Exhibit 10.4

THE WARRANTS INITIALLY WILL BE REPRESENTED BY ONE OR MORE PERMANENT GLOBAL
CERTIFICATES IN FULLY REGISTERED FORM AND WILL BE DEPOSITED WITH A CUSTODIAN
FOR, AND REGISTERED IN THE NAME OF, A NOMINEE OF THE DEPOSITORY TRUST COMPANY,
NEW YORK, NEW YORK (“DTC”), AS DEPOSITARY.

IDERA PHARMACEUTICALS, INC.

WARRANT TO PURCHASE COMMON STOCK

 

  

Number of Shares: [    ]

(subject to adjustment)

Warrant No.         Original Issue Date: [    ], 2013

Idera Pharmaceuticals, Inc., a Delaware corporation (the “Company”), hereby
certifies that, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged,              or its permitted registered
assigns (the “Holder”), is entitled, subject to the terms set forth below, to
purchase from the Company up to a total of                  shares of common
stock, $0.001 par value per share (the “Common Stock”), of the Company (each
such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an
exercise price per share equal to $0.47 per share (as adjusted from time to time
as provided in Section 9 herein, the “Exercise Price”), upon surrender of this
Warrant to Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, the “Warrant”) at any
time and from time to time on or after the date hereof (the “Original Issue
Date”) and through and including 5:30 P.M., New York City time, on the date that
is five years following the Original Issue Date (the “Expiration Date”), and
subject to the following terms and conditions:

1. Definitions. For purposes of this Warrant, the following terms shall have the
following meanings:

(a) “Commission” means the United States Securities and Exchange Commission.

(b) “Closing Sale Price” means, for any security as of any date, the last trade
price for such security on the Principal Trading Market for such security, as
reported by Bloomberg Financial Markets, or, if such Principal Trading Market
begins to operate on an extended hours basis and does not designate the last
trade price, then the last trade price of such security prior to 4:00 P.M., New
York City time, as reported by Bloomberg Financial Markets, or if the foregoing
do not apply, the last trade price of such security in the over-the-counter
market on the electronic bulletin board for such security as reported by
Bloomberg Financial Markets, or, if no last trade price is reported for such
security by Bloomberg Financial Markets, the average of the bid and ask prices,
of any market makers for such security as reported in the “pink sheets” by Pink
Sheets LLC. If the Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Sale Price of such
security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then the Board of Directors of the
Company shall use its good faith judgment to determine the fair market value.
The Board of Directors’ determination shall be binding upon all parties absent
demonstrable error. All such determinations shall be appropriately adjusted for
any stock dividend, stock split, stock combination or other similar transaction
during the applicable calculation period.

(c) “Principal Trading Market” means the Trading Market on which the Common
Stock is primarily listed on and quoted for trading, which, as of the Original
Issue Date shall be the Nasdaq Capital Market.

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(d) “Registration Statement” means the Company’s Registration Statement on Form
S-1, as amended (File No. 333-187155), initially filed on March 11, 2013.

(e) “Securities Act” means the Securities Act of 1933, as amended.

(f) “Transfer Agent” means Computershare Shareowner Services LLC, the Company’s
transfer agent for the Common Stock and Warrants.

2. Registration of Warrants. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder (which shall include the initial
Holder or, as the case may be, any registered assignee to which this Warrant is
permissibly assigned hereunder) from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.

3. Registration of Transfers. Subject to compliance with all applicable
securities laws, the Company shall, or will cause its Transfer Agent to,
register the transfer of all or any portion of this Warrant in the Warrant
Register, upon surrender of this Warrant, and payment for all applicable
transfer taxes. Upon any such registration or transfer, a new warrant to
purchase Common Stock in substantially the form of this Warrant (any such new
warrant, a “New Warrant”) evidencing the portion of this Warrant so transferred
shall be issued to the transferee, and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued to the
transferring Holder. The acceptance of the New Warrant by the transferee thereof
shall be deemed the acceptance by such transferee of all of the rights and
obligations in respect of the New Warrant that the Holder has in respect of this
Warrant. The Company shall, or will cause its Transfer Agent to, prepare, issue
and deliver at the Company’s own expense any New Warrant under this Section 3.
Until due presentment for registration of transfer, the Company may treat the
registered Holder hereof as the owner and holder for all purposes, and the
Company shall not be affected by any notice to the contrary.

4. Exercise and Duration of Warrants.

(a) All or any part of this Warrant shall be exercisable by the registered
Holder in any manner permitted by Section 10 of this Warrant at any time and
from time to time on or after the Original Issue Date and through and including
5:30 P.M. New York City time, on the Expiration Date. At 5:30 P.M., New York
City time, on the Expiration Date, the portion of this Warrant not exercised
prior thereto shall be and become void and of no value and this Warrant shall be
terminated and no longer outstanding.

(b) The Holder may exercise this Warrant by delivering to the Company (i) an
exercise notice, in the form attached as Schedule 1 hereto (the “Exercise
Notice”), completed and duly signed, and (ii) payment of the Exercise Price for
the number of Warrant Shares as to which this Warrant is being exercised (which
may take the form of a “cashless exercise” if so indicated in the Exercise
Notice and if a “cashless exercise” may occur at such time pursuant to
Section 10 below), and the date on which the last of such items is delivered to
the Company (as determined in accordance with the notice provisions hereof) is
an “Exercise Date.” The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and delivery of the
Exercise Notice shall have the same effect as cancellation of the original
Warrant and issuance of a New Warrant evidencing the right to purchase the
remaining number of Warrant Shares.

 

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5. Delivery of Warrant Shares.

(a) Upon exercise of this Warrant, the Company shall promptly (but in no event
later than three (3) Trading Days after the Exercise Date), upon the request of
the Holder, credit such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with The Depository Trust Company (“DTC”) through its Deposit
Withdrawal Agent Commission system, or if the Transfer Agent is not
participating in the Fast Automated Securities Transfer Program (the “FAST
Program”) or if the certificates are required to bear a legend regarding
restriction on transferability, issue and dispatch by overnight courier to the
address as specified in the Exercise Notice, a certificate, registered in the
Company’s share register in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder is entitled pursuant to
such exercise. The Holder, or any Person permissibly so designated by the Holder
to receive Warrant Shares, shall be deemed to have become the holder of record
of such Warrant Shares as of the Exercise Date, irrespective of the date such
Warrant Shares are credited to the Holder’s DTC account or the date of delivery
of the certificates evidencing such Warrant Shares, as the case may be.

(b) If by the close of the third (3rd) Trading Day after the Exercise Date, the
Company fails to deliver to the Holder a certificate representing the required
number of Warrant Shares in the manner required pursuant to Section 5(a) or
fails to credit the Holder’s balance account with DTC for such number of Warrant
Shares to which the Holder is entitled, and if after such third (3rd) Trading
Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”), then the Company shall,
within three (3) Trading Days after the Holder’s request and in the Holder’s
sole discretion, either (1) pay in cash to the Holder an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such Warrant
Shares) shall terminate or (2) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Warrant Shares and pay
cash to the Holder in an amount equal to the excess (if any) of Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased in the Buy-In over the product of (A) the number of
shares of Common Stock purchased in the Buy-In, times (B) the closing bid price
of a share of Common Stock on the Exercise Date.

(c) To the extent permitted by law, the Company’s obligations to issue and
deliver Warrant Shares in accordance with and subject to the terms hereof
(including the limitations set forth in Section 11 below) are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance that might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit the Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

 

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6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares
of Common Stock upon exercise of this Warrant shall be made without charge to
the Holder for any issue or transfer tax, transfer agent fee or other incidental
tax or expense in respect of the issuance of such certificates, all of which
taxes and expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares
or the Warrants in a name other than that of the Holder or an Affiliate thereof.
The Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.

7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or
destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction (in such case)
and, in each case, a customary and reasonable indemnity and surety bond, if
requested by the Company. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable third-party costs as the Company may prescribe. If a New
Warrant is requested as a result of a mutilation of this Warrant, then the
Holder shall deliver such mutilated Warrant to the Company as a condition
precedent to the Company’s obligation to issue the New Warrant.

8. Reservation of Warrant Shares. The Company covenants that it will at all
times while this Warrant is outstanding reserve and keep available out of the
aggregate of its authorized but unissued and otherwise unreserved Common Stock,
solely for the purpose of enabling it to issue Warrant Shares upon exercise of
this Warrant as herein provided, the number of Warrant Shares that are initially
issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other contingent purchase rights of persons other than
the Holder (taking into account the adjustments and restrictions of Section 9).
The Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable. The Company will take all such action as may be reasonably
necessary to assure that such shares of Common Stock may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of any securities exchange or automated quotation system upon which
the Common Stock may be listed.

9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable
upon exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 9.

(a) Stock Dividends and Splits. If the Company, at any time while this Warrant
is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes
a distribution on any class of capital stock, other than Series E Preferred
Stock or Series D Preferred Stock issued and outstanding on the Original Issue
Date and in accordance with the terms of such stock on the Original Issue Date
or as amended, as described in the Registration Statement, that is payable in
shares of Common Stock, (ii) subdivides its outstanding shares of Common Stock
into a larger number of shares of Common Stock, (iii) combines its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or
(iv) issues by reclassification of shares of capital stock any additional shares
of Common Stock of the Company, then in each such case the Exercise Price shall
be multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately before such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant

 

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to clause (i) of this paragraph shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
dividend or distribution, provided, however, that if such record date shall have
been fixed and such dividend is not fully paid on the date fixed therefor, the
Exercise Price shall be recomputed accordingly as of the close of business on
such record date and thereafter the Exercise Price shall be adjusted pursuant to
this paragraph as of the time of actual payment of such dividends. Any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall become
effective immediately after the effective date of such subdivision or
combination.

(b) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock for no consideration
(i) evidences of its indebtedness, (ii) any security (other than a distribution
of Common Stock covered by the preceding paragraph) or (iii) rights or warrants
to subscribe for or purchase any security, or (iv) any other asset (in each
case, “Distributed Property”), then, upon any exercise of this Warrant that
occurs after the record date fixed for determination of stockholders entitled to
receive such distribution, the Holder shall be entitled to receive, in addition
to the Warrant Shares otherwise issuable upon such exercise (if applicable), the
Distributed Property that such Holder would have been entitled to receive in
respect of such number of Warrant Shares had the Holder been the record holder
of such Warrant Shares immediately prior to such record date without regard to
any limitation on exercise contained therein.

(c) Fundamental Transactions. If, at any time while this Warrant is outstanding
(i) the Company effects any merger or consolidation of the Company with or into
another Person, in which the Company is not the surviving entity or the
stockholders of the Company immediately prior to such merger or consolidation do
not own, directly or indirectly, at least 50% of the voting power of the
surviving entity immediately after such merger or consolidation, (ii) the
Company effects any sale to another Person of all or substantially all of its
assets in one or a series of related transactions, (iii) pursuant to any tender
offer or exchange offer (whether by the Company or another Person), holders of
capital stock who tender shares representing more than 50% of the voting power
of the capital stock of the Company and the Company or such other Person, as
applicable, accepts such tender for payment, (iv) the Company consummates a
stock purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person whereby such other Person acquires more than
the 50% of the voting power of the capital stock of the Company or (v) the
Company effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (other than as a result of a
subdivision or combination of shares of Common Stock covered by Section 9(a)
above) (in any such case, a “Fundamental Transaction”), then following such
Fundamental Transaction the Holder shall have the right to receive, upon
exercise of this Warrant, the same amount and kind of securities, cash or
property as it would have been entitled to receive upon the occurrence of such
Fundamental Transaction if it had been, immediately prior to such Fundamental
Transaction, the holder of the number of Warrant Shares then issuable upon
exercise in full of this Warrant without regard to any limitations on exercise
contained herein (the “Alternate Consideration”). The Company shall not effect
any Fundamental Transaction in which the Company is not the surviving entity or
the Alternate Consideration includes securities of another Person unless prior
to or simultaneously with the consummation thereof, any successor to the
Company, surviving entity or other Person (including any purchaser of assets of
the Company) shall assume the obligation to deliver to the Holder, such
Alternate Consideration as, in accordance with the foregoing provisions, the
Holder may be entitled to receive, and the other obligations under this Warrant.
The provisions of this paragraph (c) shall similarly apply to subsequent
transactions analogous of a Fundamental Transaction type.

 

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(d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise
Price pursuant to paragraphs (a) of this Section 9, the number of Warrant Shares
that may be purchased upon exercise of this Warrant shall be increased or
decreased proportionately, so that after such adjustment the aggregate Exercise
Price payable hereunder for the increased or decreased number of Warrant Shares
shall be the same as the aggregate Exercise Price in effect immediately prior to
such adjustment.

(e) Calculations. All calculations under this Section 9 shall be made to the
nearest cent or the nearest share, as applicable.

(f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to
this Section 9, the Company at its expense will, at the written request of the
Holder, promptly compute such adjustment, in good faith, in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment,
including a statement of the adjusted Exercise Price and adjusted number or type
of Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the Company’s transfer agent.

(g) Notice of Corporate Events. If, while this Warrant is outstanding, the
Company (i) declares a dividend or any other distribution of cash, securities or
other property in respect of its Common Stock, including, without limitation,
any granting of rights or warrants to subscribe for or purchase any capital
stock of the Company or any subsidiary, (ii) authorizes or approves, enters into
any agreement contemplating or solicits stockholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then, except if such notice and the
contents thereof shall be deemed to constitute material non-public information,
the Company shall deliver to the Holder a notice of such transaction at least
ten (10) days prior to the applicable record or effective date on which a Person
would need to hold Common Stock in order to participate

 

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in or vote with respect to such transaction; provided, however, that the failure
to deliver such notice or any defect therein shall not affect the validity of
the corporate action required to be described in such notice. In addition, if
while this Warrant is outstanding, the Company authorizes or approves, enters
into any agreement contemplating or solicits stockholder approval for any
Fundamental Transaction contemplated by Section 9(c), other than a Fundamental
Transaction under clause (iii) of Section 9(c), the Company shall deliver to the
Holder a notice of such Fundamental Transaction at least seventy five (75) days
prior to the date such Fundamental Transaction is consummated. To the extent
that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of its subsidiaries, the
Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.

10. Payment of Exercise Price. Notwithstanding anything contained herein to the
contrary, if a registration statement registering the issuance of the Warrant
Shares under the Securities Act is not effective or available for the issuance
of the Warrant Shares and an exemption from registration under the Securities
Act is not available for the issuance of the Warrant Shares, the Holder may, in
its sole discretion, satisfy its obligation to pay the Exercise Price through a
“cashless exercise”, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows:

X = Y [(A-B)/A]

where:

“X” equals the number of Warrant Shares to be issued to the Holder;

“Y” equals the total number of Warrant Shares with respect to which this Warrant
is then being exercised;

“A” equals the average of the Closing Sale Prices of the shares of Common Stock
(as reported by Bloomberg Financial Markets) for the five (5) consecutive
Trading Days ending on the date immediately preceding the Exercise Date; and

“B” equals the Exercise Price then in effect for the applicable Warrant Shares
at the time of such exercise.

For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a “cashless
exercise” transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally (provided that the Commission continues to
take the position that such treatment is proper at the time of such exercise).

11. Limitations on Exercise.

(a) Notwithstanding anything to the contrary contained herein, the number of
Warrant Shares that may be acquired by the Holder upon any exercise of this
Warrant (or otherwise in respect hereof) shall be limited to the extent
necessary to ensure that, following such exercise (or other issuance), the total
number of shares of Common Stock then beneficially owned by the Holder and its
Affiliates and any other Persons whose beneficial ownership of Common Stock
would be aggregated with the Holder’s for purposes of Section 13(d) of the
Exchange Act, does not exceed 4.999% of the total number of then issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise), it being acknowledged by the Holder
that the Company is not representing to such Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and such Holder is solely
responsible for any schedules required to be filed in accordance therewith. To
the extent that the limitation contained in this Section 11(a) applies, the
determination of whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which a portion of this Warrant is
exercisable shall be in the sole discretion of a Holder, and

 

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the submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which portion of this Warrant is
exercisable, in each case subject to such aggregate percentage limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination under this Section 11(a) as to any
group status shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 11(a), in determining the number of outstanding shares of Common
Stock, the Holder may rely on the number of outstanding shares of Common Stock
as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the
case may be, (y) a more recent public announcement by the Company or (z) any
other notice by the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written request of the Holder, the
Company shall within three (3) Trading Days confirm orally and in writing to
such Holder the number of shares of Common Stock then outstanding. By written
notice to the Company, which will not be effective until the sixty-first
(61st) day after such notice is delivered to the Company, the Holder may waive
the provisions of this Section 11(a) (but such waiver will not affect any other
holder) to change the beneficial ownership limitation to such percentage of the
number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock upon exercise of this Warrant as the
Holder shall determine, in its sole discretion, subject to Section 11(b), and
the provisions of this Section 11(a) shall continue to apply. Upon such a change
by a Holder of the beneficial ownership limitation from such 4.999% limitation
to such other percentage limitation, the beneficial ownership limitation may not
be further waived by such Holder without first providing the minimum notice
required by this Section 11(a). Notwithstanding the foregoing, at any time
following notice of a Fundamental Transaction under Section 9(g)(ii) with
respect to a Section 9(c)(iii) Fundamental Transaction, the Holder may waive
and/or change the beneficial ownership limitation effective immediately upon
written notice to the Company and may reinstitute a beneficial ownership
limitation at any time thereafter effective immediately upon written notice to
the Company.

(b) Notwithstanding anything to the contrary contained herein, including
Section 11(a), the Company shall not effect any exercise of this Warrant, and
the Holder shall not be entitled to exercise this Warrant for a number of
Warrant Shares in excess of that number of Warrant Shares which, upon giving
effect to such exercise, would cause (i) the aggregate number of shares of
Common Stock beneficially owned by the Holder and its Affiliates and any other
Persons whose beneficial ownership of Common Stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act, to exceed 19.99% of
the total number of issued and outstanding shares of Common Stock of the Company
following such exercise, or (ii) the combined voting power of the securities of
the Company beneficially owned by the Holder and its Affiliates and any other
Persons whose beneficial ownership of Common Stock would be aggregated with the
Holder’s for purposes of Section 13(d) of the Exchange Act to exceed 19.99% of
the combined voting power of all of the securities of the Company then
outstanding following such exercise, unless, in either case, the stockholders of
the Company approve the Nasdaq Proposal (as defined by and in accordance with
Section 5.11(B) of that certain Convertible Preferred Stock and Warrant Purchase
Agreement, dated November 9, 2012, among the Company, Pillar Pharmaceuticals II,
L.P. and the other parties thereto), in which case, the 19.99% limitation under
clause (i) and clause (ii) of this Section 11(b) shall be increased, with
respect to the Holder, to 35% for purposes of both clause (i) and clause (ii) of
this Section 11(b). For purposes of this Section 11(b), the aggregate number of
shares of Common Stock or voting securities beneficially owned by the Holder and
its Affiliates and any other Persons whose beneficial ownership of Common Stock
would be aggregated with the Holder’s for purposes of Section 13(d) of the
Exchange Act shall include the shares of Common Stock issuable upon the exercise
of this Warrant with respect to which such determination is being made, but
shall exclude the number of shares of Common Stock which would be issuable upon
(x) exercise of the remaining unexercised and non-cancelled portion of this
Warrant by the Holder and (y) exercise or conversion of the unexercised,
non-converted or non-cancelled portion of any other securities of the Company
that do not have voting power (including without limitation any securities of
the Company which would entitle the holder thereof to acquire at any time Common
Stock, including without limitation any debt, preferred stock, right, option,
warrant or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock), is subject to a limitation on conversion or exercise analogous to the
limitation contained herein and is beneficially owned by the Holder or any of
its Affiliates and other Persons whose beneficial ownership of Common Stock
would be aggregated with the Holder’s for purposes of Section 13(d) of the
Exchange Act.

(c) This Section 11 shall not restrict the number of shares of Common Stock
which a Holder may receive or beneficially own in order to determine the amount
of securities or other consideration that such Holder may receive in the event
of a Fundamental Transaction as contemplated in Section 9 of this Warrant.

12. No Fractional Shares. No fractional Warrant Shares will be issued in
connection with any exercise of this Warrant. In lieu of any fractional shares
that would otherwise be issuable, the number of Warrant Shares to be issued
shall be rounded down to the next whole number and the Company shall pay the
Holder in cash the fair market value (based on the Closing Sale Price) for any
such fractional shares.

13. Redemption of Warrants.

(a) At any time on or after the date that is two years following the Original
Issue Date, subject to the terms of this Section 13, the Company shall have the
right to redeem all or a portion of this Warrant for a redemption price (the
“Redemption Price”) equal to the result obtained by multiplying (i) $0.01 by
(ii) the number of Warrant Shares that the Holder is entitled to purchase upon
exercise of all or the portion of this Warrant that is being redeemed (such
Redemption Price being subject to adjustment for stock splits, stock dividends,
combinations, recapitalizations, reclassifications, and similar transactions
affecting the Common Stock) following notice to the holder thereof if the
closing price of our common stock for 20 or more trading days in a period of 30
consecutive trading days is greater than or equal to $2.80 (subject to
adjustment).

 

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(b) The Company shall exercise this redemption right by providing at least
thirty (30) days’ prior written notice to the Holder of such redemption (the
“Redemption Notice”). Such Redemption Notice shall be provided to the Holder in
accordance with Section 14 of this Warrant. The Redemption Notice shall specify
the time, manner and place of redemption, including without limitation the date
on which this Warrant shall be redeemed (the “Redemption Date”) and the
Redemption Price payable to the Holder (assuming that this Warrant is not
exercised on or prior to the Redemption Date).

(c) Notwithstanding the foregoing, the Company may not redeem any part of this
Warrant which may not be exercised by the redeeming Holder as of the date of the
Redemption Notice under Section 11 of this Warrant.

14. Notices. Any and all notices or other communications or deliveries hereunder
(including, without limitation, any Exercise Notice) shall be in writing and
shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile or
confirmed e-mail at the facsimile number or e-mail address specified in the
books and records of the Transfer Agent prior to 5:30 P.M., New York City time,
on a Trading Day, (ii) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile or confirmed e-mail at
the facsimile number or e-mail address specified in the books and records of the
Transfer Agent on a day that is not a Trading Day or later than 5:30 P.M., New
York City time, on any Trading Day, (iii) the Trading Day following the date of
mailing, if sent by nationally recognized overnight courier service specifying
next business day delivery, or (iv) upon actual receipt by the Person to whom
such notice is required to be given, if by hand delivery.

15. Warrant Agent. The Transfer Agent shall serve as warrant agent under this
Warrant. Upon thirty (30) days’ notice to the Holder, the Company may appoint a
new warrant agent. Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last
address as shown on the Warrant Register.

16. Miscellaneous.

(a) No Rights as a Stockholder. The Holder, solely in such Person’s capacity as
a holder of this Warrant, shall not be entitled to vote or receive dividends or
be deemed the holder of share capital of the Company for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the Holder,
solely in such Person’s capacity as the Holder of this Warrant, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, amalgamation, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.

 

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(b) Authorized Shares. (i) Except and to the extent as waived or consented to by
the Holder, the Company shall not by any action, including, without limitation,
amending its certificate or articles of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment. Without
limiting the generality of the foregoing, the Company will (a) not increase the
par value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares upon the exercise
of this Warrant, and (c) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant.

(ii) Before taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the Exercise
Price, the Company shall obtain all such authorizations or exemptions thereof,
or consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof.

(c) Successors and Assigns. Subject to the restrictions on transfer set forth in
this Warrant and compliance with applicable securities laws, this Warrant may be
assigned by the Holder. This Warrant may not be assigned by the Company without
the written consent of the Holder except to a successor in the event of a
Fundamental Transaction. This Warrant shall be binding on and inure to the
benefit of the Company and the Holder and their respective successors and
assigns. Subject to the preceding sentence, nothing in this Warrant shall be
construed to give to any Person other than the Company and the Holder any legal
or equitable right, remedy or cause of action under this Warrant. This Warrant
may be amended only in writing signed by the Company and the Holder, or their
successors and assigns.

(d) Amendment and Waiver. Except as otherwise provided herein, the provisions of
the Warrants may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the Holders of Warrants
representing no less than a majority of the Warrant Shares obtainable upon
exercise of the Warrants then outstanding.

(e) Acceptance. Receipt of this Warrant by the Holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.

(f) Governing Law; Jurisdiction. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS WARRANT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF THE
COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF
MANHATTAN, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
(INCLUDING WITH

 

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RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY
IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION
OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PERSON AT THE ADDRESS IN
EFFECT FOR NOTICES TO IT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL
BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL
BY JURY.

(g) Headings. The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.

(h) Severability. In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby, and the Company and the Holder will
attempt in good faith to agree upon a valid and enforceable provision which
shall be a commercially reasonable substitute therefor, and upon so agreeing,
shall incorporate such substitute provision in this Warrant.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above.

 

IDERA PHARMACEUTICALS, INC. By:  

 

Name:   Title:  

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SCHEDULE 1

FORM OF EXERCISE NOTICE

[To be executed by the Holder to purchase shares of Common Stock under the
Warrant]

Ladies and Gentlemen:

(1) The undersigned is the Holder of Warrant No.              (the “Warrant”)
issued by Idera Pharmaceuticals, Inc., a Delaware corporation (the “Company”).
Capitalized terms used herein and not otherwise defined herein have the
respective meanings set forth in the Warrant.

(2) The undersigned hereby exercises its right to purchase              Warrant
Shares pursuant to the Warrant.

(3) The Holder intends that payment of the Exercise Price shall be made as
(check one):

 

  ¨ Cash Exercise

 

  ¨ “Cashless Exercise” under Section 10 of the Warrant

(4) If the Holder has elected a Cash Exercise, the Holder shall pay the sum of
$         in immediately available funds to the Company in accordance with the
terms of the Warrant.

(5) Pursuant to this Exercise Notice, the Company shall deliver to the Holder
Warrant Shares determined in accordance with the terms of the Warrant.

(6) By its delivery of this Exercise Notice, the undersigned represents and
warrants to the Company that in giving effect to the exercise evidenced hereby
the Holder will not beneficially own in excess of the number of shares of Common
Stock (as determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 11(a) or Section 11(b), as
applicable, of the Warrant to which this notice relates.

Dated:                                              

Name of Holder:                                          
                       

By:                                                                       

Name:                                                                  

Title:                                                                    

(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)