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 XXXXX 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.
Type of Investment Property Percentage
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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%
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(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%
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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%
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.
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IN WITNESS WHEREOF, this Addendum has been executed as
of the same date as the Agreement.
XXXXX FARGO BANK,
NASTECH PHARMACEUTICAL NATIONAL ASSOCIATION
COMPANY INC.
By: /s/ XXXXXX XXXX By: /s/ XXXXXX X. XXXXX
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Xxxxxx Xxxx, CEO Xxxxxx X. Xxxxx, Vice President
By: /s/ XXXX XXXXXX
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Xxxx Xxxxxx, CFO
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