall have been omitted therefrom, then immediately following the execution
of this Agreement, the Company will prepare, and file or transmit for filing
with the Commission in accordance with Rule 430A or Rule 434 and Rule 424(b),
copies of a Prospectus or Term Sheet containing such Rule 430A Information and
Rule 434 Information, respectively, or, if required by Rule 430A, a
post-effective amendment to the Registration Statement (including an amended
Prospectus), containing such Rule 430A Information.

                  k. If the Company elects to rely upon Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 of the 1933 Act Regulations by the earlier of (i) 10:00 P.M. Eastern Time on
the date hereof and (ii) the time confirmations are sent or given, as specified
by Rule 462(b)(2).

                  l. The Company, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to Section 13, 14 or
15 of the 1934 Act within the time periods required by the 1934 Act and the 1934
Act Regulations.

                  m. During a period of 90 days from the date of the Prospectus,
the Company will not, without the prior written consent of Vector, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any share
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the 1933
Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Securities to be
sold hereunder, (B) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of any security outstanding
on the date hereof and referred to in the Prospectus, (C) any shares of Common
Stock issued or options to purchase Common Stock granted pursuant 



                                       9
<PAGE>   10
to existing employee benefit plans of the Company referred to in the Prospectus
or (D) any shares of Common Stock issued pursuant to any non-employee director
stock plan.

                  n. The Company has furnished or will furnish to you "lock-up"
letters, in form and substance satisfactory to you, signed by each of its
current officers, directors, Immunex Corporation and International Biotechnology
Trust plc.

                  o. The Company will supply the Underwriters with copies of all
correspondence to and from, and all documents issued to and by, the Commission
in connection with the registration of the Securities under the 1933 Act.

                  p. Prior to the Closing Date, the Company shall furnish to the
Underwriters, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company and its sole subsidiary
set forth on Exhibit 21 to Item 16(a) of the Registration Statement (the
"Subsidiary"), for any periods subsequent to the periods covered by the
financial statements appearing in the Registration Statement and the Prospectus.

                  q. Prior to the Closing Date, the Company will issue no press
release or other communications directly or indirectly and hold no press
conference with respect to the Company or its Subsidiary, the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of any of them, or the offering of the Securities, without the prior written
consent of the Representatives unless in the judgment of the Company and its
counsel, and after notification to the Representatives, such press release or
communication is required by law.

                  r. The Company will comply with all provisions of Florida H.B.
1771, codified as Section 517.075 of the Florida statutes, and all regulations
promulgated thereunder relating to issuers doing business with Cuba.

                  s. The Company has not taken, nor will it take, directly or
indirectly, any action designed to, or that might reasonably be expected to,
cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Securities.




                                       10
<PAGE>   11
                  t. The Company will use its best efforts to maintain the
quotation of the Common Stock (including the Securities) on NASDAQ and will file
with NASDAQ all documents and notices required by NASDAQ of companies that have
securities that are traded in the over-the-counter market and quotations for
which are reported by NASDAQ.

         6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:

                  a. When the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto becomes
effective, at the date of the Prospectus, if different, and at the Closing Date
and the Option Closing Date, as the case may be, (i) the Registration Statement,
the Rule 462(b) Registration Statement and any amendments and supplements
thereto complied or will comply in all material respects with the requirements
of the 1933 Act and the 1933 Act Regulations and did not and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus and any supplements or amendments thereto will not at
the date of the Prospectus, at the date of any such supplements or amendments,
or at the Closing Date or the Option Closing Date, if any, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. If Rule 434 is used, the Company will comply
with the requirements of Rule 434 and the Prospectus shall not be "materially
different," as such term is used in Rule 434, from the Prospectus included in
the Registration Statement at the time it became effective. The representations
and warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus relating to any Underwriter made
in reliance upon and in conformity with information furnished to the Company in
writing by any Underwriter, through Vector expressly for use in the Registration
Statement or Prospectus. The Company has not distributed any offering materials
in connection with the offering or sale of the Securities other than the
Registration Statement, the preliminary prospectus, the Prospectus, the Term
Sheet, if applicable, or any other materials, if any, permitted by the 1933 Act
or the 1933 Act Regulations.




                                       11
<PAGE>   12
                  b. Each preliminary prospectus and the prospectus filed as
part of the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act, complied
when so filed in all material respects with the 1933 Act Regulations and, if
applicable, each preliminary prospectus and the Prospectus delivered to the
Underwriters for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.

                  c. The accountants who certified the financial statements
included in the Registration Statement are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.

                  d. The financial statements included in the Registration
Statement and the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates indicated and the
results of their operations for the periods specified; except as otherwise
stated in the Registration Statement, said financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis; and no supporting schedules are required to be included in
the Registration Statement. The summary financial and statistical data set forth
in the Prospectus are prepared on an accounting basis consistent with such
financial statements.

                  e. Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (i) there has been no material adverse change or any development
involving a prospective material adverse change in or affecting the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiary considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) except with
respect to the Merger (as defined below), there have been no transactions
entered into by the Company or its Subsidiary, other than those in the ordinary
course of business, which are material with respect to the Company, and (iii)
there has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock. The Company has no material
contingent obligations which are not specifically 



                                       12
<PAGE>   13
disclosed in the Company's financial statements that are included in the
Registration Statement.

                  f. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Washington with corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not, singly or in the aggregate,
have a material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
Subsidiary considered as one enterprise.

                  g. The Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material adverse effect
on the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its Subsidiary considered as one
enterprise; all of the issued and outstanding capital stock of the Subsidiary
has been duly authorized and validly issued, is fully paid and nonassessable and
is owned by the Company free and clear of any security interest, mortgage,
pledge, lien, charge, encumbrance, claim or equity. There are no outstanding
subscriptions, options, warrants, commitments, convertible or exchangeable
securities or other rights granted by the Company or its Subsidiary to acquire
any shares of capital stock of or ownership interests in any subsidiary of the
Company and there are no commitments, plans or arrangements to do so. Except as
described in the Prospectus, the Company does not own, directly or indirectly,
any shares of stock or any other equity or long-term debt securities of any


                                       13
<PAGE>   14
corporation or have any equity interest in any firm, partnership, joint venture,
association or other entity.

                  h. The authorized, issued and outstanding capital stock of the
Company is as set forth in the Prospectus under "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
reservations, agreements, employee or director benefit plans or the exercise of
convertible securities referred to in the Prospectus); the shares of issued and
outstanding capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and have not been issued in
violation of or are not otherwise subject to any preemptive or other rights to
subscribe for or purchase securities; the Securities have been duly authorized
for issuance and sale to the Underwriters pursuant to this Agreement and, when
issued and delivered by the Company pursuant to this Agreement against payment
of the consideration set forth herein, will be validly issued and fully paid and
nonassessable; the certificates evidencing the Securities are in due and proper
form under Washington law; the authorized capital stock of the Company,
including the Securities, conforms to all statements relating thereto contained
in the Prospectus; and the issuance of the Securities is not subject to
preemptive or other rights to subscribe for or purchase securities. There are no
outstanding subscriptions, options, warrants, convertible or exchangeable
securities or other rights granted to or by the Company to purchase shares of
Common Stock or other securities of the Company and there are no commitments,
plans or arrangements to issue any shares of Common Stock or any security
convertible into or exchangeable for Common Stock, in each case other than as
described in the Prospectus.

                  i. Except as disclosed in the Registration Statement and
except as would not, singly or in the aggregate, reasonably be expected to have
a material adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company and its
Subsidiary considered as one enterprise, (A) the Company and its Subsidiary are
each in compliance with all applicable Environmental Laws (as defined below),
(B) the Company and its Subsidiary have all permits, authorizations and
approvals required under any applicable Environmental Laws and are each in
compliance with the requirements of such permits authorizations and approvals,
(C) there are no pending or, to the best knowledge of the Company, threatened



                                       14
<PAGE>   15
Environmental Claims against the Company or its Subsidiary and (D) under
applicable law, there are no circumstances with respect to any property or
operations of the Company or its Subsidiary that are reasonably likely to form
the basis of an Environmental Claim against the Company or its Subsidiary.

                  For purposes of this Agreement, the following terms shall have
the following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) Federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgement, relating to the environment,
health, safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority. "Environmental
Claims" means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.

                  j. Neither the Company nor its Subsidiary is in violation of
its charter or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any material contract, indenture,
mortgage, loan agreement, deed, trust, note, lease, sublease, voting agreement,
voting trust, or other instrument or agreement to which the Company or its
Subsidiary is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or its Subsidiary is subject; and
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated herein and the fulfillment of the terms hereof
have been duly authorized by all necessary corporate action and will not
conflict with or constitute a breach of, or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or its Subsidiary pursuant to, any contract, indenture,
mortgage, loan agreement, deed, trust, note, lease, sublease, voting agreement,
voting trust or other instrument or agreement to which the Company or its
Subsidiary is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or its Subsidiary is subject, nor
will such action result in any violation of the provisions of the charter or
bylaws of the Company or its 



                                       15
<PAGE>   16
Subsidiary or any applicable statute, law, rule, regulation, ordinance,
decision, directive or order.

                  k. No labor dispute with the employees of the Company or its
Subsidiary exists or, to the best knowledge of the Company, is imminent; and the
Company is not aware of any existing or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or contractors which
might, singly or in the aggregate, be expected to result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiary considered as
one enterprise.

                  l. There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or, to
the knowledge of the Company, threatened, against or affecting the Company or
its Subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which, singly or in the aggregate, might
result in any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Company and
its Subsidiary considered as one enterprise, or which, singly or in the
aggregate, might materially and adversely affect the properties or assets
thereof or which might materially and adversely affect the consummation of this
Agreement; all pending legal or governmental proceedings to which the Company or
its Subsidiary is a party or of which any of their respective property or assets
is the subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are, considered in the
aggregate, not material; and there are no contracts or documents of the Company
or its Subsidiary which are required to be filed as exhibits to the Registration
Statement by the 1933 Act or by the 1933 Act Regulations which have not been so
filed.

                  m. Except as otherwise specifically disclosed in the
Prospectus, the Company and its Subsidiary own or are licensed to use all
patents, patent applications, inventions, trademarks, trade names, applications
for registration of trademarks, service marks, service mark applications,
copyrights, know-how, manufacturing processes, formulae, trade secrets, licenses
and rights in any thereof and any other intangible property and assets (herein
called the "Proprietary Rights") which are material to the business of the



                                       16
<PAGE>   17
Company and its Subsidiary considered as one enterprise as now conducted and as
proposed to be conducted, in each case as described in the Prospectus. The
description of the Proprietary Rights in the Prospectus is correct in all
material respects and fairly and correctly describes the Company's and its
Subsidiary's rights with respect thereto. The Company does not have any
knowledge of, and the Company has not given or received any notice of, any
pending conflicts with or infringement of the rights of others with respect to
any Proprietary Rights or with respect to any license of Proprietary Rights
which are material to the business of the Company and its Subsidiary considered
as one enterprise. No action, suit, arbitration, or legal, administrative or
other proceeding, or investigation is pending, or, to the best knowledge of the
Company, threatened, which involves any Proprietary Rights. Neither the Company
nor its Subsidiary is subject to any judgment, order, writ, injunction or decree
of any court or any Federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, or any arbitrator, or has entered into or is a party to any contract
which restricts or impairs the use of any such Proprietary Rights in a manner
which would have a material adverse effect on the use of any of the Proprietary
Rights. Except as otherwise specifically disclosed in the Prospectus, to the
best knowledge of the Company, no Proprietary Rights used by the Company or its
Subsidiary, and no services or products sold by the Company or its Subsidiary,
conflict with or infringe upon any proprietary rights of any third party.
Neither the Company nor its Subsidiary has received written notice of any
pending conflict with or infringement upon such third-party proprietary rights.
Neither the Company nor its Subsidiary has entered into any consent,
indemnification, forbearance to sue or settlement agreement with respect to
Proprietary Rights other than in the ordinary course of business. No claims have
been asserted by any person with respect to the validity of the Company's or its
Subsidiary's ownership or right to use the Proprietary Rights and, to the best
knowledge of the Company, there is no reasonable basis for any such claim to be
successful. The Proprietary Rights which are material to the business of the
Company and its Subsidiary considered as one enterprise are valid and
enforceable and no registration relating thereto has lapsed, expired or been
abandoned or cancelled or is the subject of cancellation or other adversarial
proceedings, and all applications therefore are pending and are in good
standing. The Company and its Subsidiary have complied, in all material
respects, with their 



                                       17
<PAGE>   18
respective contractual obligations relating to the protection of the Proprietary
Rights which are material to the business of the Company and its Subsidiary
considered as one enterprise used pursuant to licenses. To the best knowledge of
the Company, no person is infringing on or violating the Proprietary Rights
which are material to the business of the Company and its Subsidiary considered
as one enterprise owned or used by the Company or its Subsidiary.

                  n. No registration, authorization, approval, qualification or
consent of any court or governmental authority or agency is necessary in
connection with the offering, issuance or sale of the Securities hereunder,
except such as may be required under the 1933 Act or the 1933 Act Regulations or
state securities or Blue Sky laws (or such as may be required by the National
Association of Securities Dealers, Inc. ("NASD")).

                  o. The Company and its Subsidiary possess and are operating in
compliance with all material licenses, certificates, consents, authorities,
approvals and permits (collectively, "permits") from all state, Federal, foreign
and other regulatory agencies or bodies necessary to conduct the businesses now
operated by them, and neither the Company nor its Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
permit or any circumstance which would lead it to believe that such proceedings
are reasonably likely which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would materially and adversely affect
the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its Subsidiary considered as one
enterprise.

                  p. This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or by general
principles of equity and except as rights to indemnity and contribution
hereunder may be limited by Federal or state securities laws or the public
policy underlying such laws.




                                       18
<PAGE>   19
                  q. Except as described in the Prospectus, there are no persons
with registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the 1933 Act.

                  r. No order preventing or suspending the use of any
preliminary prospectus has been issued and no proceedings for that purpose are
pending or, to the knowledge of the Company, threatened by the Commission; and
to the best knowledge of the Company, no order suspending the offering of the
Securities in any jurisdiction designated by the Underwriters pursuant to
Section 5(g) of this Agreement has been issued and, to the best knowledge of the
Company, no proceedings for that purpose have been instituted or threatened or
are contemplated.

                  s. The Company and its Subsidiary have good and marketable
title to their respective properties, free and clear of all material security
interests, mortgages, pledges, liens, charges, encumbrances and claims of
record. The properties of the Company and its Subsidiary are, in the aggregate,
in good repair (reasonable wear and tear excepted), and suitable for their
respective uses. Any real properties held under lease by the Company and its
Subsidiary are held by them under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the conduct of the
business of the Company and its Subsidiary considered as one enterprise.

                  t. The Company and its Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

                  u. The Company and its Subsidiary have conducted and are
conducting their respective businesses in compliance with all applicable
Federal, state, local and foreign statutes, laws, rules, regulations,
ordinances, codes, decisions, decrees, direc-




                                       19
<PAGE>   20

tives and orders, except where the failure to do so would not, singly or in the
aggregate, have a material adverse effect on the condition, financial or
otherwise, or on the earnings, business affairs or business prospects of the
Company and its Subsidiary considered as one enterprise.

                  v. To the best of the Company's knowledge, the Company and its
Subsidiary take security measures adequate to assert trade secret protection in
their non-patented technology.

                  w. To the best of the Company's knowledge, neither the Company
nor its Subsidiary nor any employee or agent of the Company or its Subsidiary
has made any payment of funds of the Company or its Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which payment,
receipt or retention of funds is of a character required to be disclosed in the
Prospectus.

                  x. The Company is not now, and after sale of the Securities to
be sold by it hereunder and application of the net proceeds from such sale as
described in the Prospectus under the caption "Use of Proceeds" will not be, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.

                  y. All offers and sales of capital stock of the Company prior
to the date hereof were at all relevant times duly registered or exempt from the
registration requirements of the 1933 Act and were duly registered or subject to
an available exemption from the registration requirements of the applicable
state securities or Blue Sky laws.

                  z. The Company has complied with all provisions of Florida
H.B. 1771, codified as Section 517.075 of the Florida statutes, and all
regulations promulgated thereunder relating to issuers doing business with Cuba.

                  aa. The Common Stock is registered pursuant to Section 12(g)
of the 1934 Act. The Securities have been duly authorized for quotation on
NASDAQ. The Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the 1934 Act
or delisting the Common Stock from NASDAQ, nor has the Company 



                                       20
<PAGE>   21
received any notification that the Commission or NASDAQ is contemplating
terminating such registration or listing.

                  bb. Neither the Company nor, to its knowledge, any of its
officers, directors or affiliates has taken, and at the Closing Date and at any
later Option Closing Date, neither the Company nor, to its knowledge, any of its
officers, directors or affiliates will have taken, directly or indirectly, any
action which has constituted, or might reasonably be expected to constitute, the
stabilization or manipulation of the price of sale or resale of the Securities.

                  cc. The Company and its Subsidiary maintain insurance of the
types and in amounts adequate for its and its Subsidiary's business and
consistent with insurance coverage maintained by similar companies in similar
business, including but not limited to, insurance covering clinical trial
liability, product liability and real and personal property owned or leased
against theft, damage, destruction, acts of vandalism and all other risks
customarily insured against, all of which insurance is in full force and effect.

                  dd. The Company and its Subsidiary have filed all material tax
returns required to be filed, which returns are true and correct in all material
respects, and neither the Company nor its Subsidiary is in default in the
payment of any taxes, including penalties and interest, assessments, fees and
other charges, shown thereon due or otherwise assessed, other than those being
contested in good faith and for which adequate reserves have been provided or
those currently payable without interest which were payable pursuant to said
returns or any assessments with respect thereto.

                  ee. Except as described in the Prospectus, to the best of the
Company's knowledge, there are no rulemaking or similar proceedings before The
United States Food and Drug Administration or comparable Federal, state, local
or foreign government bodies which involve or affect the Company or its
Subsidiary, which, if the subject of an action unfavorable to the Company or its
Subsidiary, could involve a prospective material adverse change in or effect on
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiary considered as one
enterprise.



                                       21
<PAGE>   22

                  ff. The Company has not received any communication (whether
written or oral) relating to the termination or threatened termination or
modification or threatened modification of any material, consulting, licensing,
marketing, research and development, cooperative or any similar agreement,
including, without limitation, the collaborative research and license agreements
listed under the section of the Prospectus entitled, "Collaborative and
Licensing Agreements." Each such collaborative and licensing agreement is in
effect substantially as described in such section of the Prospectus.

                  gg. To the knowledge of the Company, if any full-time
employee identified in the Prospectus has entered into any non-competition,
non-disclosure, confidentiality or other similar agreement with any party other
than the Company or its Subsidiary, such employee is neither in violation
thereof nor is expected to be in violation thereof as a result of the business
conducted or expected to be conducted by the Company or its Subsidiary as
described in the Prospectus or such person's performance of his obligations to
the Company or its Subsidiary; and neither the Company nor its Subsidiary has
received written notice that any consultant or scientific advisor of the Company
or its Subsidiary is in violation of any non-competition, non-disclosure,
confidentiality or similar agreement.

                  hh. On or prior to the date hereof, the Company and RGene
Therapeutics, Inc. ("RGene") have received the requisite approval or approvals
of that certain Agreement and Plan of Merger, dated as of April 16, 1996 (the
"Merger Agreement"), by and among the Company, TGC Acquisition Corporation and
RGene, pursuant to which TGC Acquisition Corporation will be merged with and
into RGene (the "Merger"). Except as set forth in the Prospectus, no such
approval or approvals imposes on the Company or any affiliate thereof any
condition that adversely affects the ability of the Company and its affiliates
to conduct their business as the same is described in the Prospectus or
adversely affects the ability of the Underwriters to market the Securities on
the terms and in the manner contemplated by the Prospectus.

                  ii. The Certificate of Merger with respect to the Merger has
been filed with the Secretary of State of the State of Delaware and has become
effective, the Merger has occurred and all other transactions contemplated by
the Merger Agreement to be 





                                       22
<PAGE>   23
consummated on or prior to the Closing Date have been consummated without waiver
or modification thereto.

         7. INDEMNIFICATION AND CONTRIBUTION.

                  a. The Company agrees to indemnify and hold harmless (i) each
Underwriter and (ii) each person, if any, who controls any Underwriter within
the meaning of Section 15 of the 1933 Act (any of the persons referred to in
this clause (ii) being hereinafter referred to as a "controlling person") and
(iii) the respective directors, officers, partners and employees of any of the
Underwriters or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Person") to the
fullest extent lawful, from and against any and all losses, claims, damages,
liabilities and expenses whatsoever (including, without limitation, all
reasonable costs of pursuing, investigating and defending any claim, suit or
action or any investigation or proceeding by any governmental agency or body,
commenced or threatened, including the reasonable fees and expenses of counsel
to any Indemnified Person), directly or indirectly, caused by, related to, based
upon or arising out of or in connection with any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
any amendment thereto, including the Rule 430A Information and Rule 434
Information, if applicable, or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading or caused by, related to, based upon, arising
out of or in connection with any untrue statement or alleged untrue statement of
a material fact contained in any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto) or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to such Underwriter furnished in writing to the Company by or on behalf
of any Underwriter through you expressly for use in connection therewith;
provided, however, that the indemnification contained in this paragraph a. with
respect to any preliminary 



                                       23
<PAGE>   24
prospectus shall not inure to the benefit of any Underwriter (or related
Indemnified Person) on account of any such loss, claim, damage, liability or
expense arising from the sale of the Securities by such Underwriter to any
person if a copy of the Prospectus shall not have been delivered or sent to such
person within the time required by the 1933 Act or the 1933 Act Regulations, and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such preliminary prospectus was corrected in the
Prospectus (or any amendment or supplement thereto), provided that the Company
has delivered the Prospectus to the several Underwriters in requisite quantity
on a timely basis to permit such delivery or sending.

                  b. If any action, suit or proceeding shall be brought against
any Indemnified Person in respect of which indemnity may be sought against the
Company, such Indemnified Person shall promptly notify in writing the parties
against whom indemnification is being sought (the "indemnifying parties"), and
such indemnifying parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. Such Indemnified
Person shall have the right to employ separate counsel in any such action, suit
or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel or (iii) the named parties to any such action, suit,
investigation or proceeding (including any impleaded parties) include both such
Indemnified Person and the indemnifying parties and representation of such
Indemnified Person and any indemnifying party by the same counsel would, in the
reasonable judgment of the Indemnified Person, be inappropriate due to actual or
potential differing interests between them (in which case the indemnifying party
shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Indemnified Person). It is understood, however,
that the indemnifying parties shall, in connection with any one such action,
suit or proceeding or separate but substantially similar or related actions,
suits or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys (in addition to any local counsel) at any
time for all such Indemnified Persons not having actual or potential differing 



                                       24
<PAGE>   25
interests with you or among themselves, which firm shall be designated in
writing by Vector, and that all such fees and expenses shall be reimbursed as
they are incurred. The indemnifying parties shall not be liable for any
settlement of any such action, suit or proceeding effected without their written
consent, which consent shall not be unreasonably withheld, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless any Indemnified Person, to the extent provided in the preceding
paragraph, from and against any loss, claim, damage, liability or expense by
reason of such settlement or judgment.

                  c. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration Statement, any person who controls the Company within the
meaning of Section 15 of the 1933 Act, to the same extent as the foregoing
indemnity from the Company to each Indemnified Person, but only with respect to
information relating to such Underwriter furnished in writing by or on behalf of
such Underwriter through Vector expressly for use in the Registration Statement,
the Prospectus or any preliminary prospectus, or any amendment or supplement
thereto. If any action, suit, investigation or proceeding shall be brought
against the Company, any of its directors, any such officer or any such
controlling person based on the Registration Statement, the Prospectus or any
preliminary prospectus, or any amendment or supplement thereto, and in respect
of which indemnity may be sought against any Underwriter pursuant to this
paragraph (c), such Underwriter shall have the rights and duties given to the
Company by paragraph (b) above, and the Company, its directors, any such officer
and any such controlling person shall have the rights and duties given to the
Indemnified Persons by paragraph (a) above.

                  d. If the indemnification provided for in this Section 7 is
unavailable to, or insufficient to hold harmless, an indemnified party under
paragraphs (a) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the 


                                       25
<PAGE>   26
Company on the one hand and the Underwriters on the other hand from the offering
of the Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or judicial determination, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other hand, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus or, if Rule 434 is used, the corresponding
location on the Term Sheet. The relative fault of the Company on the one hand
and the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by the Underwriters on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The indemnity and contribution obligations of the Company set forth herein shall
be in addition to any liability or obligation the Company may otherwise have to
any Indemnified Person.

                  e. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this Section 7 were determined by
a pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 7, no
Underwriter (or any of its related Indemnified Persons) shall be required to
contribute (whether pursuant to subsection (a) or (c) or otherwise) any amount
in excess of the 


                                       26
<PAGE>   27
underwriting discount applicable to the Securities underwritten by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 7 are several
in proportion to the respective numbers of Securities set forth opposite their
names in Schedule I hereto (or such numbers of Securities increased as set forth
in Section 10 hereof) and not joint.

                  f. No indemnifying party shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened action, suit or proceeding in respect of which any Indemnified Person
is or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such action, suit or proceeding.

                  g. Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the indemnifying party to the indemnified party
as such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Indemnified Person, the Company, its
directors or officers or any person controlling the Company, (ii) acceptance of
any Securities and payment therefor hereunder and (iii) any termination of this
Agreement.

         8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Initial Securities hereunder are subject to the
following conditions:

                  a. The Registration Statement, including any Rule 462(b)
Registration Statement, shall have become effective on the date hereof, or with
the consent of the Representatives, at a later date and time; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by the
Commission. If 



                                       27
<PAGE>   28
the Company has elected to rely upon Rule 430A, Rule 430A Information previously
omitted from the effective Registration Statement pursuant to Rule 430A shall
have been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period and the Company shall have provided evidence
satisfactory to the Underwriters of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A. If the Company has
elected to rely upon Rule 434, a Term Sheet shall have been transmitted to the
Commission for filing pursuant to Rule 424(b) within the prescribed time period.

                  b. The Underwriters shall have received:

                                    (i) The favorable opinion, dated as of the
         Closing Date, of Perkins Coie, counsel for the Company, in form and
         substance satisfactory to counsel for the Underwriters, to the effect
         that:

                           A. The Company has been duly incorporated and is
                  validly existing as a corporation under the laws of the State
                  of Washington.

                           B. The Company has corporate power and authority to
                  own or lease its properties and to conduct its business as
                  described in the Registration Statement and the Prospectus and
                  to enter into and perform its obligations under this
                  Agreement.

                           C. To their knowledge, the Company is duly qualified
                  as a foreign corporation to transact business and is in good
                  standing in each jurisdiction in which such qualification is
                  required, except where the failure to qualify would not have a
                  material adverse effect on the Company.

                           D. The authorized, issued and outstanding capital
                  stock of the Company is as set forth in the Prospectus under
                  "Capitalization" (except for subsequent 



                                       28
<PAGE>   29
                  issuances, if any, pursuant to reservations, agreements,
                  employee or director benefit plans or the exercise of
                  convertible securities referred to in the Prospectus), and the
                  shares of issued and outstanding capital stock of the Company,
                  including the Securities, have been duly authorized and
                  validly issued and are fully paid and nonassessable and, to
                  their knowledge, have not been issued in violation of or are
                  not otherwise subject to any preemptive rights or, to such
                  counsel's knowledge, other rights to subscribe for or purchase
                  securities.

                           E. The Securities have been duly authorized for
                  issuance and sale to the Underwriters pursuant to this
                  Agreement and, when issued and delivered by the Company
                  pursuant to this Agreement against payment of the
                  consideration set forth herein, will be validly issued and
                  fully paid and nonassessable; and the issuance of the
                  Securities is not subject to preemptive or, to such counsel's
                  knowledge, other rights to subscribe for or purchase
                  securities.

                           F. The Subsidiary has been duly incorporated and is
                  validly existing as a corporation in good standing under the
                  laws of the jurisdiction of its incorporation, has corporate
                  power and authority to own and lease its properties and to
                  conduct its business as described in the Registration
                  Statement and, to their knowledge, is duly qualified as a
                  foreign corporation to transact business and is in good
                  standing in each jurisdiction in which such qualification is
                  required, except where the failure to qualify would not have a
                  material adverse effect on the Company; all of the issued and
                  outstanding capital stock of the Subsidiary has been duly
                  authorized and 




                                       29
<PAGE>   30

                  validly issued, is fully paid and nonassessable and, to their
                  knowledge, is owned by the Company free and clear of any
                  security interest, mortgage, pledge, lien, encumbrance, claim
                  or equity.

                           G. To their knowledge, except as described in the
                  Prospectus, there are no outstanding options, warrants or
                  other rights granted to or by the Company to purchase shares
                  of Common Stock or other securities of the Company and there
                  are no commitments, plans or arrangements to issue any shares
                  of Common Stock or other securities.

                           H.  This Agreement has been duly authorized,
                  executed and delivered by the Company.

                           I. At the time the Registration Statement became
                  effective and at the Closing Date, the Registration Statement
                  (other than the financial statements, as to which no opinion
                  need be rendered) complied as to form in all material respects
                  with the requirements of the 1933 Act and the 1933 Act
                  Regulations.

                           J. The form of certificate used to evidence each of
                  the Securities is in due and proper form.

                           K. To their knowledge, there are no legal or
                  governmental proceedings pending or threatened to which the
                  Company or its Subsidiary is a party or to which any property
                  of the Company or its Subsidiary is subject which are required
                  to be disclosed in the Registration Statement other than those
                  disclosed therein, and all pending legal or governmental
                  proceedings to which the Company or its Subsidiary is a party
                  or to which any of their property is subject

                                       30
<PAGE>   31

                  which are not described in the Registration Statement,
                  including ordinary routine litigation incidental to the
                  business, are, considered in the aggregate, not material.

                           L. The information in the Prospectus under "Risk
                  Factors--Shares Eligible for Future Sale; Registration
                  Rights," "Business--Research Collaborations and Licensing
                  Agreements," "--Benefit Plans," "Limitation of Liability and
                  Indemnification Matters" and "Description of Capital Stock,"
                  to the extent that it constitutes matters of law, summaries of
                  legal matters, documents or proceedings, or legal conclusions,
                  has been reviewed by them and fairly summarizes in all
                  material respects the information called for with respect
                  thereto.

                           M. The Merger Agreement conforms in all material
                  respects to the description thereof con- tained in the
                  Prospectus.

                           N. The Merger has been duly authorized by all
                  requisite corporate action on the part of the Company and
                  RGene. On June 19, 1996, a duly authorized and executed
                  Certificate of Merger with respect to the Merger was filed
                  with the Secretary of State of the State of Delaware and on
                  such date the Merger became effective pursuant to the Delaware
                  General Corporation Law with the effect set forth in Section
                  259(a) thereof.

                           O. Such counsel does not know of any contracts or
                  documents required to be filed as exhibits to the Registration
                  Statement or described in the Registration Statement or the
                  Prospectus which are not so filed or described as required and
                  such contracts and documents as are summarized in the
                  Registration Statement or the Prospectus are fairly summarized
                  in all material respects.

                                       31
<PAGE>   32

                  To their knowledge, neither the Company nor its Subsidiary is
                  in default in the performance or observance of any material
                  obligation, agreement, covenant or condition contained in any
                  material contract, indenture, mortgage, loan agreement, deed,
                  trust, note, lease, sublease, voting trust, voting agreement
                  or other instrument or agreement to which it is a party or by
                  which it or any of its properties may be bound, except for
                  defaults which neither individually nor in the aggregate are
                  material to the condition, financial or otherwise, of the
                  Company and its Subsidiary, taken as one enterprise.

                           P. The form of the agreements executed by the
                  Company's employees, consultants and other advisors respecting
                  trade secrets, confidentiality or intellectual property rights
                  is valid, binding and enforceable in accordance with its
                  express terms (it being understood that such counsel will
                  attach to such opinion a certificate executed by an
                  appropriate officer of the Company to the effect that the
                  Company uses all reasonable efforts to cause its employees,
                  consultants and other advisors to execute such agreements).

                           Q. The Company is the non-exclusive licensee of the
                  United States and foreign patents and patent applications
                  listed on Schedule I hereto and is the exclusive licensee of
                  the United States and foreign patents and patent applications
                  listed on Schedule II hereto. All such licenses are duly
                  executed, validly binding and enforceable in accordance with
                  their terms and, to the best of their knowledge, the Company
                  is not in default (declared or undeclared) of any material
                  provision of any such license.

                                       32
<PAGE>   33

                           R. No authorization, approval, consent or order of
                  any court or governmental authority or agency is required in
                  connection with the offering, issuance or sale of the
                  Securities to the Underwriters, except such as may be required
                  under the 1933 Act or the 1933 Act Regulations or state
                  securities or Blue Sky laws or such as may be required by the
                  NASD; and, to such counsel's knowledge, the execution,
                  delivery and performance of this Agreement and the
                  consummation of the transactions contemplated herein and the
                  compliance by the Company with its obligations hereunder will
                  not conflict with or constitute a breach of, or default under,
                  or result in the creation or imposition of any lien, charge or
                  encumbrance upon any property or assets of the Company or its
                  Subsidiary pursuant to, any material contract, indenture,
                  mortgage, loan agreement, note, deed, trust, lease, sublease,
                  voting trust, voting agreement or other instrument or
                  agreement to which the Company or its Subsidiary is a party or
                  by which it or any of them may be bound, or to which any of
                  the property or assets of the Company or its Subsidiary is
                  subject, nor will such action result in any violation of the
                  provisions of the charter or bylaws of the Company or its
                  Subsidiary, or any applicable statute, law, rule, regulation,
                  ordinance, code, decision, directive or order.

                           S. To their knowledge, except as set forth in the
                  Prospectus, there are no legal or governmental proceedings,
                  pending or threatened, to which the Company or its Subsidiary
                  is a party or by which any property of the Company or its
                  Subsidiary is subject which are required to be disclosed in
                  the Registration Statement which could reasonably be expected
                  to have a material adverse effect on the business or
                  condition,

                                       33
<PAGE>   34

                  financial or otherwise, of the Company and its Subsidiary
                  considered as one enterprise.

                           T. Except as described in the Prospectus, to their
                  knowledge, there are no persons with registration or other
                  similar rights to have any securities registered pursuant to
                  the Registration Statement or otherwise registered by the
                  Company under the 1933 Act.

                           U. The Company is not an "investment company" or a
                  company "controlled" by an "investment company" within the
                  meaning of the Investment Company Act of 1940, as amended.

                           V. Based on the representations and warranties made
                  by the respective investors contained in each respective
                  purchase agreement and the responses (if any) of such
                  investors to the Company's inquiries and the facts and
                  circumstances contemplated by each respective purchase
                  agreement, and except that such counsel expresses no opinion
                  as to whether information provided to the investors was
                  sufficient and assuming that each offer and sale was a
                  discrete transaction and not integrated with any offer or sale
                  of securities by the Company, the sales of the Company's
                  Common Stock during the three years immediately before the
                  date hereof were at all relevant times duly registered or
                  exempt from registration under Section 5 of the 1933 Act.

                           W. Although they have made no independent
                  investigation, in the course of their representation of the
                  Company in connection with the offering of the Securities,
                  nothing has come to their attention that leads them to believe
                  that either the Company or its Subsidiary is not in

                                       34


<PAGE>   35

                  compliance with, or is not conducting its business in
                  conformity with, all applicable laws and regulations relating
                  to the operation of its business as described in the
                  Registration Statement, except to the extent that any failure
                  so to comply or conform would not have a material adverse
                  effect upon the business or condition, financial or otherwise,
                  of the Company and its Subsidiary considered as one
                  enterprise.

                           X. The Registration Statement has become effective
                  under the 1933 Act; any required filing of the Prospectus, and
                  any supplements thereto or the Term Sheet, pursuant to Rule
                  424(b) and if applicable, Rule 434, has been made in the
                  manner and within the time period required; and to their
                  knowledge, no stop order suspending the effectiveness of the
                  Registration Statement or any part thereof has been issued and
                  no proceedings therefor have been instituted or are pending or
                  contemplated under the 1933 Act.

                  In giving their opinions with respect to matters involving the
Merger required by subsection b(i) of this Section 8, Perkins Coie shall be
entitled to rely upon opinions of local counsel and certificates of officers of
the Company or its Subsidiary as to matters of fact.

                           (ii) The favorable opinion, dated as of the Closing
         Date, of Morrison & Foerster LLP, patent counsel for the Company, in
         form and substance satisfactory to counsel for the Underwriters, to the
         effect that:

                           A. To the best of their knowledge, the statements set
                  forth on Schedule I to this opinion, which are contained in
                  the Prospectus under the captions "Risk Factors--Uncertainty
                  of Patent Position and Proprietary Rights; Access to
                  Proprietary Genes" and "--

                                       35
<PAGE>   36

                  Patents and Proprietary Rights" (the "Patent Paragraphs"), are
                  accurate and complete statements or summaries of the matters
                  set forth therein.

                           B. To the best of their knowledge, there are no
                  pending or threatened legal or governmental proceedings (other
                  than patent applications and the patent interference
                  proceeding described in the Prospectus) relating to patent
                  rights of the Company to which the Company is a party and, to
                  the best of their knowledge, no such proceedings are
                  threatened or contemplated.

                           C. Based solely upon the Officer's Certificate
                  attached as Exhibit A to this opinion (the "Officer's
                  Certificate"), to the best of their knowledge, the Company is
                  not infringing or otherwise violating any patents of any
                  persons that the Company believes would be held valid and, to
                  the best of their knowledge, no person is infringing or
                  otherwise violating any of the Company's patents.

                           D. Based solely upon the Officer's Certificate, to
                  the best of their knowledge, the Company owns or possesses
                  sufficient licenses or other rights to use all patents
                  necessary to conduct the business now being conducted by the
                  Company as described in the Prospectus.

                           E. Assignment documents listing the Company as the
                  sole assignee of each of the patent applications listed on
                  Schedule II to this opinion (the "Solely Assigned
                  Applications") have been filed with the United States Patent
                  and Trademark Office (the "PTO"), and corresponding Notices of
                  Recordation of Assignment Documents have been received from
                  the PTO. Such counsel is

                                       36
<PAGE>   37

                  not aware of any communications to the Company in which it is
                  alleged that the Company is not the sole assignee of the
                  Solely Assigned Applications. Assignment documents listing the
                  Company as an assignee of each of the patent applications
                  listed on Schedule III to this opinion (the "Jointly Assigned
                  Applications") have been filed with the PTO, and corresponding
                  Notices of Recordation of Assignment Documents have been
                  received from the PTO. Such counsel is not aware of any
                  communications to the Company in which it is alleged that the
                  Company is not an assignee of the Jointly Assigned
                  Applications.

                           F. Each of the United States patent applications
                  listed in Schedule IV to this opinion was prepared and filed
                  in a form sufficient to obtain a filing date and serial number
                  from the PTO.

                           G. To the best of their knowledge, each of the
                  foreign patent applications listed on Schedule IV hereto was
                  prepared and filed in a form sufficient to obtain a serial
                  number and filing date from the applicable foreign patent
                  office.

                           H. Each of the United States patent applications
                  listed as "Pending" in Schedule IV to this opinion is being
                  prosecuted in a manner sufficient to avoid abandonment of the
                  applications (other than an abandonment in favor of a
                  continuing application). To the best of their knowledge, each
                  of the foreign patent applications listed as "Pending" in
                  Schedule IV to this opinion is being prosecuted in a manner
                  sufficient to avoid abandonment.

                           I. Such counsel believes that it has complied with
                  its obligations to disclose 


                                       37
<PAGE>   38

                  information material to patentability pursuant to 37 C.F.R.
                  1.56 in connection with the filing of the United States patent
                  applications listed on Schedule IV to this opinion.

                  In giving their opinions required by subsections (b)(ii) of
this Section 8, Morrison & Foerster LLP shall additionally state that nothing
has come to their attention that leads them to believe that the Patent
Paragraphs at the time the Registration Statement became effective contained an
untrue statement of a material fact with respect to patent rights of the Company
or omitted to state a material fact with respect to patent rights of the Company
required to be stated therein or necessary to make the statements therein not
misleading or that the Patent Paragraphs as of the date of the Prospectus or at
the Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact with respect to patent rights of the Company
or omitted to state a material fact with respect to patent rights of the Company
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

                           (iii) The favorable opinion, dated as of the Closing
         Date, of Morgan & Finnegan, L.L.P., patent counsel for RGene, in form
         and substance satisfactory to counsel for the Underwriters, to the
         effect that:

                           A. To their knowledge, the information in the
                  Prospectus under "Risk Factors--Uncertainty of Patent Position
                  and Proprietary Rights; Access to Proprietary Genes" and
                  "--Patents and Proprietary Rights," as it relates solely to
                  matters for which Morgan & Finnegan, L.L.P. is identified
                  under the column "LAW FIRM CONTACT DOCKET NO." as being
                  responsible in Schedule 2.11 and Schedule 2.14 (collectively,
                  the "Schedules") attached to that certain Merger Agreement,
                  dated as of April 16, 1996 (the "Merger Agreement"), by and
                  between Targeted Genetics Corporation, TGC Acquisition
                  Corporation and RGene Therapeutics, Inc., to the extent that
                  it constitutes matters of 

                                       38
<PAGE>   39

                  law, summaries of legal matters, documents or proceedings, or
                  legal conclusions, has been reviewed by them and is correct in
                  all material respects and fairly and correctly presents the
                  information called for with respect thereto.

                           B. To their knowledge, other than as set forth in the
                  Schedules, there are no pending or threatened legal or
                  governmental proceedings, nor allegations on the part of any
                  person of infringement, relating to patent rights of RGene
                  and, to their knowledge, no such proceedings are threatened or
                  contemplated.

                           C. To their knowledge, RGene is not infringing or
                  otherwise violating any patents, trade secrets, trademarks,
                  service marks, copyrights or other proprietary information or
                  know-how of any persons and, to their knowledge, no person is
                  infringing or otherwise violating any of RGene's patents,
                  trade secrets, trademarks, service marks, copyrights or other
                  proprietary information or know-how of RGene in a way in which
                  could materially affect the use thereof by RGene.

                           D. To their knowledge, there are no asserted or
                  unasserted claims of any persons relating to the scope or
                  ownership of any of the patent applications listed on Schedule
                  I to this opinion (herein called the "Applications") (which
                  include and are limited to all United States patent
                  applications for which Morgan & Finnegan, L.L.P. is identified
                  under the column "LAW FIRM CONTACT DOCKET NO." as being
                  responsible on the Schedules), there are no liens which have
                  been filed against any of the Applications, there are no
                  material defects of form in the preparation or filing of such
                  Applications,

                                       39
<PAGE>   40

                  the Applications are being diligently prosecuted, and none of
                  the Applications has been finally rejected or abandoned.

                           E. To their knowledge, there are no asserted or
                  unasserted claims of any persons relating to the scope or
                  ownership of any of the foreign patent applications listed on
                  Schedule II to this opinion (herein called the "Foreign
                  Applications") (which include and are limited to all foreign
                  patent applications for which Morgan & Finnegan, L.L.P. is
                  identified under the column "LAW FIRM CONTACT DOCKET NO." as
                  being responsible on the Schedules), there are no liens which
                  have been filed against any of the Foreign Applications, there
                  are no material defects of form in the preparation or filing
                  of such Foreign Applications, the Foreign Applications are
                  being diligently prosecuted, and none of the Foreign
                  Applications has been finally rejected or abandoned.

                           F. Nothing has come to their attention that leads
                  them to believe that the Applications and the corresponding
                  Foreign Applications will not eventuate in issued patents, or
                  that any patents issued in respect of any such Applications or
                  Foreign Applications will not be valid or will not afford
                  RGene reasonable patent protection relative to the subject
                  matter thereof.

                           G. With respect to each of the licenses listed on
                  Schedule III to this opinion (which include and are limited to
                  all agreements pursuant to which RGene licenses the patents
                  and patent applications set forth on the Schedules), such
                  counsel has no knowledge of any default (declared or
                  undeclared) by RGene of any material provision of any such
                  license.


                                       40
<PAGE>   41

                           H. To their knowledge, all material prior art
                  references known to RGene or its counsel during the
                  prosecution of the Applications were disclosed to the United
                  States Patent and Trademark Office (the "PTO") and, to their
                  knowledge, neither such counsel nor RGene made any
                  misrepresentation to, or concealed any material fact from, the
                  PTO during such prosecution.

                  In giving their opinions required by subsections (b)(iii) of
this Section 8, Morgan & Finnegan, L.L.P. shall additionally state that nothing
has come to their attention that leads them to believe that, with respect to
licenses, patents or other proprietary information or know-how owned or used by
RGene which are the subject of the foregoing opinions, the Registration
Statement, at the time it became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus, as of its date (unless the term "Prospectus" refers to a prospectus
which has been provided to the Underwriters by RGene for use in connection with
the offering of the Securities which differs from the Prospectus on file at the
Commission at the time the Registration Statement becomes effective, in which
case at the time it is first provided to the Underwriters for such use) or at
the Closing Date or the Option Closing Date, as the case may be, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

                  For purposes of the opinion, "RGene" shall mean RGene
Therapeutics, Inc. and its successors and assigns, including through the Merger
of a wholly-owned subsidiary of the Company with and into RGene.

                           (iv) The favorable opinion, dated as of the Closing
         Date, of the firm of Weiser & Associates, patent counsel for the
         University of Tennessee Research Corporation ("UTRC") and McMaster
         University, Ontario, Canada ("McMaster"), with respect to patent rights
         in certain novel cholesterol

                                       41
<PAGE>   42

         derivatives (the "DC cholesterol technology"), in form and substance
         satisfactory to counsel for the Underwriters, to the effect that:

                           A. To the best of its knowledge, the information in
                  the Prospectus under "Risk Factors--Uncertainty of Patent
                  Position and Proprietary Rights; Access to Proprietary Genes,"
                  "Business--Research Collaborations and Licensing Agreements"
                  and "--Patents and Proprietary Rights," as it relates solely
                  to UTRC's patent rights (as defined below) in the DC
                  cholesterol technology, to the extent that it constitutes
                  matters of law, summaries of legal matters, documents or
                  proceedings, or legal conclusions, has been reviewed by it and
                  is correct in all material respects and does not include any
                  untrue statement of a material fact or omit to state a
                  material fact with respect thereto or necessary in order to
                  make the statements therein, in the light of the circumstances
                  under which they were made, not misleading.

                  With respect to the DC cholesterol technology, the United
States of America has certain rights under the provisions of 35 U.S.C. 200 et
seq., Chapter 18, applicable to patent rights and inventions made with federal
assistance, and with respect to said technology, UTRC owns an undivided one-half
interest (the other undivided one-half interest being owned by McMaster, for
which McMaster, by virtue of an agreement, dated as of May 25, 1992, by and
between UTRC and McMaster, has granted to UTRC a worldwide exclusive right and
license to commercialize the DC cholesterol technology, including the right to
grant exclusive and nonexclusive licenses therefor). The patent rights described
in this paragraph are hereinafter referred to as "UTRC's patent rights."

                           B. To the best of its knowledge, there are no pending
                  or threatened legal or governmental proceedings, nor
                  allegations on the part of any person of infringement,
                  relating to UTRC's patent rights, and, to

                                       42
<PAGE>   43

                  the best of its knowledge, no such proceedings are threatened
                  or contemplated.

                           C. To the best of its knowledge, neither UTRC nor
                  McMaster is infringing or otherwise violating any patents of
                  any persons and no such proceedings are threatened by others,
                  and no person is infringing or otherwise violating any of
                  UTRC's patent rights in a way which could materially affect
                  the use thereof by UTRC or McMaster.

                           D. UTRC (together with McMaster) is listed in the
                  records of the United States Patent and Trademark Office (the
                  "PTO") as the assignee of record of the patent related to the
                  DC cholesterol technology listed on Schedule I to this opinion
                  (herein called the "UTRC Patent") and each of the applications
                  related to the DC cholesterol technology listed on Schedule II
                  to this opinion (herein called the "UTRC Applications"). To
                  the best of its knowledge, there are no asserted claims of any
                  persons relating to the scope, except with respect to
                  assertions thereto submitted by one or more parties with
                  respect to the European, the Japanese and the Australian
                  patent applications which circumstances are described in the
                  Prospectus, or ownership of the UTRC Patent or the UTRC
                  Applications; there are no liens which have been filed against
                  the UTRC Patent or the UTRC Applications; there are no
                  material defects of form in the preparation or filing of the
                  UTRC Applications; the UTRC Applications are being diligently
                  prosecuted; and none of the UTRC Applications has been finally
                  rejected with no right to further prosecute or has been
                  abandoned. To the best of its knowledge, the UTRC Patent is
                  entitled to a statutory presumption of validity under 35
                  U.S.C. 282 or the analogous foreign law and, 

                                       43
<PAGE>   44

                  to the best of its knowledge, there is no legal basis to rebut
                  the statutory presumption of validity of the UTRC Patent.

                           E. UTRC (together with McMaster) is listed in the
                  records of the appropriate foreign patent offices as the
                  assignee of record of each of the foreign applications related
                  to the DC cholesterol technology listed on Schedule III to
                  this opinion (herein called the "UTRC Foreign Applications").
                  To the best of its knowledge, there are no asserted or
                  unasserted claims of any persons relating to the scope, other
                  than as described in paragraph D hereinabove, or ownership of
                  the UTRC Foreign Applications; there are no liens which have
                  been filed against any of the UTRC Foreign Applications; there
                  are no material defects of form in the preparation or filing
                  of the UTRC Foreign Applications; the UTRC Foreign
                  Applications are being diligently prosecuted; and none of the
                  UTRC Foreign Applications has been finally rejected without
                  right to further prosecute or abandoned.

                           F. Nothing has come to its attention, other than as
                  described in paragraph D hereinabove, that leads it to believe
                  that the UTRC Applications and the UTRC Foreign Applications
                  will not eventuate in issued patents, or that any patents
                  issued in respect of any such UTRC Applications or UTRC
                  Foreign Applications will not be valid or will not afford UTRC
                  and McMaster reasonable patent protection relative to the
                  subject matter thereof.

                           G. To the best of its knowledge, all pertinent prior
                  art references known to UTRC, McMaster or its counsel during
                  the prosecution of the UTRC Patents and the UTRC Applications
                  were disclosed to the PTO and

                                       44
<PAGE>   45

                  other relevant patent offices and, to the best of its
                  knowledge, neither such counsel, UTRC nor McMaster made any
                  misrepresentation to, or concealed any material fact from, the
                  PTO during such prosecution and, to the best of its knowledge,
                  all information submitted to the PTO and such other relevant
                  patent offices was accurate.

                  In giving its opinions required by subsections (b)(iv) of this
Section 8, Weiser & Associates shall additionally state that nothing has come to
its attention that leads it to believe that, with respect to UTRC's patent
rights, the UTRC Patents, the UTRC Applications or the UTRC Foreign Applications
owned or used by UTRC and McMaster which are the subject of the foregoing
opinions, the Registration Statement, at the time it became effective, contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of its date (unless the term "Prospectus"
refers to a prospectus which has been provided to the Underwriters for use in
connection with the offering of the Securities which differs from the Prospectus
on file at the Commission at the time the Registration Statement becomes
effective, in which case at the time it is first provided to the Underwriters
for such use) or at the Closing Date or the Option Closing Date, as the case may
be, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

                  For purposes of the opinion, "UTRC" shall mean the University
of Tennessee Research Corporation and its successors and assigns and "McMaster"
shall mean McMaster University, Ontario, Canada and its successors and assigns.

                           (v) The favorable opinion, dated as of the Closing
         Date, of the firm of Covington & Burling, regulatory counsel for the
         Company, in form and substance satisfactory to counsel for the
         Underwriters, to the effect that:

                                       45
<PAGE>   46

                           A. The statements in the Registration Statement under
                  the captions "Risk Factors--Uncertainty of Governmental
                  Regulatory Requirements; Lengthy Approval Process" and
                  "Business--Governmental Regulation," to the best of such
                  counsel's knowledge and belief, are accurate and complete
                  statements or summaries of the United States Food and Drug
                  Administration matters therein set forth and nothing has come
                  to such counsel's attention that causes them to believe that
                  the above-referenced portions of the Registration Statement
                  and the Prospectus contain any untrue statement of a material
                  fact or omit to state any material fact required to be stated
                  therein or necessary in order to make the statements therein,
                  in the light of the circumstances under which they were made,
                  not misleading.

                           B. Such counsel is not aware of any adverse legal or
                  governmental proceedings pending relating to products or
                  potential products of the Company, or any such proceedings
                  threatened or contemplated by governmental authorities or
                  others.

                           (vi) The favorable opinion, dated as of the Closing
         Date, of Skadden, Arps, Slate, Meagher & Flom, counsel for the
         Underwriters with respect to the issuance and sale of the Securities,
         the Registration Statement and the Prospectus and such other related
         matters as the Underwriters shall reasonably request.

                           (vii) In giving their opinions required by
         subsections (b)(i) and (b)(vi), respectively, of this Section 8,
         Perkins Coie and Skadden, Arps, Slate, Meagher & Flom shall each
         additionally state that nothing has come to their attention that leads
         them to believe that the Registration Statement (except for financial
         statements and other financial information included therein, as to
         which counsel 

                                       46
<PAGE>   47

         need make no statement), at the time it became effective, contained an
         untrue statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading or that the Prospectus (except for financial
         statements and other financial information included therein, as to
         which counsel need make no statement), as of its date (unless the term
         "Prospectus" refers to a prospectus which has been provided to the
         Underwriters by the Company for use in connection with the offering of
         the Securities which differs from the Prospectus on file at the
         Commission at the time the Registration Statement becomes effective, in
         which case at the time it is first provided to the Underwriters for
         such use) or at the Closing Date or the Option Closing Date, as the
         case may be, included or includes an untrue statement of a material
         fact or omitted or omits to state a material fact necessary in order to
         make the statements therein, in the light of the circumstances under
         which they were made, not misleading.

                           c.  (i) There shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change or any
development involving a prospective material adverse change in or affecting the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its Subsidiary considered as one
enterprise, whether or not arising in the ordinary course of business, (ii) the
representations and warranties of the Company in Section 6 hereof shall be true
and correct with the same force and effect as though expressly made at and as of
the Closing Date, except to the extent that any such representation or warranty
relates to a specific date, (iii) the Company shall have complied in all
material respects with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to the Closing Date, (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission and (v)

                                       47
<PAGE>   48

the Representatives shall have received a certificate, dated the Closing Date
and signed by the President or any Vice President and the chief financial or
accounting officer of the Company to the effect set forth in clauses (i), (ii),
(iii) and (iv) above.

                           d.  At the time of the execution of this Agreement,
the Underwriters shall have received from Ernst & Young LLP a letter dated such
date, in form and substance satisfactory to the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.

                           e.  At the time of the execution of this Agreement,
the Underwriters shall have received from Arthur Andersen LLP a letter dated
such date, in form and substance satisfactory to the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.

                           f.  The Underwriters shall have received from Ernst
& Young LLP a letter, dated as of the Closing Date, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection (d)
of this Section, except that the specified date referred to shall be a date not
more than three business days prior to the Closing Date.

                           g.  The Underwriters shall have received from Arthur
Andersen LLP a letter, dated as of the Closing Date, to the effect that they
reaffirm the statements made in the letter furnished pursuant to subsection (e)
of this Section, except that the specified date referred to shall be a date not
more than three business days prior to the Closing Date.

                           h.  The Securities shall have been approved for
quotation on NASDAQ.

                                       48
<PAGE>   49

                           i.  In the event that the Underwriters exercise
their option provided in Section 2 hereof to purchase all or any portion of the
Option Securities, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company hereunder
shall be true and correct as of the Option Closing Date and, at the relevant
Option Closing Date, the Underwriters shall have received:

                                           (1)  A certificate, dated such Option
         Closing Date, of the President or any Vice President of the Company and
         of the chief financial or accounting officer of the Company confirming
         that the certificate delivered at the Closing Date pursuant to Section
         8 (c) hereof remains true and correct as of such Option Closing Date.

                                            (2)  The favorable opinion of 
         Perkins Coie, in form and substance satisfactory to counsel for the
         Underwriters, dated such Option Closing Date, relating to the Option
         Securities to be purchased on such Option Closing Date and otherwise to
         the same effect as the opinion required by Sections 8 (b)(i) and 8
         (b)(vii) hereof.

                                            (3)  The favorable opinion of
         Morrison & Foerster, LLP, in form and substance satisfactory to counsel
         for the Underwriters, dated such Option Closing Date to the same effect
         as the opinion required by Section 8(b)(ii) hereof.

                                            (4)  The favorable opinion of Morgan
         & Finnegan, L.L.P., in form and substance satisfactory to counsel for
         the Underwriters, dated such Option Closing Date, to the same effect as
         the opinion required by Section (b)(iii) hereof.

                                       49
<PAGE>   50

                                            (5)  The favorable opinion of Weiser
         & Associates, in form and substance satisfactory to counsel for the
         Underwriters, dated such Option Closing Date, to the same effect as the
         opinion required by Section (b)(iv) hereof.

                                            (6)  The favorable opinion of
         Covington & Burling, in form and substance satisfactory to counsel for
         the Underwriters, dated such Option Closing Date, to the same effect as
         the opinion required by Section (b)(v) hereof.


                                            (7)  The favorable opinion of
         Skadden, Arps, Slate, Meagher & Flom, counsel for the Underwriters,
         dated such Option Closing Date, relating to the Option Securities to be
         purchased on such Option Closing Date and otherwise to the same effect
         as the opinion required by Sections 8 (b)(vi) and 8 (b)(vii) hereof.

                                            (8)  A letter from Ernst & Young LLP
         in form and substance satisfactory to the Underwriters and dated such
         Option Closing Date, substantially the same in form and substance as
         the letter furnished to the Underwriters pursuant to Section 8(f)
         hereof, except that the "specified date" in the letter furnished
         pursuant to this Section 8(i)(8) shall be a date not more than three
         business days prior to such Option Closing Date.

                                            (9)  A letter from Arthur Andersen
         LLP in form and substance satisfactory to the Underwriters and dated
         such Option Closing Date, substantially the same in form and substance
         as the letter furnished to the Underwriters pursuant to Section 8(g)
         hereof, except that the "specified date" in the letter furnished
         pursuant to this Section 8(i)(9) shall be a date not more than three
         business days prior to such Option Closing Date.

                                       50
<PAGE>   51

                           j.  At the date of this Agreement, the Underwriters
shall have received lock-up agreements in form and substance satisfactory to the
Underwriters by the persons listed on Schedule B hereto.

                           k.  Counsel for the Underwriters shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated and related proceedings, or in order to evidence the accuracy of
any of the representations or warranties or the fulfillment of any of the
conditions herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be satisfactory in form and substance to the Underwriters and counsel for
the Underwriters.

                           l.  The NASD shall not have raised any objection
with respect to the fairness and reasonableness of the underwriting
terms and arrangements.

                           m.  Any certificate or document signed by any
officer of the Company and delivered to you, as Representatives of the
Underwriters, or to counsel for the Underwriters, shall be deemed a
representation and warranty by the Company to each Underwriter as to the
statements made therein.


                           n.  If any condition specified in this Section 8
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on an Option Closing Date which is after the Closing Date, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Date or such an Option Closing Date as the case
may be, and such termination shall be without liability of any party to any
other party except as provided in Section 9 and except that Sections 6 and 7
shall survive any such termination and remain in full force and effect.

                  9. EXPENSES. The Company agrees to pay the following costs and
expenses and all other costs and expenses incident to the performance by it of
its obligations hereunder: (i) the prepara-

                                       51
<PAGE>   52


tion, printing or reproduction, and filing with the Commission of the
Registration Statement (including financial statements and exhibits thereto),
each preliminary prospectus, the Prospectus, and each amendment or supplement to
any of them; (ii) the printing (or reproduction) and delivery (including
postage, air freight and charges for counting and packaging) of such copies of
the Registration Statement, each preliminary prospectus, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Securities; (iii) the
preparation, printing, authentication, issuance and delivery of certificates for
the Securities, including any stamp taxes in connection with the original
issuance and sale of the Securities; (iv) the printing (or reproduction) and
delivery of this Agreement, the preliminary and supplemental Blue Sky Memoranda
and all other agreements or documents printed (or reproduced) and delivered in
connection with the original issuance and sale of the Securities; (v) the
quotation of the Securities on NASDAQ; (vi) the registration or qualification of
the Securities for offer and sale under the securities or Blue Sky laws of the
several states as provided in Section 5(g) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Underwriters relating to the
preparation, printing or reproduction, and delivery of the preliminary and
supplemental Blue Sky Memoranda and such registration and qualification); (vii)
the filing fees and the reasonable fees and expenses of counsel for the
Underwriters incident to securing any required review by the NASD; and (viii)
the fees and expenses of the Company's accountants and the fees and expenses of
counsel (including local and special counsel) for the Company.

                  If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than pursuant to the
second paragraph of Section 10 or pursuant to clauses (ii), (iii), (iv) and (v)
of Section 11 hereof) or if this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part of the Company to
comply, in any material respect, with the terms or fulfill, in any material
respect, any of the conditions of this Agreement, the Company agrees to
reimburse the Representatives for all reasonable out-of-pocket expenses
(including reasonable fees and expenses of counsel for the Underwriters)
incurred by you in connection herewith.

                                       52
<PAGE>   53

                  10. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by or on behalf of the
parties hereto; or (ii) if, at the time this Agreement is executed and
delivered, it is necessary for the Registration Statement or a post-effective
amendment thereto to be declared effective before the offering of the Securities
may commence, when notification of the effectiveness of the Registration
Statement or such post-effective amendment has been released by the Commission.
Until such time as this Agreement shall have become effective, it may be
terminated by the Company, by notifying you, or by you, as Representatives of
the several Underwriters, by notifying the Company.

                  If one or more of the Underwriters shall fail on the Closing
Date to purchase the Initial Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), the Representatives
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:

                           a.  if the number of Defaulted Securities does not
exceed 10% of the number of Initial Securities, the non-defaulting Underwriters
shall be obligated to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or

                           b.  if the number of Defaulted Securities exceeds
10% of the number of Initial Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriter.

                  No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.

                                       53
<PAGE>   54

                  In the event of any such default which does not result in a
termination of this Agreement, either the Representatives or the Company shall
have the right to postpone the Closing Date for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. As used herein, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 10.

                  Any notice under this Section 10 may be given by telegram,
telecopy or telephone but shall be subsequently confirmed by letter.

                  11. TERMINATION OF AGREEMENT. a. The Underwriters may
terminate this Agreement, by notice to the Company, at any time at or prior to
the Closing Date or Option Closing Date, as the case may be, (i) if there has
been, since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement, any material adverse change
or any development involving a prospective material adverse change in or
affecting the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its Subsidiary considered as
one enterprise, whether or not arising in the ordinary course of business, (ii)
if there has occurred any change in the financial markets in the United States
or elsewhere or any outbreak of hostilities or escalation thereof or other
calamity or crisis the effect of which is such as to make it, in your judgement,
impracticable or inadvisable to market the Securities or to enforce contracts
for the sale of the Securities, (iii) if trading in the Common Stock has been
suspended by the Commission, or if trading generally on the American Stock
Exchange, the New York Stock Exchange or in the over-the-counter markets has
been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by such exchange or
markets or by order of the Commission or any other governmental authority, or if
a banking moratorium has been declared by either Federal, New York or Illinois
authorities, (iv) the enactment, publication, decree or other promulgation of
any Federal or state statute, regulation, rule or order of any court or other
governmental authority which in your judgement materially and adversely affects
or may materially or adversely affect the business or operations of the Company
and its Subsidiary or (v) the taking of any action by any Federal, state or
local 

                                       54
<PAGE>   55

government or agency in respect of its monetary or fiscal affairs which in your
judgement has a material adverse effect on the securities markets in the United
States, and would in your judgement make it impracticable or inadvisable to
market the Securities or to enforce any contract for the sale thereof. Notice of
such termination may be given by telegram, telecopy or telephone and shall be
subsequently confirmed by letter.

                           b.  If this Agreement is terminated pursuant to this
Section 11, such termination shall be without liability of any party to any
other party except as provided in Section 9 and provided further that Sections 6
and 7 shall survive such termination and remain in full force and effect.

                  12. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements
set forth in the last paragraph on the cover page, the stabilization legend on
the inside front cover page, and the statements under the caption "Underwriting"
in any preliminary prospectus and in the Prospectus constitute the only
information furnished by or on behalf of the Underwriters through you as such
information is referred to in Sections 5(a) and 7 hereof.

                  13. MISCELLANEOUS. Except as otherwise provided in Sections 5,
10 and 11 hereof, notice given pursuant to any provision of this Agreement shall
be in writing and shall be delivered (i) if to the Company at the office of the
Company, at 1100 Olive Way, Suite 100, Seattle, Washington 98101, Attention: H.
Stewart Parker, President and Chief Executive Officer; or (ii) if to you, as
Representatives of the several Underwriters, care of Vector Securities
International, Inc., 1751 Lake Cook Road, Suite 350, Deerfield, Illinois 60015,
Attention: Syndicate Department.

                  14. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of Illinois
applicable to contracts made and to be performed within the State of Illinois.
This Agreement may be signed in various counterparts which together constitute
one and the same instrument. If signed in counterparts, this Agreement shall not
become effective unless at least one counterpart hereof shall have been executed
and delivered on behalf of each party hereto.

                  15. SUCCESSORS. This Agreement has been and is made solely for
the benefit of the several Underwriters, the Company,

                                       55
<PAGE>   56

its directors and officers, the other persons referred to in Section 7 hereof
and their respective successors and assigns, to the extent provided herein, and
no other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns" as
used in this Agreement shall include a purchaser from any Underwriter of any of
the Securities in his status as such purchaser.

                                       56
<PAGE>   57



                  Please confirm that the foregoing correctly sets forth the
agreement among the Company and the several Underwriters.

                                                Very truly yours,

                                                TARGETED GENETICS CORPORATION

                                                By:_____________________________
                                                         President and Chief
                                                         Executive Officer

Confirmed as of the date first above mentioned on behalf of themselves and the
other several Underwriters named in Schedule I hereto.

VECTOR SECURITIES INTERNATIONAL, INC.
GENESIS MERCHANT GROUP SECURITIES

   As Representatives of the Several Underwriters

By VECTOR SECURITIES INTERNATIONAL, INC.

By:________________________________
         Vice President

                                       57
<PAGE>   58

                                   SCHEDULE I

                          TARGETED GENETICS CORPORATION

                                                     Number of Initial
                                                     Securities Purchased
Underwriter                                          from the Company
- -----------                                          ----------------

Vector Securities
 International, Inc................................

Genesis Merchant
 Group Securities..................................


Total
                                                    ----------------

                                       58


