Document:

Exhibit
4.2

 

FIRST
SUPPLEMENTAL INDENTURE

 

FIRST SUPPLEMENTAL INDENTURE (this “First Supplemental
Indenture”) dated as of October 17, 2003, by and among NEKTAR THERAPEUTICS, a
Delaware corporation, as issuer (the “Company”), and J.P. MORGAN TRUST COMPANY,
NATIONAL ASSOCIATION, as trustee under the Indenture referred to below (the
“Trustee”).

 

W I T N E S S E T
H :

 

WHEREAS the Company heretofore executed and delivered
to the Trustee an Indenture (the “Indenture”) dated as of October 9, 2003
providing for the issuance of 3% Convertible Subordinated Notes due 2010 to be
issued in one or more series from time to time (the “Securities”) (capitalized
terms defined in the Indenture have the same meanings for purposes of this
First Supplemental Indenture); and

 

WHEREAS the Company and the Trustee desire to enter
into this First Supplemental Indenture to amend (i) certain definitions in
Section 1.1 of the Indenture and (ii) the notice provision to the Company in
Section 15.2 of the Indenture, as provided herein (collectively the
“Amendments”); and

 

WHEREAS pursuant to Section 7.1(i) of the Indenture,
the Trustee and the Company are authorized to amend the Indenture and to
execute and deliver this First Supplemental Indenture, without notice to or the
consent of any Holder, because the Amendments cure ambiguities, correct or
supplement certain provisions in the Indenture and do not adversely affect the
interests of the Holders of Securities in any material respect.

 

NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Trustee mutually covenant and agree as
follows:

 

1.             Definitions.  The following definitions in Section 1.1 of
the Indenture shall be deleted in its entirety and replaced with the following
:

 

“Exchange Agreements” means the Exchange Agreements,
dated October 3, 2002,  between the
Company and the Initial Purchasers, and any other exchange agreements executed
by the Company from time to time with Initial Purchasers which provides for the
issuance of the Securities to such Initial Purchasers under this Indenture.

 

“Initial Purchasers” means Salomon Brothers Qualified Investor Portfolios Multi-Strategy Arbitrage
Portfolio, Salomon Brothers Diversified Arbitrage Strategies Fund Ltd., Salomon
Brothers Enhanced Arbitrage Strategies Fund, CEBT- Comingled Employee Benefit
Trust – Capital Structure Arbitrage, General Motors Employees Global Group
Pension Trust, General Motors Welfare Benefits Trust, Salomon Brothers Market
Neutral Arbitrage Fund L.P., Alexandra Global Master Fund Ltd. and any Person who executes from time to time
an Exchange Agreement.

 

 

“Pledge Agreement” means the Pledge Agreement, dated
as of October 9, 2003, by and among the Company, the Trustee and J.P. Morgan
Trust Company, National Association, as securities intermediary, as amended,
supplemented or otherwise modified from time to time, together with any
schedules thereto that may be amended, supplemented or otherwise modified from
time to time.

 

2.             Notices.  Section 15.2(a) of the Indenture its deleted
in its entirety and replaced with the following:

 

(a)           if
to the Company:

 

Nektar Therapeutics

150 Industrial Road

San Carlos, California 94070

Attention: 
Paula Kasler, Esq.

 

with a copy to:

 

Cooley Godward LLP

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA 
94306-2155

Attention: 
John Geschke, Esq.

 

3.             Ratification of Indenture; First
Supplemental Indenture Part of Indenture. Except as expressly amended
hereby, the Indenture is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and
effect.  This First Supplemental
Indenture shall form a part of the Indenture for all purposes, and every holder
of the Securities heretofore or hereafter authenticated and delivered shall be
bound hereby.

 

3.             Governing Law. THIS FIRST
SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.

 

4.             Trustee Makes No Representation.  The Trustee makes no representation as to
the validity or sufficiency of this First Supplemental Indenture.

 

5.             Counterparts. The parties
may sign any number of copies of this First Supplemental Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.

 

6.             Effect of Headings. The
Section headings herein are for convenience only and shall not effect the
construction thereof.

 

2

 

IN WITNESS WHEREOF, the parties hereto have caused
this First Supplemental Indenture to be duly executed as of the date first
written above.

 

	
   

  	
  NEKTAR THERAPEUTICS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ajit S. Gill

  	
   

  
	
   

  	
   

  	
  Name:  Ajit S. Gill

  
	
   

  	
   

  	
  Title:  Chief Executive Officer and President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  J.P. MORGAN TRUST
  COMPANY,

  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Nagy

  	
   

  
	
   

  	
   

  	
  Name:  James Nagy

  
	
   

  	
   

  	
  Title:  Assistant Vice President

  

 

3Exhibit 10.1

 

PLEDGE AGREEMENT

 

This PLEDGE
AGREEMENT (this “Agreement”) is made and entered into as of October 9, 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 in one or
more series from time to time 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. 10206353.1, 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

 

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(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).

 

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

 

3

 

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 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

 

4

 

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 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.

 

5

 

(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. (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

 

6

 

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.

 

(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)

 

7

 

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.

 

(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

 

8

 

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 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 943134940.

 

(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

 

9

 

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.

 

(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.

 

10

 

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
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

 

11

 

(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 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

 

12

 

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.  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

 

13

 

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
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:

 

14

 

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.

 

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

 

15

 

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.

 

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

 

16

 

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
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.

 

17

 

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 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

 

18

 

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.

 

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 issued in one or more series from time to time after the date
hereof in accordance with the provisions of the Indenture (the “Additional
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

 

19

 

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.

 

20

 

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:

  	
  /s/ Ajit S. Gill

  	
   

  
	
   

  	
   

  	
  Name: Ajit S. Gill

  
	
   

  	
   

  	
  Title: Chief Executive Officer and

  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Trustee:

  
	
   

  	
   

  	
   

  
	
   

  	
  J.P. MORGAN TRUST COMPANY,

  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Nagy

  	
   

  
	
   

  	
   

  	
  Name:  James Nagy

  
	
   

  	
   

  	
  Title:  Assistant Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Pledged Securities Intermediary:

  
	
   

  	
   

  	
   

  
	
   

  	
  J.P. MORGAN TRUST COMPANY,

  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Nagy

  	
   

  
	
   

  	
   

  	
  Name:  James Nagy

  
	
   

  	
   

  	
  Title:  Assistant Vice
  President

  
					

 

21

 

SCHEDULE I

 

PLEDGED SECURITIES

 

	
  SECURITY

  	
   

  	
  CUSIP NO.

  	
   

  	
  MATURITY

  	
   

  	
  PRINCIPAL

  AMOUNT AT

  MATURITY

  	
   

  
	
  United States Treasury

  	
   

  	
  912820DJ3

  	
   

  	
  11/15/03

  	
   

  	
  227,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FU9

  	
   

  	
  05/15/04

  	
   

  	
  504,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FV7

  	
   

  	
  11/15/04

  	
   

  	
  504,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FW5

  	
   

  	
  05/15/05

  	
   

  	
  504,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FX3

  	
   

  	
  11/15/05

  	
   

  	
  504,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FY1

  	
   

  	
  05/15/06

  	
   

  	
  504,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912820DJ3

  	
   

  	
  11/15/03

  	
   

  	
  95,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FU9

  	
   

  	
  05/15/04

  	
   

  	
  210,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FV7

  	
   

  	
  11/15/04

  	
   

  	
  210,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FW5

  	
   

  	
  05/15/05

  	
   

  	
  210,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FX3

  	
   

  	
  11/15/05

  	
   

  	
  210,000

  	
   

  
	
  United States Treasury

  	
   

  	
  912833FY1

  	
   

  	
  05/15/06

  	
   

  	
  210,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3,892,000

  	
   

  

 

22

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00057-of-00352.parquet"}]]