Document:

<PAGE>
                                                                    Exhibit 10.5

                                                              SECURITY AGREEMENT
WELLS FARGO                                                   SECURITIES ACCOUNT
--------------------------------------------------------------------------------

1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
NASTECH PHARMACEUTICAL COMPANY INC., or any of them ("Debtor"), hereby grants
and transfers to WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") a security
interest in (a) Debtor's account no. xxxxxxxx (whether held in Debtor's name or
as a Bank collateral account for the benefit of Debtor), and all replacements or
substitutions therefor, including any account resulting from a renumbering or
other administrative re-identification thereof (collectively, the "Securities
Account") maintained with WELLS CAPITAL MANAGEMENT ("Intermediary"), (b) all
financial assets credited to the Securities Account, (c) all security
entitlements with respect to the financial assets credited to the Securities
Account, and (d) any and all other investment property or assets maintained or
recorded in the Securities Account (with all the foregoing defined as
"Collateral", together with whatever is receivable or received when any of the
Collateral or proceeds thereof are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, including
without limitation, (ii) all rights to payment, including returned premiums,
with respect to any insurance relating to any of the foregoing, (ii) all rights
to payment with respect to any claim or cause of action affecting or relating to
any of the foregoing, and (iii) all stock rights, rights to subscribe, stock
splits, liquidating dividends, cash dividends, dividends paid in stock, new
securities or other property of any kind which Debtor is or may hereafter be
entitled to receive on account of any securities pledged hereunder, including
without limitation, stock received by Debtor due to stock splits or dividends
paid in stock or sums paid upon or in respect of any securities pledged
hereunder upon the liquidation, or dissolution of the issuer thereof
(hereinafter called "Proceeds"). Except as otherwise expressly permitted herein,
in the event Debtor receives any such Proceeds, Debtor will hold the same in
trust on behalf of and for the benefit of Bank and will immediately deliver all
such Proceeds to Bank in the exact form received; with the endorsement of Debtor
if necessary and/or appropriate undated stock powers duly executed in blank, to
be held by Bank as part of the Collateral, subject to all terms hereof. As used
herein, the terms "security entitlement," "financial asset" and "investment
property" shall have the respective meanings set forth in the Washington Uniform
Commercial Code.

2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein In its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Debtor may
be liable individually or jointly, or whether recovery upon such Indebtedness
may be or hereafter becomes unenforceable.

3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of Debtor to Bank, and the termination of all commitments of Bank
to extend credit to Debtor, existing at the time Bank receives written notice
from Debtor of the termination of this Agreement.

4. OBLIGATIONS OF BANK. Bank has no obligation to make any loans hereunder. Any
money received by Bank in respect of the Collateral may be deposited, at Bank's
option, into a non-interest bearing account over which Debtor shall have no
control, and the same shall, for all purposes, be deemed Collateral hereunder.
Bank shall have no duty to take any steps necessary to preserve the rights of
Debtor against prior parties, or to initiate any action to protect against the
possibility of a decline in the market value of the Collateral or Proceeds. Bank
shall not be obligated to take any action with respect to the Collateral or
Proceeds requested by Debtor unless such request is made in writing and Bank
determines, in its sole discretion, that the requested action would not
unreasonably jeopardize the value of the Collateral and Proceeds as security for
the Indebtedness.

                                  7492/Page 1

<PAGE>

5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that:
(a) Debtor's legal name is exactly as set forth on the first page of this
Agreement, and all of Debtor's organizational documents or agreements delivered
to Bank are complete and accurate in every respect; (b) Debtor is the owner of
the Collateral and Proceeds; (c) Debtor has the exclusive right to grant a
security interest in the Collateral and Proceeds; (d) all Collateral and
Proceeds are genuine, free from liens, adverse claims, setoffs, default,
prepayment, defenses and conditions precedent of any kind or character, except
the lien created hereby or as otherwise agreed to by Bank, or heretofore
disclosed by Debtor to Bank, in writing; (e) all statements contained herein
and, where applicable, in the Collateral, are true and complete in all material
respects; (f) no financing statement or control agreement covering any of the
Collateral or Proceeds, and naming any secured party other than Bank, exists or
is on file in any public office or remains in effect; (g) no person or entity,
other than Debtor, Bank and Intermediary, has any interest in or control over
the Collateral; and (h) specifically with respect to Collateral and Proceeds
consisting of investment securities, instruments, chattel paper, documents,
contracts, insurance policies or any like property, (i) all persons appearing to
be obligated thereon have authority and capacity to contract and are bound as
they appear to be, and (ii) the same comply with applicable laws concerning
form, content and manner of preparation and execution.

6. COVENANTS OF DEBTOR.

6.1 Debtor agrees in general: (a) to pay Indebtedness secured hereby when due;
(b) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto; (c) to pay all costs
and expenses, including reasonable attorneys' fees, incurred by Bank in the
perfection and preservation of the Collateral or Bank's interest therein and/or
the realization, enforcement and exercise of Bank's rights, powers and remedies
hereunder; (d) to permit Bank to exercise its powers; (e) to execute and deliver
such documents as Bank deems necessary to create, perfect and continue the
security interests contemplated hereby; (f) not to change its name, and as
applicable, its chief executive office, its principal residence or the
jurisdiction in which it is organized and/or registered without giving Bank
prior written notice thereof; (g) not to change the places where Debtor keeps
any Collateral or Debtor's records concerning the Collateral and Proceeds
without giving Bank prior written notice of the address to which Debtor is
moving same; and (h) to cooperate with Bank in perfecting all security interests
granted herein and in obtaining such agreements from third parties as Bank deems
necessary, proper or convenient in connection with the preservation, perfection
or enforcement of any of its rights hereunder.

6.2 Debtor agrees with regard to the Collateral and Proceeds, unless Bank agrees
otherwise in writing: (a) that Bank is authorized to file financing statements
in the name of Debtor to perfect Bank's security interest in Collateral and
Proceeds; (b) not to permit any security interest in or lien on the Collateral
or Proceeds, except in favor of Bank and except liens in favor of Intermediary
to the extent expressly permitted by Bank in writing; (c) not to hypothecate or
permit the transfer by operation of law of any of the Collateral or Proceeds or
any interest therein; (d) to keep, in accordance with generally accepted
accounting principles, complete and accurate records regarding all Collateral
and Proceeds, and to permit Bank to inspect the same and make copies thereof at
any reasonable time; (e) if requested by Bank, to receive and use reasonable
diligence to collect Proceeds, in trust and as the property of Bank, and to
immediately endorse as appropriate and deliver such Proceeds to Bank daily in
the exact form in which they are received together with a collection report in
form satisfactory to Bank; (f) in the event Bank elects to receive payments of
Proceeds hereunder, to pay all expenses incurred by Bank in connection
therewith, including expenses of accounting, correspondence, collection efforts,
filing, recording, record keeping and expenses incidental thereto; (g) to
provide any service and do any other acts which may be necessary to keep all
Collateral and Proceeds free and clear of all defenses, rights of offset and
counterclaims; and (h) if the Collateral or Proceeds consists of securities and
so long as no Event of Default exists, to vote said securities and to give
consents, waivers and ratifications with respect thereto, provided that no vote
shall be cast or consent, waiver or ratification given or action taken which
would impair Bank's interests in the Collateral and Proceeds or be inconsistent
with or violate any provisions of this Agreement. Debtor further agrees that any
party now or at any time hereafter authorized by Debtor to advise or otherwise
act with respect to the Securities Account shall be subject to all terms and
conditions contained herein and in any control, custodial or other similar
agreement at any time in effect among Bank, Debtor and Intermediary relating to
the Collateral.

                                  7492/Page 2
<PAGE>
7. POWERS OF BANK. Debtor appoints Bank its true attorney-in-fact to perform any
of the following powers, which are coupled with an interest, are irrevocable
until termination of this Agreement and may be exercised from time to time by
Bank's officers and employees, or any of them, whether or not Debtor is in
default: (a) to perform any obligation of Debtor hereunder in Debtor's name or
otherwise; (b) to notify any person obligated on any security, instrument or
other document subject to this Agreement of Bank's rights hereunder; (c) to
collect by legal proceedings or otherwise all dividends, interest, principal or
other sums now or hereafter payable upon or on account of the Collateral or
Proceeds; (d) to enter into any extension, modification, reorganization,
deposit, merger or consolidation agreement, or any other agreement relating to
or affecting the Collateral or Proceeds, and in connection therewith to deposit
or surrender control of the Collateral and Proceeds, to accept other property in
exchange for the Collateral and Proceeds, and to do and perform such acts and
things as Bank may deem proper, with any money or property received in exchange
for the Collateral or Proceeds, at Bank's option, to be applied to the
Indebtedness or held by Bank under this Agreement; (e) to make any compromise or
settlement Bank deems desirable or proper in respect of the Collateral and
Proceeds; (f) to insure, process and preserve the Collateral and Proceeds; (g)
to exercise all rights, powers and remedies which Debtor would have, but
for this Agreement, with respect to all Collateral and Proceeds subject hereto;
and (h) to do all acts and things and execute all documents in the name of
Debtor or otherwise, deemed, by Bank as necessary, proper and convenient in
connection with the preservation, perfection or enforcement of its rights
hereunder. To effect the purposes of this Agreement or otherwise upon
instructions of Debtor, or any of them, Bank may cause any Collateral and/or
Proceeds to be transferred to Bank's name or the name of Bank's nominee. If an
Event of Default has occurred and is continuing, any or all Collateral and/or
Proceeds consisting of securities may be registered, without notice, in the name
of Bank or its nominee, and thereafter Bank or its nominee may exercise, without
notice, all voting and corporate rights at any meeting of the shareholders of
the issuer thereof, any and all rights of conversion, exchange or subscription,
or any other rights, privileges or options pertaining to such Collateral and/or
Proceeds, all as if it were the absolute owner thereof. The foregoing shall
include, without limitation, the right of Bank or its nominee to exchange, at
its discretion, any and all Collateral and/or Proceeds upon the merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof, or upon the exercise by the issuer thereof or Bank of any
right, privilege or option pertaining to any shares of the Collateral and/or
Proceeds, and in connection therewith, the right to deposit and deliver any and
all of the Collateral and/or Proceeds with any committee, depository, transfer
agent, registrar or other designated agency upon such terms and conditions as
Bank may determine. All of the foregoing rights, privileges or options may be
exercised without liability on the part of Bank or its nominee except to account
for property actually received by Bank. Bank shall have no duty to exercise any
of the foregoing; or any other rights, privileges or options with respect to
the Collateral or Proceeds and shall not be responsible for any failure to do so
or delay in so doing.

8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor agrees to
pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of Debtor
to do so, Bank at its option may pay any of them and shall be the sole judge of
the legality or validity thereof and the amount necessary to discharge the same.
Any such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon demand, together with interest at a rate determined in
accordance with the provisions of this Agreement, and shall be secured by the
Collateral and Proceeds, subject to all terms and conditions of this Agreement.

9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute
an "Event of Default" under this Agreement: (a) any default in the payment or
performance of any obligation, or any defined event of default, under (i) any
contract or instrument evidencing any Indebtedness, (ii) any other agreement
between Debtor and Bank, including without limitation any loan agreement,
relating to or executed in connection with any Indebtedness, or (iii) any
control, custodial or other similar agreement in effect among Bank, Debtor and
Intermediary relating to the Collateral; (b) any representation or warranty made
by Debtor herein shall prove to be incorrect, false or misleading in any
material respect when made; (c) Debtor shall fail to observe or perform any
obligation or agreement captained herein; (d) any impairment of the rights of
Bank in any Collateral or Proceeds or any attachment or like levy on any
property of Debtor; and (e) Bank, in good faith, believes any or all of the
Collateral and/or Proceeds to be in danger of misuse, dissipation, commingling,
loss, theft, damage or destruction, or otherwise in jeopardy or unsatisfactory
in character or value.

                                  7492/Page 3

<PAGE>

10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have the
right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the Washington Uniform Commercial
Code or otherwise provided, by law, including without limitation, the right (a)
to contact all persons obligated to Debtor on any Collateral or Proceeds and to
instruct such persons to deliver all Collateral and/or Proceeds directly to
Bank, and (b) to sell, lease, license or otherwise dispose at any or all
Collateral. All rights, powers, privileges and remedies of Bank shall be
cumulative. No delay, failure or discontinuance of Bank in exercising any right,
power, privilege or remedy hereunder shall affect or operate as a waiver of such
right, power, privilege or remedy; nor shall any single or partial exercise of
any such right, power, privilege or remedy preclude, waive or otherwise affect
any other or further exercise thereof or the exercise of any other right, power,
privilege or remedy. Any waiver, permit, consent or approval of any kind by Bank
of any default hereunder, or any such waiver of any provisions or conditions
hereof, must be in writing and shall be effective only to the extent set forth
in writing. It is agreed that public or private sales or other dispositions, for
cash or on credit, to a wholesaler or retailer or investor, or user of property
of the types subject to this Agreement, or public auctions, are all commercially
reasonable since differences in the prices generally realized in the different
kinds of dispositions are ordinarily offset by the differences in the costs and
credit risks of such dispositions.

While an Event of Default exists: (a) Debtor will not dispose of any Collateral
or Proceeds except on terms approved by Bank: (b) Bank may appropriate the
Collateral and apply all Proceeds toward repayment of the Indebtedness in such
order of application as Bank may from time to time elect; (c) Bank may take any
action with respect to the Collateral contemplated by any control, custodial or
other similar agreement then in effect among Bank, Debtor and Intermediary; and
(d) at Bank's request, Debtor will assemble and deliver all books and records
pertaining to the Collateral or Proceeds to Bank at a reasonably convenient
place designated by Bank. For any Collateral or Proceeds consisting of
securities, Bank shall have no obligation to delay a disposition of any portion
thereof for the period of time necessary to permit the issuer thereof to
register such securities for public sale under any applicable state or Federal
law, even if the issuer thereof would agree to do so. Debtor further agrees that
Bank shall have no obligation to process or prepare any Collateral for sale or
other disposition.

11. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF INDEBTEDNESS. In
disposing of Collateral hereunder, Bank may disclaim all warranties of title,
possession, quiet enjoyment and the like. Any proceeds of any disposition of any
Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order of application as Bank
may from time to time elect. Upon the transfer of all or any part of the
Indebtedness, Bank may transfer all or any part of the Collateral or Proceeds
and shall be fully discharged thereafter from all liability and responsibility
with respect to any of the foregoing so transferred, and the transferee shall be
vested with all rights and powers of Bank hereunder with respect to any of the
foregoing so transferred; but with respect to any Collateral or Proceeds not so
transferred Bank shall retain all rights, powers, privileges and remedies herein
given.

12. STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid in full
and all commitments by Bank to extend credit to Debtor have been terminated, the
power of sale or other disposition and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be exercised
by Bank at any time and from time to time irrespective at the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all Indebtedness
secured hereunder.

13. MISCELLANEOUS. When there is more then one Debtor named herein: (a) the word
"Debtor shall mean all or any one or more of them as the context requires; (b)
the obligations of each Debtor hereunder are joint and several; and (c) until
all Indebtedness shall have been paid in full, no Debtor shall have any right of
subrogation or contribution, and each Debtor hereby waives any benefit of or
right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank. Debtor hereby waives any right to

                                  7492/Page 4

<PAGE>

require Bank to (i) proceed against Debtor or any other person; (ii) proceed
against or exhaust any security from Debtor or any other person, (iii) perform
any obligation of Debtor with respect to any Collateral or Proceeds, and (d)
make any presentment or demand, or give any notice of nonpayment or
nonperformance protest, notice of protest or notice of dishonor hereunder or in
connection with any Collateral or Proceeds. Debtor further waives any right to
direct the application of payments or security for any Indebtedness of Debtor or
indebtedness of customers of Debtor.

14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in any other loan
documents entered into between Debtor and Bank and to Debtor at the address of
its chief executive office (or principal residence, if applicable) specified
below or to such other addresses any party may designate by written notice to
each other party, and shall be deemed to have been given or made as follows: (a)
if personally delivered, upon delivery; (b) if sent by mail, upon the earlier of
the date of receipt or 3 days after deposit in the U. S. mail, first class and
postage prepaid; and (c) if sent by telecopy, upon receipt.

15. COSTS, EXPENSES AND ATTORNEYS' FEES. Debtor shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel), expended or incurred by
Bank in exercising any right, power, privilege or remedy conferred by this
Agreement or in the enforcement thereof, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Debtor or in any way affecting any of
the Collateral or Bank's ability to exercise any of its rights or remedies with
respect thereto. All of the foregoing shall be paid by Debtor with interest
from the date of demand until paid in full at a rate per annum equal to the
greater of ten percent (10%) or Bank's Prime Rate in effect from time to time.

16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modified only in writing signed by Bank and Debtor.

17. OBLIGATIONS OF MARRIED PERSONS. Any married person who signs this Agreement
as Debtor hereby expressly agrees that recourse may be had against his or her
separate property for all his or her Indebtedness to Bank secured by the
Collateral and Proceeds under this Agreement.

18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of
this Agreement.

19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.

20. ADDENDUM. Additional terms and conditions relating to the Securities Account
are set forth in an Addendum attached hereto and incorporated herein by this
reference.

Debtor warrants that Debtor is an organization registered under the laws of the
State of Delaware.

Debtor warrants that its chief executive office (or principal residence, if
applicable) is located at the following address: 3450 MONTE VILLA PARKWAY,
BOTHELL, WA 98021

                                   7492/Page 5

<PAGE>

IN WITNESS WHEREOF, this Agreement has been duly executed as of June 10, 2003.

Nastech Pharmaceutical Company Inc.

By: /s/ STEVEN QUAY
    --------------------
    Steven Quay, CEO

By: /s/ GREG WEAVER
    --------------------
    Greg Weaver, CFO

                                  7492/ Page 6<PAGE>
                                                                    Exhibit 10.6

               ADDENDUM TO SECURITY AGREEMENT: SECURITIES ACCOUNT

         THIS ADDENDUM is attached to and made a part of that certain Security
Agreement: Securities Account executed by NASTECH PHARMACEUTICAL COMPANY INC.
("Debtor") in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank"), dated as
of June 10, 2003 (the "Agreement").

         The following provisions are hereby incorporated into the Agreement:

         1. Securities Account Activity. So long as no Event of Default exists,
Debtor, or any party authorized by Debtor to act with respect to the Securities
Account, may receive payments of interest and/or cash dividends earned on
financial assets maintained in the Securities Account. Without Bank's prior
written consent, except as permitted by the preceding sentence, neither Debtor
nor any party other than Bank may (a) withdraw or receive any distribution of
any of the Collateral from the Securities Account, or (b) trade financial assets
maintained in the Securities Account. The Collateral Value of the Securities
Account shall at all times be equal to or greater than one hundred percent
(100%) of the outstanding principal balance of the Indebtedness secured hereby.
In the event the Collateral Value, for any reason and at any time, is less than
the required amount, Debtor shall promptly make a principal reduction on the
Indebtedness or deposit additional assets of a nature satisfactory to Bank into
the Securities Account, in either case in amounts or with values sufficient to
achieve the required Collateral Value.

         2. "Collateral Value" means the percentage set forth below of the lower
of the face or market value, or the lower of the face or redemption value, as
appropriate, for each type of investment property held in the Securities Account
at the time of computation, with such value and the classification of any
particular investment property in all instances determined by Bank in its sole
discretion, and excluding from such computation (a) all Common Trust Funds, (b)
any stock with a market value of $10.00 or less, and (c) all investment property
from an issuer if Bank determines such issuer to be ineligible.

<Table>
<Caption>
Type of Investment Property                                         Percentage
---------------------------                                         ----------
<S>                                                                 <C>

CASH AND CASH EQUIVALENTS                                              100%

U.S. GOVERNMENT BILLS, NOTES AND U.S. GOVERNMENT
SPONSORED AGENCY SECURITIES:

   (a)  with maturities less than or equal to 5 years                   90%

   (b)  with maturities greater than 5 years but
        less than or equal to 10 years                                  85%

   (c)  with maturities greater than 10 years                           80%

CORPORATE AND MUNICIPAL BONDS AND NOTES:

   (a)  rated AAA/Aaa, AA/Aa or SP-1 by a nationally
        recognized rating agency with maturities less
        than or equal to 5 years                                        85%
</Table>

                                      -1-
<PAGE>

<Table>
<S>                                                                     <C>
   (b)  rated AAA/Aaa, AA/Aa or SP-1 by a nationally
        recognized rating agency with maturities
        greater than 5 years but less than or equal to
        10 years                                                        80%

   (c)  rated AAA/Aaa, AA/Aa or SP-1 by a nationally
        recognized rating agency with maturities
        greater than 10 years                                           75%

   (d)  rated A, Baa, BBB or SP-2 by a nationally
        recognized rating agency with maturities less
        than or equal to 5 years                                        80%

   (e)  rated A, Baa, BBB or SP-2 by a nationally
        recognized rating agency with maturities
        greater than 5 years but less than or equal to
        10 years                                                        75%

   (f)  rated A, Ba, BBB or SP-2 by a nationally
        recognized rating agency with maturities
        greater than 10 years
                                                                        70%
COMMERCIAL PAPER:

   (a)  rated Al or P1 by a nationally recognized
        rating agency                                                   80%

   (b)  rated P2 or P2 by a nationally recognized
        rating agency                                                   70%

COMMON AND PREFERRED STOCK:

   (a)  traded an the New York Stock Exchange                           75%

   (b)  traded on NASDAQ, the American Stack Exchange
        or a regional exchange:

        (i)  with a market capitalization greater than $7.5B and

             **  rated A-, A or A- by a nationally recognized
                 rating agency                                          75%

             **  rated B+ by a nationally recognized rating agency      60%

             **  rated B, B- or C by a nationally recognized
                 rating agency                                          50%

       (ii)  with a market capitalization greater than $1B but
             less than or equal to $7.5B and

             **  rated At A or A- by a nationally recognized
                 rating agency                                          60%

             **  rated B+ by a nationally recognized rating
                 agency                                                 50%

             **  rated B, B- or C by a nationally recognized
                 rating agency                                          40%

      (iii)  with a market capitalization greater than or
             equal to $500MM but less than $1B and

             **  rated At, A or A- by a nationally recognized
                 rating agency                                          50%

             **  rated B+ by a nationally recognized rating
                 agency                                                 40%

             **  rated B, B- or C by a nationally recognized
                 rating agency                                          30%
</Table>

                               -2-

<PAGE>

<Table>
<S>                                                                       <C>
         MUTUAL FUNDS:

         (a)  Listed Money Market                                          95%

         (b)  Short Term Taxable or Tax Exempt Bonds                       90%

         (c)  Intermediate Term Taxable or Tax Exempt Bonds                85%

         (d)  General Taxable Bonds                                        80%

         (e)  Municipal Bonds, Single State Bonds or
              Long Term Corporate Taxable Bonds                            75%

         (f)  Balanced Stock and Bond Funds (includes
              flexible portfolio)                                          75%

         (g)  Domestic Large Cap Stock                                     70%

         (h)  Domestic Equity Income Stock                                 70%

         (i)  Domestic Mortgage Taxable Bonds                              70%

         (j)  Multi Cap Growth, Value and Core Stock                       60%

         (k)  Mid Cap Growth, Value and Core Stock                         60%

         (l)  Small Cap Growth, Value and Core Stock                       50%

         (m)  Specialty Equity Stock                                       50%

         (n)  Sector, International, High Yield Taxable and
              Tax Exempt Stocks and Bonds                                  50%

         (o) Listed NASDAQ Mutual Funds                                    50%
</Table>

         3. Exclusion from Collateral. Notwithstanding anything
herein to the contrary, the terms "Collateral" and "Proceeds" do
not include, and Bank disclaims a security interest in all Common
Trust Funds now or hereafter maintained in the Securities
Account.

         4. "Common Trust Funds" means common trust funds as
described in 12 CFR 9.18 and includes, without limitation, common
trust funds maintained by Bank for the exclusive use of its
fiduciary clients.

                               -3-

<PAGE>

         IN WITNESS WHEREOF, this Addendum has been executed as
of the same date as the Agreement.

                                           WELLS FARGO BANK,
NASTECH PHARMACEUTICAL                     NATIONAL ASSOCIATION
COMPANY INC.

By: /s/ STEVEN QUAY                        By: /s/ JEREMY B. SMITH
    ----------------------------               --------------------------------
    Steven Quay, CEO                           Jeremy B. Smith, Vice President

By: /s/ GREG WEAVER
    ----------------------------
    Greg Weaver, CFO

                               -4-

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