Exhibit 10.1


 


PLEDGE AGREEMENT


 


This PLEDGE AGREEMENT (this “Agreement”) is made and entered into as of
June 30, 2003 by and among NEKTAR THERAPEUTICS, a Delaware corporation (the
“Grantor”), having its principal executive offices at 150 Industrial Road, San
Carlos, California 94070 and J.P. MORGAN TRUST COMPANY, NATIONAL
ASSOCIATION (“J.P. Morgan”), having an office at 560 Mission Street, 13th
Floor, San Francisco, California 94105, (i) in its capacity as trustee (the
“Trustee”) for the holders (the “Holders”) of the Notes (as hereinafter
defined) issued by the Grantor under the Indenture referred to below and (ii)
in its individual capacity, as securities intermediary (in such capacity, the
“Pledged Securities Intermediary”) at its office in New York c/o: J.P. Morgan
Chase Bank, Institutional Trust Services, 4 New York Plaza, 15th Floor, New
York, New York 10004 (the “Account Office”) with respect to the Pledge Account
(as hereinafter defined).  Capitalized
terms used herein and not otherwise defined herein shall have the meanings
given to such terms in the Indenture.


 


W I T N E S S E T H


 


WHEREAS, the Grantor and the Trustee have entered into that certain
Indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the “Indenture”), pursuant to which the
Grantor is issuing on the date hereof $100,000,000 in aggregate principal
amount of its 3% Convertible Subordinated Notes due 2010 (the “Notes”); and


 


WHEREAS, subject to the terms of this Agreement, the Pledged Securities
Intermediary has established for the Grantor, as beneficial owner, a securities
account (the “Pledge Account”) at the Account Office, registered in the name of
the Trustee, as entitlement holder, and designated as Account No. 10205801.1,
Reference: “J.P. Morgan Trust Company, National Association as Pledged
Securities Intermediary, Nektar Therapeutics Convertible Bond Collateral A/C”;
and


 


WHEREAS, the Grantor has agreed to purchase or cause the purchase of
security entitlements with respect to the U. S. Government Securities
identified by CUSIP number in Schedule I hereto (such security entitlements
being, collectively, the “Pledged Securities”), for the account of the Pledged
Securities Intermediary for credit to the Pledge Account, in an amount that
will be sufficient, upon receipt of the scheduled interest and principal
payments in respect thereof, to provide for the payment of the first six
scheduled interest payments due on the Notes; and


 


WHEREAS, to secure the obligations of the Grantor under the Indenture
and the Notes to pay in full each of the first six scheduled interest payments
on the Notes and to pay in full all of the principal, premium (if any) and
interest on the Notes and all other amounts payable by the Grantor under the Indenture
in the event that the Notes or any principal thereof or premium, if any,
thereon becomes due and payable prior to such time as the first six scheduled
interest payments thereon shall have been paid in full (collectively, the
“Obligations”), the Grantor has


 

















 


agreed (i) to grant to the
Trustee, for its benefit and the ratable benefit of the Holders of the Notes, a
security interest in the Pledge Account and all cash, Pledged Securities and
other Collateral (as hereinafter defined) from time to time deposited therein
or credited thereto and (ii) to execute and deliver this Agreement in order to
secure the payment and performance by the Grantor of all the Obligations; and;


 


WHEREAS, it is
a condition precedent to the purchase of the Notes by the initial Holders
thereof that the Grantor shall have granted the security interests contemplated
by this Agreement; and


 


WHEREAS,
unless otherwise defined herein or in the Indenture, terms used herein that are
defined in Article 8 or 9 of the Uniform Commercial Code as in effect in the
State of New York (the “UCC”) are used herein as therein defined:


 


NOW,
THEREFORE, in consideration of the mutual promises herein contained, and in
order to induce the initial Holders to purchase the Notes, the Grantor hereby
agrees with the Trustee, for the benefit of the Trustee and for the ratable
benefit of the Holders of the Notes, and with the Pledged Securities
Intermediary as follows:


 


SECTION
1.  Grant of Security Interest.  The Grantor hereby grants to the Trustee,
for its benefit and for the ratable benefit of the Holders of the Notes, a
security interest in and to all of the Grantor’s right, title and interest in,
to and under the following, in each case whether now owned or hereafter
acquired, wherever located and whether now or hereafter existing (hereinafter
collectively referred to as the “Collateral”):


 


(a)                                  the
Pledge Account;


 


(b)                                 all
cash or credit balances from time to time deposited in or credited to the
Pledge Account;


 


(c)                                  the
Pledged Securities and all other financial assets (including certificated and
uncertificated securities) and security entitlements from time to time
deposited in, credited to, or created or otherwise carried in the Pledge
Account;


 


(d)                                 all
interest, dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Collateral;


 


(e)                                  all
securities (whether certificated or uncertificated) or other financial assets,
security entitlements, securities accounts, accounts, general intangibles,
instruments, documents, cash or deposit accounts representing or evidencing any
or all of the Collateral; and


 


(f)                                    to
the extent not covered by clauses (a) through (e) above, all proceeds of any
and all of the foregoing Collateral (including, without limitation, proceeds
that constitute property of the types described in clauses (a) through (e)
above).


 


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SECTION
2.  Secured Obligations.  This Agreement and the grant of a security
interest in the Collateral secure the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration, upon
redemption or otherwise) of all Obligations now or hereafter existing, whether
for principal, premium, interest, fees, indemnities or otherwise, and all
obligations of the Grantor now or hereafter existing under this Agreement (all
such Obligations and such other obligations being, collectively, the “Secured
Obligations”).  Without limiting the generality
of the foregoing, this Agreement and the grant of a security interest in the
Collateral hereunder secure, to the fullest extent permitted by applicable law,
the payment of all amounts that constitute part of the Secured Obligations and
that would be owed by the Grantor to the Trustee or the Holders under the Notes
or the Indenture but for the fact that they are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving the Grantor.


 


SECTION
3.  Maintaining the Pledge Account.  Prior to or concurrently with the execution
and delivery hereof and for so long as any Secured Obligation shall remain
outstanding,


 


(a)                                  the
Trustee shall establish and maintain (and the Pledged Securities Intermediary
shall maintain and administer in accordance with this Agreement) the Pledge
Account with the Pledged Securities Intermediary at the Account Office in
accordance with the terms of this Agreement. The Pledge Account shall at all
times be under the sole dominion and control of, and shall at all times be
segregated from any other custodial, collateral or other accounts maintained
by, or under the dominion and control of, the Trustee;


 


(b)                                 it
shall be a term and condition of the Pledge Account, notwithstanding any term
or condition to the contrary in any other agreement relating to the Pledge
Account, and except as otherwise provided by the provisions of Section 5 and
Section 15.9 of this Agreement, that no Collateral (including proceeds thereof)
shall be paid or released from the Pledge Account to or for the account of, or
withdrawn by or for the account of, and no entitlement orders with respect to
any of the Collateral shall be given to the Pledged Securities Intermediary by,
the Grantor or any other Person other than the Trustee as provided herein;


 


(c)                                  subject
to the provisions of this Agreement, the Pledge Account shall be registered in
the name of the Trustee on the books and records of the Pledged Securities
Intermediary, the Trustee shall be identified on such books and records as the
entitlement holder with respect to all security entitlements in all financial
assets from time to time held in or credited to the Pledge Account, and the
Trustee shall have the sole right to (i) deliver entitlement orders with respect
to the Pledge Account and any Collateral from time to time credited thereto,
deposited therein or represented thereby or (ii) make withdrawals from the
Pledge Account or otherwise exercise any other rights with respect to any
Collateral from time to time credited thereto or on deposit therein; and


 


(d)                                 the
Pledge Account shall be subject to such applicable laws, and such applicable
regulations of any appropriate banking or governmental authority, as may now or
hereafter be in


 


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effect, including without
limitation any applicable regulations of the Board of Governors of the Federal
Reserve System.


 


SECTION
4.  Acquisition of Pledged Securities
for Credit to the Pledge Account.


 


(a)                                  On
or prior to the date hereof, the Grantor shall purchase or cause the purchase
of the Pledged Securities for the account of the Pledged Securities
Intermediary for credit to the Pledge Account.


 


(b)                                 Upon
transfer or credit of the Pledged Securities to the Pledged Securities
Intermediary, as confirmed to the Pledged Securities Intermediary by the
Federal Reserve Bank of New York or another securities intermediary at which
the Pledged Securities Intermediary maintains a securities account, the Pledged
Securities Intermediary shall make appropriate book entries indicating that the
Pledged Securities have been credited to and are held in the Pledge Account.


 


SECTION
5.  Disbursements From the Pledge
Account; Transfers of Additional Amounts to the Pledge Account.


 


(a)                                  At
least three Business Days prior to the due date of any of the first six
scheduled interest payments on the Notes, the Grantor may, pursuant to written
instructions given by the Grantor to the Trustee (each an “Issuer Order”),
instruct the Trustee to direct the Pledged Securities Intermediary to release
from the Pledge Account, and pay to the Holders of the Notes as of the
applicable Regular Record Date, proceeds of the Pledged Securities sufficient
to provide for payment in full of such interest then due on the Notes.  Upon receipt of an Issuer Order, the Trustee
will direct the Pledged Securities Intermediary to release funds from (and to
the extent of) proceeds of the Pledged Securities in the Pledge Account in an
amount sufficient to provide for the payment in full of such interest then due
on the Notes, as instructed in such Issuer Order, and to transfer such funds to
the Holders of the Notes in accordance with the payment provisions of the
Indenture.  Nothing in this Section 5
shall affect the Trustee’s rights to direct the application of the Collateral
to the payment of amounts due on the Notes upon acceleration thereof in
accordance with the terms of the Indenture.


 


(b)                                 If
the Grantor makes all or any portion of any interest payment for which the
Collateral is security from a source of funds other than the Pledge Account
(“Grantor Funds”), the Grantor may, after payment in full of such interest
payment, instruct the Trustee, pursuant to an Issuer Order, to direct the
Pledged Securities Intermediary to release to the Grantor, or to another party
designated by the Grantor in such Issuer Order (the “Grantor’s Designee”),
proceeds from the Pledge Account in an amount that, in the discretion of the
Grantor, is less than or equal to the amount of Grantor Funds applied to such
interest payment; provided that, after giving effect to such release, the
scheduled interest and principal payments in respect of the Pledged Securities
remaining in the Pledge Account, together with any cash remaining in the Pledge
Account, equal or exceed the amount necessary to provide for the timely payment
in full of interest on the Notes for as many of the first six scheduled
interest payments as shall then remain. 
Upon (i) receipt by the Trustee of such Issuer Order and (ii)
confirmation by the Trustee


 


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of the payment in full of
such interest payment (from such Grantor Funds and, if necessary, additional
funds released from the Pledge Account in accordance with Section 5(a)), the
Trustee shall direct the Pledged Securities Intermediary to release funds from
(and to the extent of) proceeds of the Pledged Securities in the Pledge Account
and to transfer such funds to the Grantor or the Grantor’s Designee, as the
case may be, as instructed in such Issuer Order as soon as practicable after
such conditions are satisfied.


 


(c)                                  If
at any time the scheduled interest and principal payments in respect of the
Pledged Securities then credited to the Pledge Account, together with any cash
then held in the Pledge Account, exceed 100% of the amount necessary (which
shall be certified in writing by an Officer of the Company or, if such amount,
together with all other amounts disbursed from the Pledge Account in the
preceding 12 month period, equals or exceeds $100,000, by a nationally
recognized firm of independent accountants selected by the Grantor and
delivered to the Trustee) to provide for the payment in full, when due, of the
first six scheduled interest payments on the Notes (or such number of the first
six scheduled interest payments on the Notes as shall then remain, as the case
may be), the Grantor may instruct the Trustee, pursuant to an Issuer Order, to
direct the Pledged Securities Intermediary to release any such excess amount to
the Grantor or to the Grantor’s Designee. 
Upon receipt of such Issuer Order (which shall be accompanied by a
certificate in accordance with, and meeting the requirements of, the provisions
of Section 314(d) of the TIA or, if the amount to be released from the pledge,
together with all other amounts disbursed from the Pledge Account in the
preceding 12 month period, equals or exceeds $100,000, by a certificate of such
nationally recognized firm of independent accountants stating that the
scheduled interest and principal payments in respect of the Pledged Securities
credited to the Pledge Account, together with any cash held in the Pledge
Account, in each case after giving effect to such release, equal or exceed 100%
of the amount necessary to provide for the payment in full, when due, of such
remaining scheduled interest payments on the Notes), the Trustee shall instruct
the Pledged Securities Intermediary to release funds from (and to the extent
of) proceeds of such Pledged Securities in accordance with such Issuer Order
and the accompanying certificate and to transfer such funds to the Grantor or
the Grantor’s Designee, as the case may be.


 


(d)                                 Upon
the release of any Collateral from the Pledge Account in accordance with the
terms of this Section 5, whether upon release of proceeds of Collateral to the
Holders as payment of interest or upon release of proceeds of Collateral to the
Grantor or the Grantor’s Designee as provided in Section 5(b) or Section 5(c),
the security interest evidenced by this Agreement in such released Collateral
will automatically terminate and be of no further force and effect.


 


(e)                                  At
least three Business Days prior to the due date of each of the first six
scheduled interest payments on the Notes, the Grantor shall give the Trustee
notice (by Issuer Order) as to whether such interest payment will be made
pursuant to Section 5(a) or 5(b) above and the respective amounts of interest
that will be paid from the Pledge Account and from Grantor Funds (it being
understood that the failure by the Grantor to provide an Issuer Order shall not
constitute an Event of Default). Any Grantor Funds to be used to make any
interest payment (or portion thereof) shall be delivered to the Trustee, in
immediately available funds, prior to 12:00 p.m.


 


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(New York City time) on
such interest payment date. If no such notice is given or such Grantor Funds
have not been so delivered, the Trustee will act pursuant to Section 5(a) above
as if it had received an Issuer Order pursuant thereto for the payment in full
of the interest then due from the proceeds of Pledged Securities in the Pledge
Account.


 


(f)                                    If
on any interest payment date there are insufficient proceeds of Pledged
Securities in the Pledge Account to make the scheduled payment of interest due
on such date (after taking into account any Grantor Funds delivered to the
Trustee as provided in Section 5(b) above), the Trustee shall direct the
Pledged Securities Intermediary to liquidate Collateral in the Pledge Account
to the extent necessary to pay, in full, such scheduled payment of interest.


 


(g)                                 Nothing
contained in this Agreement (including without limitation the provisions hereof
regarding the delivery of Issuer Orders by the Grantor to the Trustee) shall
(i) afford the Grantor any right to issue entitlement orders to the Pledged
Securities Intermediary or any other Person with respect to the Pledge Account
or any security entitlement in respect of the Pledged Securities, or otherwise
afford the Grantor control of the Pledge Account or any such security
entitlement, or (ii) otherwise give rise to any rights of the Grantor with
respect to the Pledge Account, the Pledged Securities, or any security
entitlement thereto, other than the Grantor’s rights under this Agreement as the
beneficial owner of Collateral pledged to and subject to the exclusive dominion
and control (subject to the Trustee’s obligations to comply with Sections 5(a)
through (f) and Section 15.9 hereof) of the Trustee in its capacity as such
(and not as a securities intermediary). 
The Grantor acknowledges, confirms and agrees that the Trustee holds a
security interest in the Pledged Securities solely as Trustee for the Holders
of the Notes and not as a securities intermediary.


 


(h)                                 Anything
contained herein to the contrary notwithstanding, prior to any release of any
Collateral to the Grantor or the Grantor’s Designee, the Grantor shall deliver
to the Trustee such certificates, opinions or other documents as may be
required by the Indenture or the TIA in connection with such release and shall
otherwise comply with the requirements of the Indenture and the TIA applicable
thereto.


 


(i)                                     If
at any time the Grantor is obligated to pay any amount to the Trustee pursuant
to the terms of this Agreement and the Trustee charges such amount against the
Pledge Account with the result that the scheduled interest and principal
payments in respect of the Pledged Securities then credited to the Pledge
Account, together with any cash then held in the Pledge Account, are less than 100%
of the amount necessary to provide for the payment in full, when due, of the
first six scheduled interest payments on the Notes (or such number of the first
six scheduled interest payments on the Notes as shall then remain, as the case
may be), the Grantor shall deposit cash into the Pledge Account in the amount
of such deficiency and shall deliver to the Trustee a certificate signed by one
of its Officers (as defined in the Indenture) stating that the scheduled
interest and principal payments in respect of the Pledged Securities credited
to the Pledge Account, together with any cash held in the Pledge Account, in
each case after giving effect to such deposit by the Grantor, equal or exceed
100% of the amount necessary to provide for the payment in full, when due, of
such remaining scheduled interest payments on the Notes.


 


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(j)                                     Neither
the Trustee nor the Pledged Securities Intermediary shall be liable for any
disbursement made or other action taken in accordance with an Issuer Order. In
no event shall either of the Pledged Securities Intermediary or the Trustee in
its role hereunder be liable for any special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits),
except as a result of its gross negligence or willful misconduct.


 


SECTION
6.  Securities Intermediary.  (a) J.P. Morgan, as Pledged Securities
Intermediary, hereby represents and warrants to, and agrees with the Grantor
and the Trustee, as follows:


 


(a)                                  It
is a securities intermediary as of the date hereof and, for so long as this
Agreement remains in effect and J.P. Morgan is acting as the Pledged Securities
Intermediary hereunder, it shall remain a securities intermediary and shall at
all times act in such capacity with respect to the Trustee, the Pledge Account
and all other Collateral.


 


(b)                                 The
Pledge Account is and will be maintained as a securities account.


 


(c)                                  Each
item of property (whether cash, certificated or uncertificated securities,
security certificates, security entitlements or any other property whatsoever)
credited to the Pledge Account shall be treated as a financial asset.


 


(d)                                 All
financial assets in registered form or payable to, or to the order of, any
Person and credited to the Pledge Account shall be registered in the name of,
payable to or to the order of, or endorsed to, the Pledged Securities
Intermediary, and in no case during the term of this Agreement will any
financial asset credited to the Pledge Account be registered in the name of,
payable to or to the order of, or endorsed to, the Grantor, except to the
extent the foregoing have been subsequently endorsed by the Grantor to the
Pledged Securities Intermediary or in blank.


 


(e)                                  It
(i) shall, upon written direction from the Trustee, as entitlement holder with
respect to the Pledge Account, the Pledged Securities and all other Collateral,
and without further consent from the Grantor, comply with all instructions,
entitlement orders and directions of any kind originated by the Trustee
concerning the Collateral, including without limitation directions to liquidate
or otherwise dispose of the Collateral as and to the extent directed by the
Trustee and to pay over to the Trustee, or as otherwise directed by the
Trustee, all proceeds and other value therefrom or otherwise distributed with
respect thereto, without any set-off or deduction, and (ii) shall not, except
as otherwise directed in writing by the Trustee, as entitlement holder with
respect to the Pledge Account, the Pledged Securities and all other Collateral,
comply or agree to comply with any instructions, entitlement orders or
directions of any kind that are originated by the Grantor or any other Person
with respect to any of the Collateral.


 


(f)                                    Except
for the claims and interests of the Trustee under this Agreement and the rights
of the Grantor vis-à-vis the Trustee hereunder, it does not know of any claim
to or security interest or other interest in the Collateral.


 


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(g)                                 It
hereby waives its rights to set off any obligations of the Grantor to it
against any or all of the Collateral, and hereby agrees that any and all liens,
encumbrances, claims or security interests which it may have against the
Collateral, either now or in the future, are and shall be subordinate and
junior in right of payment to the prior payment in full of all Secured
Obligations.


 


SECTION
7.  Representations and Warranties.  The Grantor hereby represents and warrants
that:


 


(a)                                  The
execution and delivery by the Grantor of, and the performance by the Grantor of
its obligations under, this Agreement will not contravene any provision of
applicable law or the articles of incorporation or by-laws of the Grantor or
any material agreement or other material instrument binding upon the Grantor or
any judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Grantor, or result in the creation or imposition of any
lien on any assets of the Grantor, except for the security interests granted
under this Agreement.


 


(b)                                 No
consent of any other Person and no approval, authorization or order of, action
by or qualification with, any governmental authority, regulatory body, agency
or other third party is required (i) for the execution, delivery or performance
by the Grantor of its obligations under this Agreement or (ii) for the grant by
the Grantor of the security interests created by this Agreement.  To the best of Grantor’s knowledge, no
consent of any other Person and no approval, authorization or order of, action
by or qualification with, any governmental authority, regulatory body, agency
or other third party is required for the exercise by the Trustee of the rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement.


 


(c)                                  The
Grantor is the beneficial owner of the Collateral, free and clear of any lien
or claim of any Person (except for the security interests created by this
Agreement and any lien arising under the Indenture in favor of the
Trustee).  The Grantor has not at any
time transferred any of the Collateral to any Person other than the Trustee or
encumbered any of the Collateral with a lien in favor of any other Person.  No financing statement or instrument similar
in effect covering all or any part of the Grantor’s interest in any of the
Collateral is on file in any public or recording office, other than the
financing statements filed pursuant to this Agreement.  Other than the Grantor’s previous name,
Inhale Therapeutics, Inc., the Grantor has no trade names.


 


(d)                                 This
Agreement has been duly authorized, executed and delivered by the Grantor and
constitutes a valid and binding agreement of the Grantor, enforceable against
the Grantor in accordance with its terms, except as the enforceability hereof
may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally or by equitable principles of general
applicability.


 


(e)                                  Upon
the transfer to the Pledged Securities Intermediary of the Pledged Securities,
the crediting thereof to the Pledge Account in accordance with Section 4 above
and the execution and delivery of this Agreement by all of the parties hereto,
the grant of a security interest in the Collateral pursuant to this Agreement
for the benefit of the Trustee and the Holders of the Notes


 


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will create a valid and
perfected first priority security interest in such Collateral securing the
payment of the Secured Obligations.


 


(f)                                    There
are no legal or governmental proceedings pending or, to the best of the
Grantor’s knowledge, threatened to which the Grantor is a party or to which any
of the properties of the Grantor is subject that would adversely affect in any
material respect the power or ability of the Grantor to perform its obligations
under this Agreement or to consummate the transactions contemplated hereby.


 


(g)                                 The
pledge of the Collateral pursuant to this Agreement is not prohibited by any
law or governmental regulation (including, without limitation, Regulations U
and X of the Board of Governors of the Federal Reserve System) applicable to
the Grantor.


 


(h)                                 To
the best of Grantor’s knowledge, no Default or Event of Default exists.


 


(i)                                     The
Grantor’s exact legal name is that indicated on the signature page hereof.


 


(j)                                     The
Grantor is a corporation organized in the State of Delaware


 


(k)                                  The
Grantor’s organizational identification number is •.


 


(l)                                     The
Grantor’s place of business or, if more than one, its chief executive office as
well as the Grantor’s mailing address is as is set forth in Section 15.1.


 


SECTION
8.  Further Assurances.


 


(a)                                  The
Grantor agrees that from time to time, it will, at its own expense, promptly
upon reasonable request by the Trustee, execute and deliver or cause to be
executed and delivered, or use its commercially reasonable efforts to procure,
all assignments, instruments and other documents, all in form and substance
reasonably satisfactory to the Trustee, deliver any instruments to the Trustee
and take any other actions that may be necessary or, in the reasonable opinion
of the Trustee, desirable to perfect, continue the perfection of, or protect
the first priority of the Trustee’s security interest in and to the Collateral,
to protect the Collateral against the rights, claims, or interests of third
Persons (other than any such rights, claims or interests created by or arising
through the Trustee) or to effect the purposes of this Agreement.


 


(b)                                 The
Grantor hereby authorizes the Trustee to file any financing or continuation
statements with respect to the Collateral without the signature of the Grantor
(to the extent permitted by applicable law); provided, however, that the
Grantor shall not be relieved of any of its obligations under Section 8(a) or
8(d) hereof.  A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.


 


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(c)                                  The
Grantor will furnish to the Trustee from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Trustee may reasonably request, all in
reasonable detail.


 


(d)                                 The
Grantor will promptly pay all costs and expenses reasonably incurred in
connection with any of the foregoing within 30 days of receipt of an invoice
therefor. The Grantor also agrees, whether or not requested by the Trustee, to
take all actions that are necessary to perfect and to continue the perfection
of, and to protect the first priority of, the Trustee’s security interest in
and to the Collateral, including the filing of all necessary financing and
continuation statements, and to protect the Collateral against the rights,
claims or interests of third Persons (other than any such rights, claims or
interests created by or arising through the Trustee).


 


(e)                                  The
Grantor hereby irrevocably authorizes the Trustee at any time and from time to
time to file in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (x) indicate the Collateral as being of
an equal or lesser scope or with greater detail, and (y) contain any other
information required by part 5 of Article 9 of the Uniform Commercial Code of
the appropriate jurisdiction for the sufficiency or filing office acceptance of
any financing statement or amendment; provided that the Trustee shall have no
obligation to perform any of the foregoing actions other than those expressly
provided herein or in the Indenture.


 


(f)                                    The
Pledged Securities Intermediary covenants and agrees with the Grantor and the
Trustee that for so long as the Pledged Securities Intermediary holds assets in
the Pledge Account, the Pledged Securities Intermediary will, as soon as
reasonably practicable, certify in writing the aggregate dollar value of the
assets held in such Pledge Account on a monthly basis, as of the Grantor’s
fiscal month end or at such other time as the parties may mutually agree.  The Grantor will provide the Pledged
Securities Intermediary with a schedule of its fiscal months as soon as such
schedule becomes reasonably available.


 


SECTION
9.  Covenants.  The Grantor covenants and agrees with the
Trustee and the Holders of the Notes that from and after the date of this
Agreement until the earlier of (x) payment in full in cash of each of the first
six scheduled interest payments due on the Notes under the terms of the
Indenture or (y) payment in full in cash of all Secured Obligations due and
owing under the Indenture and the Notes in the event such Secured Obligations
become due and payable prior to the payment in full of the first six scheduled
interest payments on the Notes:


 


(a)                                  it
will not (and will not purport to) sell or otherwise dispose of, or grant any
option, right or warrant with respect to, any of the Collateral or its
beneficial interest therein, and it will not create or permit to exist any lien
or other adverse interest in or with respect to its beneficial interest in any
of the Collateral (except for the security interests granted under this
Agreement and any lien arising under the Indenture in favor of the Trustee);


 


(b)                                 it
will not (i) enter into any agreement or understanding that restricts or
inhibits or purports to restrict or inhibit the Trustee’s rights or remedies
hereunder, including without


 


10

















 


limitation the Trustee’s
right to sell or otherwise dispose of the Collateral, or (ii) fail to pay or
discharge when due any tax, assessment or levy of any nature with respect to
its beneficial interest in the Collateral not later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment
with respect to such beneficial interest; and


 


(c)                                  it
will not, without providing at least five days prior written notice to the
Trustee, change its name, its place of business or, if more than one, chief
executive office, or its mailing address or organizational identification
number and will not change its type of organization, jurisdiction of
organization or other legal structure.


 


SECTION
10.  Power of Attorney.  In addition to all of the powers granted to
the Trustee pursuant to the Indenture, the Grantor hereby appoints and
constitutes the Trustee as the Grantor’s attorney-in-fact (with full power of
substitution), with full authority in the place and stead of the Grantor and in
the name of the Grantor or otherwise, from time to time in the Trustee’s
reasonable discretion to take any action and to execute any instrument that the
Trustee may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation:


 


(a)                                  to
ask for, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipt for moneys due and to become due under or in respect of
any of the Collateral,


 


(b)                                 to
receive, indorse and collect any drafts or other instruments, documents and
chattel paper,


 


(c)                                  to
file any claims or take any action or institute any proceedings that the
Trustee may reasonably deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the Trustee with respect
to any of the Collateral, and


 


(d)                                 to
pay or discharge any taxes or liens levied or placed upon the Collateral, the
legality or validity thereof and the amounts necessary to discharge the same
all as determined by the Trustee in its sole discretion, it being understood
that any such payments made by the Trustee shall become part of the Secured
Obligations of the Grantor to the Trustee, and shall be due and payable
immediately upon demand;


 


provided, however,
that the Trustee shall have no obligation to perform any of the foregoing
actions. The Trustee’s authority under this Section 10 shall include, without
limitation, the authority to endorse and negotiate any checks or instruments
representing proceeds of Collateral in the name of the Grantor, execute and
give receipt for any certificate of ownership or any document constituting
Collateral, transfer title to any item of Collateral, authorize the filing of
any financing statements (to the extent permitted by applicable law) or any
other documents reasonably deemed necessary or appropriate by the Trustee to
preserve, protect or perfect the security interest in the Collateral and to
file the same, prepare, file and sign the Grantor’s name on any notice of lien,
and to take any other actions arising from or incident to the powers granted


 


11

















 


to the Trustee in this Agreement. This power of attorney is coupled
with an interest and is irrevocable by the Grantor.


 


SECTION
11.  No Assumption of Duties;
Reasonable Care.  The rights and
powers conferred on the Trustee hereunder are solely to preserve and protect
the security interest of the Trustee and the Holders of the Notes in and to the
Collateral granted hereby and shall not be interpreted to, and shall not,
impose any duties on the Trustee in connection therewith other than those
expressly provided herein or in the Indenture or imposed under applicable law.
Except as provided by herein, by applicable law or by the Indenture, the
Trustee shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if the Collateral is accorded
treatment substantially equal to that which the Trustee accords similar
property held by itself for its own account, it being understood that the
Trustee, in its capacity as such, shall not have any responsibility for (a)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities or other matters relative to any Collateral, whether or not the
Trustee has or is deemed to have knowledge of such matters, (b) taking any
necessary steps to preserve rights against any parties with respect to any
Collateral or (c) investing or reinvesting any of the Collateral or any loss on
any investment. Without limiting any rights of the Trustee hereunder, the
rights and limitations upon the liability of the Trustee set forth in Article 5
of the Indenture are expressly incorporated herein and made a part hereof and
shall extend to the role of the Trustee as Pledged Securities Intermediary.


 


SECTION
12.  Indemnity.  The Grantor shall indemnify, hold harmless
and defend the Trustee, the Pledged Securities Intermediary and each of their
respective directors, officers, agents and employees, from and against any and
all claims, actions, obligations, liabilities and expenses, including defense
costs, investigative fees and costs, and legal fees and damages arising from
their execution of or performance under this Agreement, except to the extent
that such claim, action, obligation, liability or expense is directly
attributable to the bad faith, gross negligence or willful misconduct of such
indemnified person. This indemnification shall survive the termination of this
Agreement.


 


SECTION
13.  Remedies Upon Event of Default.  If any Event of Default shall have occurred
and be continuing:


 


(a)                                  The
Trustee may exercise, in addition to all other rights given by law or by this
Agreement or the Indenture, all of the rights and remedies with respect to the
Collateral of a secured party under the Uniform Commercial Code as in effect
from time to time in any relevant jurisdiction and also may, without notice
except as specified below, (i) sell, redeem or liquidate any of the Collateral,
(ii) transfer any or all of the Collateral to any account designated by the
Trustee, including an account or accounts established in the Trustee’s name,
(iii) register title to any Collateral in any name specified by the Trustee,
including the name of the Trustee or any of its nominees or agents, without
reference to any interest of the Grantor, or (iv), sell the Collateral or any part
thereof in one or more parcels at any broker’s board or at public or private
sale, in one or more sales or lots, at any of the Trustee’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Trustee may deem commercially reasonable.  


 


12

















 


The Grantor agrees that
the Collateral is of a type customarily sold on recognized markets and,
accordingly, that no notice to any Person is required before any sale of any of
the Collateral pursuant to the terms of this Agreement; provided, however that,
without prejudice to the foregoing, to the extent notice of any such sale shall
be required by law, the Grantor agrees that at least ten days’ notice to the
Grantor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The
Trustee shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Trustee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to
which it was so adjourned. The purchaser of any or all Collateral so sold shall
thereafter hold the same absolutely free from any claim, encumbrance or right
of any kind whatsoever created by or through the Grantor. Any sale of the
Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies, commercial finance companies, or other financial
institutions disposing of property similar to the Collateral shall be deemed to
be commercially reasonable. The Trustee or any Holder of Notes may, in its own
name or in the name of a designee or nominee, buy any of the Collateral at any
public sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys’ fees, expenses and
disbursements) of, or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or other disposition
of the Collateral.  If there are
insufficient Pledged Securities together with proceeds of Pledged Securities
and other Collateral in the Pledge Account to make any required payment on the
Secured Obligations, the Grantor shall be liable to the Trustee for any
deficiency.


 


(b)                                 All
cash proceeds received by or on behalf of the Trustee in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral may, following the payment of the reasonable fees and expenses of
the Trustee, be held by the Trustee (or by the Pledged Securities Intermediary
on its behalf) as collateral for, and/or then or at any time thereafter applied
(after payment of any amounts payable to the Trustee pursuant to Section 14) in
whole or in part by the Trustee as provided in clause SECOND of Section 4.13 of
the Indenture.  Any surplus of such cash
or cash proceeds held by or on behalf of the Trustee and remaining after
payment in full of all the Secured Obligations shall be paid over as provided
in clause THIRD of Section 4.13 of the Indenture.


 


(c)                                  The
Trustee may, without notice to the Grantor except as required by law and at any
time or from time to time, charge, set-off and otherwise apply all or any part
of the Secured Obligations against the Pledge Account or any part thereof.


 


(d)                                 The
Grantor further agrees to use its commercially reasonable efforts to do or
cause to be done all such other acts as may be necessary to make such sale or
sales of all or any portion of the Collateral pursuant to this Section 13 valid
and binding and in compliance with any and all other applicable requirements of
law. The Grantor further agrees that a breach of any of the covenants contained
in this Section 13 will cause irreparable injury to the Trustee and the Holders
of the Notes, that the Trustee and the Holders of the Notes have no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in 


 


13

















 


this Section 13 shall be
specifically enforceable against the Grantor and, to the fullest extent
permitted by law, the Grantor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred and is continuing.


 


SECTION
14.  Expenses.  The Grantor will promptly upon demand pay to
the Trustee and the Pledged Securities Intermediary the amount of any and all
reasonable expenses, including, without limitation, the reasonable fees,
expenses and disbursements of counsel, experts and agents retained by the
Trustee or the Pledged Securities Intermediary, as the case may be, that the
Trustee or the Pledged Securities Intermediary, as the case may be, may incur
in connection with (a) the review, negotiation and administration of this
Agreement, (b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (c) the exercise or
enforcement of any of the rights of the Trustee and the Holders of the Notes
hereunder or (d) the failure by the Grantor to perform or observe any of the
provisions hereof.


 


SECTION
15.  Miscellaneous Provisions.


 


Section
15.1.  Notices.  Any notice or other communication given
hereunder shall be sufficiently given if in writing and delivered in person or
mailed by first class mail, commercial courier service or telecopier
communication, addressed as follows:


 


IF TO THE GRANTOR:


Nektar Therapeutics


150 Industrial Road


San Carlos, California 94070


Attention: Chief Financial Officer


Fax: 650-631-3150


 


IF TO THE
TRUSTEE OR PLEDGED SECURITIES INTERMEDIARY:


 


J.P. Morgan Trust Company, National Association


560 Mission Street


13th Floor


San Francisco, California 94105


Attention: Institutional Trust Services


Fax: 415-315-7585


 


All such
notices and other communications shall, when mailed, delivered or telecopied,
respectively, be effective when deposited in the mails, delivered or telecopied,
respectively, addressed as aforesaid.


 


Section
15.2.  No Adverse Interpretation of
Other Agreements.  This Agreement
may not be used to interpret another pledge, security or debt agreement of the
Grantor or any subsidiary thereof. No such pledge, security or debt agreement
(other than the Indenture) may be used to interpret this Agreement.


 


14

















 


Section
15.3.  Severability.  The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then, to the fullest
extent permitted by law, such invalidity or unenforceability shall affect in
that jurisdiction only such clause or provision, or part thereof, and shall not
in any manner affect such clause or provision in any other jurisdiction or any
other clause or provision of this Agreement in any jurisdiction.


 


Section
15.4.  Headings.  The headings in this Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.


 


Section
15.5.  Counterpart Originals.  This Agreement may be signed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
together constitute one and the same agreement.


 


Section
15.6.  Benefits of Agreement.  Nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Holders of the Notes, any benefit or any legal or
equitable right, remedy or claim under this Agreement.


 


Section
15.7.  Amendments, Waivers and
Consents.  Any amendment or waiver
of any provision of this Agreement and any consent to any departure by the
Grantor from any provision of this Agreement shall be effective only if made or
duly given in compliance with all of the terms and provisions of the Indenture,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given, provided that an amendment
or supplement to this Agreement for the purpose contemplated by Section 16 may
be entered into by the Grantor, the Trustee and the Pledged Securities
Intermediary without the consent of any Holder, so long as such amendment or
supplement is reasonably satisfactory in form and substance to the Grantor, the
Trustee and the Pledged Securities Intermediary.  Neither the Trustee nor any Holder of Notes shall be deemed, by
any act, delay, indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Event of Default or in any breach
of any of the terms and conditions hereof. 
Failure of the Trustee or any Holder of Notes to exercise, or delay in exercising,
any right, power or privilege hereunder shall not preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  A waiver by the Trustee or any Holder of
Notes of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy that the Trustee or such Holder would
otherwise have on any future occasion. 
The rights and remedies herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any rights or remedies provided
by law.


 


Section
15.8.  Interpretation of Agreement.  To the fullest extent permitted by
applicable law, acceptance of or acquiescence in a course of performance
rendered under this Agreement shall not be relevant to determine the meaning of
this Agreement even though the accepting or acquiescing party had knowledge of
the nature of the performance and opportunity for objection.


 


15

















 


Section
15.9.  Continuing Security Interest;
Termination.


 


(a)                                  This
Agreement shall create a continuing security interest in and to the Collateral
and shall, unless otherwise provided in this Agreement, remain in full force
and effect until the payment in full in cash of the Secured Obligations. This
Agreement shall be binding upon the Grantor, its transferees, successors and
assigns, and shall inure, together with the rights and remedies of the Trustee
hereunder, to the benefit of the Trustee, the Holders of the Notes, the Pledged
Securities Intermediary and their respective successors, transferees and
assigns.


 


(b)                                 This
Agreement (other than Grantor’s obligations under Sections 12 and 14) shall
terminate upon the earlier of (i) the payment in full in cash of the Secured
Obligations and (ii) the payment in full in cash of the first six scheduled
interest payments on all of the Notes. 
At such time, the Trustee shall, pursuant to an Issuer Order, direct the
Pledged Securities Intermediary to promptly transfer to the Grantor all of the
Collateral hereunder that has not been sold, disposed of, retained or applied
by or on behalf of the Trustee in accordance with the terms of this Agreement
and the Indenture and take all other actions that are necessary to release the
security interest created by this Agreement in and to the Collateral, including
the execution and delivery of all termination statements necessary to terminate
any financing or continuation statements filed with respect to the
Collateral.  Such transfer shall be
without warranty by or recourse to the Trustee in its capacity as such, except
as to the absence of any liens on the Collateral created by or arising through
the Trustee, and shall be at the expense of the Grantor.


 


Section
15.10.  Survival of Representations
and Covenants.  All representations,
warranties and covenants of the Grantor contained herein shall survive the
execution and delivery of this Agreement and the termination of this Agreement.


 


Section
15.11.  Waivers.  The Grantor, to the fullest extent permitted
by applicable law, waives presentment and demand for payment of any of the
Obligations, protest and notice of dishonor or default with respect to any of
the Obligations, and all other notices to which the Grantor might otherwise be
entitled, except as otherwise expressly provided herein or in the Indenture.


 


Section
15.12.  Authority of the Trustee.


 


(a)                                  The
Trustee shall have and be entitled to exercise all powers hereunder that are
specifically granted to it by the terms hereof, together with such powers as
are reasonably incident thereto. The Trustee may perform any of its duties
hereunder or in connection with the Collateral by or through agents or
employees and shall be entitled to retain counsel and to act in reliance upon
the advice of counsel concerning all such matters. Except as otherwise
expressly provided in this Agreement or the Indenture, neither the Trustee nor
any director, officer, employee, attorney or agent of the Trustee shall be
liable to the Grantor for any action taken or omitted to be taken by the
Trustee, in its capacity as Trustee, hereunder, except for its own bad faith,
gross negligence or willful misconduct, and the Trustee shall not be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. The Trustee and its directors,
officers, employees, attorneys and agents shall be entitled


 


16

















 


to rely on any
communication, instrument or document reasonably believed by it or them to be genuine
and correct and to have been signed or sent by the proper person or persons.


 


(b)                                 The
Grantor acknowledges that the rights and responsibilities of the Trustee under
this Agreement with respect to any action taken by the Trustee or the exercise
or non-exercise by the Trustee of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Trustee and the Holders of the Notes, be
governed by the Indenture and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Trustee and the
Grantor, the Trustee shall be conclusively presumed to be acting as agent for
the Holders of the Notes with full and valid authority so to act or refrain
from acting, and the Grantor shall not be obligated or entitled to make any
inquiry respecting such authority.


 


Section
15.13.  Final Expression.  This Agreement, together with the Indenture
and any other agreement executed in connection herewith, is intended by the
parties as a final expression of this Agreement and is intended as a complete
and exclusive statement of the terms and conditions thereof.


 


Section
15.14.  Rights of Holders of the
Notes. No Holder of Notes shall have any independent rights hereunder other
than those rights granted to individual Holders of the Notes pursuant to the
Indenture; provided
that nothing in this subsection shall limit any rights granted to the Trustee
under the Notes or the Indenture.


 


Section
15.15.  Governing Law; Submission to
Jurisdiction; Waiver of Jury Trial; Waiver of Damages.


 


(a)                                  THIS
AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF
NEW YORK.


 


(b)                                 ANYTHING
CONTAINED IN THIS AGREEMENT OR IN ANY OTHER AGREEMENT BETWEEN THE TRUSTEE AND
THE PLEDGED SECURITIES INTERMEDIARY TO THE CONTRARY NOTWITHSTANDING, THE
“PLEDGED SECURITIES INTERMEDIARY’S JURISDICTION” WITH RESPECT TO THE PLEDGED
SECURITIES FOR PURPOSES OF SECTIONS 8-110(e), 9-305(a)(3) AND 9-304(b)(1) OF
THE UCC SHALL BE THE STATE OF NEW YORK.


 


(c)                                  FOR
ANY SUIT, ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE GRANTOR
HEREBY AGREES TO SUBMIT TO THE JURISDICTION OF ANY FEDERAL OR STATE COURT
LOCATED IN THE CITY OF NEW YORK.


 


(d)                                 THE
GRANTOR AGREES THAT THE TRUSTEE SHALL, IN ITS CAPACITY AS TRUSTEE OR IN THE
NAME AND ON BEHALF OF ANY HOLDER OF NOTES, HAVE THE RIGHT, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW (AND TO THE EXTENT THE TRUSTEE HAS RECEIVED
INDEMNITY DEEMED SATISFACTORY TO IT AND HAS AGREED TO DO SO), TO PROCEED
AGAINST THE GRANTOR OR


 


17

















 


THE COLLATERAL IN A COURT
IN ANY LOCATION REASONABLY SELECTED IN GOOD FAITH (AND HAVING PERSONAL OR IN
REM JURISDICTION OVER THE GRANTOR OR THE COLLATERAL, AS THE CASE MAY BE) TO
ENABLE THE TRUSTEE TO REALIZE ON SUCH COLLATERAL, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF THE TRUSTEE. THE GRANTOR AGREES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THAT IT WILL NOT ASSERT ANY
COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS IN ANY PROCEEDING BROUGHT BY THE TRUSTEE
TO REALIZE ON SUCH PROPERTY OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF THE TRUSTEE, EXCEPT FOR SUCH COUNTERCLAIMS, SETOFFS OR CROSSCLAIMS
WHICH, IF NOT ASSERTED IN ANY SUCH PROCEEDING, COULD NOT OTHERWISE BE BROUGHT
OR ASSERTED.  THE GRANTOR WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE TO
THE LOCATION OF THE COURT IN THE CITY OF NEW YORK IN THE BOROUGH OF MANHATTAN
ONCE THE TRUSTEE HAS COMMENCED A PROCEEDING DESCRIBED IN THIS PARAGRAPH
INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS.


 


(e)                                  THE
GRANTOR AGREES THAT NONE OF ANY HOLDER OF NOTES, (EXCEPT AS OTHERWISE PROVIDED
IN THIS AGREEMENT OR THE INDENTURE) THE TRUSTEE IN ITS CAPACITY AS TRUSTEE, OR
J.P. MORGAN IN ITS CAPACITY AS PLEDGED SECURITIES INTERMEDIARY SHALL HAVE ANY
LIABILITY TO THE GRANTOR (WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE) FOR
LOSSES SUFFERED BY THE GRANTOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY
WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE RELATIONSHIP ESTABLISHED
BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION
THEREWITH, UNLESS SUCH LOSSES WERE THE RESULT OF ACTS OR OMISSIONS ON THE PART
OF THE TRUSTEE OR SUCH HOLDERS OF NOTES, AS THE CASE MAY BE, CONSTITUTING BAD
FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.


 


(f)                                    TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE GRANTOR WAIVES THE POSTING
OF ANY BOND OTHERWISE REQUIRED OF THE TRUSTEE OR ANY HOLDER OF NOTES IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER PERTAINING TO THIS AGREEMENT OR ANY RELATED AGREEMENT OR
DOCUMENT ENTERED IN FAVOR OF THE TRUSTEE OR ANY HOLDER OF NOTES, OR TO ENFORCE
BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER OR PRELIMINARY OR
PERMANENT INJUNCTION, THIS AGREEMENT OR ANY RELATED AGREEMENT OR DOCUMENT
BETWEEN THE GRANTOR ON THE ONE HAND AND THE TRUSTEE AND/OR THE HOLDERS OF THE
NOTES ON THE OTHER HAND.


 


18

















 


SECTION
16.  Provisions Relating to
Additional Notes.  The Grantor and
the Trustee, on behalf of the Holders of the Notes originally issued on the
date hereof (the “Initial Notes”) and on behalf of the Holders of any
“Additional Notes” (which term includes any additional Notes issued as part of
a reopening of the Notes in accordance with the provisions of the Indenture and
any “Optional Notes” as defined in the Purchase Agreement dated June 25, 2003
among the Grantor and the Initial Purchasers named therein and relating to the
Notes), hereby acknowledge that the Grantor may issue Additional Notes from
time to time after the date hereof and that, pursuant to the terms of the
Indenture, the Initial Notes and any Additional Notes will be treated as part
of a single class for all purposes under the Indenture.  Accordingly, anything contained herein to
the contrary notwithstanding, (a) upon the issuance of any Additional Notes (i)
for all purposes under this Agreement the term “Notes” shall thereafter include
such Additional Notes; provided that any references herein to the
first six scheduled interest payments due on the Notes shall mean, with respect
to such Additional Notes, only such number, if any, of the first six scheduled
interest payments on the Notes as shall then remain at the time such Additional
Notes are originally issued (such number, if any, of the first six scheduled
interest payments on the Notes that shall remain at such time being the
“Covered Interest Payments” in respect of such Additional Notes), (ii) in the
event that any Additional Notes are issued prior to such time as the first six
scheduled interest payments on the Notes shall have been paid in full, the
Grantor shall purchase or cause to be purchased, for the account of the Pledged
Securities Intermediary for credit to the Pledge Account, additional security
entitlements with respect to U. S. Government Securities (such security
entitlements being, collectively, the “Additional Pledged Securities”) in an
amount that will be sufficient, upon receipt of the scheduled interest and
principal payments in respect thereof, to provide for the payment of all
Covered Interest Payments in respect of such Additional Notes, and (iii) for
all purposes under this Agreement (including without limitation Section 4(b))
the term “Pledged Securities” shall thereafter include any such Additional
Pledged Securities, and (b) as provided in Section 15.7, in connection with the
issuance of any Additional Notes, the parties hereto shall be permitted to
enter into such amendments or supplements to this Agreement as may be necessary
or advisable in order to give effect to the provisions of this Section 16
without the consent of the Holders of the Initial Notes or the Holders of any
Additional Notes that are outstanding at the time of such issuance.  For the avoidance of doubt and without
limiting the generality of the foregoing, the Grantor and the Trustee, on
behalf of the Holders of the Notes, hereby acknowledge and agree that the
Holders of the Initial Notes and the Holders of any Additional Notes shall be
entitled to share ratably in the benefits of this Agreement.  In the event that the Grantor shall issue
Additional Notes on more than one occasion, then the provisions of this Section
16 shall apply to such successive issuances of Additional Notes, mutatis
mutandis.


 


19

















 


IN WITNESS
WHEREOF, the Grantor, the Trustee and the Pledged Securities Intermediary have
each caused this Agreement to be duly executed and delivered as of the date
first above written.


 


	
   

  	
  Grantor:

  
	
   

  	
   

  
	
   

  	
  NEKTAR THERAPEUTICS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Trustee:

  
	
   

  	
   

  
	
   

  	
  J.P. MORGAN TRUST COMPANY,

  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Pledged Securities Intermediary:

  
	
   

  	
   

  
	
   

  	
  J.P. MORGAN TRUST COMPANY,

  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


20

















 


SCHEDULE I


 


PLEDGED SECURITIES


 


	
  SECURITY

  	
   

  	
  CUSIP NO.

  	
   

  	
  MATURITY

  	
   

  	
  PRINCIPAL

  AMOUNT AT

  MATURITY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United States Treasury

  	
   

  	
  912820DJ3

  	
   

  	
  11/15/03

  	
   

  	
  1,500,000

  
	
  United States Treasury

  	
   

  	
  912833FU9

  	
   

  	
  05/15/04

  	
   

  	
  1,500,000

  
	
  United States Treasury

  	
   

  	
  912833FV7

  	
   

  	
  11/15/04

  	
   

  	
  1,500,000

  
	
  United States Treasury

  	
   

  	
  912833FW5

  	
   

  	
  05/15/05

  	
   

  	
  1,500,000

  
	
  United States Treasury

  	
   

  	
  912833FX3

  	
   

  	
  11/15/05

  	
   

  	
  1,500,000

  
	
  United States Treasury

  	
   

  	
  912833FY1

  	
   

  	
  05/15/06

  	
   

  	
  1,500,000

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  9,000,000

  



 


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