exv10w6




Exhibit
10.6




IDERA PHARMACEUTICALS, INC.




1995 EMPLOYEE STOCK PURCHASE PLAN




     The purpose of this Plan is to provide eligible employees of Idera Pharmaceuticals, Inc. (the
“Company”) and certain of its subsidiaries with opportunities to purchase shares of the Company’s
Common Stock (the “Common Stock”). Two Hundred Fifty
Thousand (250,000) shares of Common
Stock in the aggregate have been approved for this purpose.



     1. Administration. The Plan will be administered by the Company’s Board of Directors
(the “Board”) or by a Committee appointed by the Board (the “Committee”). The Board or the
Committee has authority to make rules and regulations for the administration of the Plan and its
interpretation and decisions with regard thereto shall be final and conclusive.



     2. Eligibility. Participation in the Plan will neither be permitted nor denied
contrary to the requirements of Section 423 of the Internal Revenue Code of 1986, as amended (the
“Code”), and regulations promulgated thereunder. All employees of the Company, including directors
who are employees, and all employees of any subsidiary of the Company (as defined in Section 424(f)
of the Code) designated by the Board or the Committee from time to time (a “Designated
Subsidiary”), are eligible to participate in any one or more of the offerings of Options (as
defined below) to purchase Common Stock under the Plan, provided that:




     (a) they are regularly employed by the Company or a Designated Subsidiary for more than
20 hours a week and for more than five months in a calendar year; and




     (b) they have been employed by the Company or a Designated Subsidiary for at least
three months prior to enrolling in the Plan; and




     (c) they are employees of the Company or a Designated Subsidiary on the first day of
the applicable Plan Period (as defined below).



     No employee may be granted an option hereunder if such employee, immediately after the option
is granted, owns 5% or more of the total combined voting power or value of the stock of the Company
or any subsidiary. For purposes of the preceding sentence, the attribution rules of Section 424(d)
of the Code shall apply in determining the stock ownership of an employee, and all stock which the
employee has a contractual right to purchase shall be treated as stock owned by the employee.



     3. Offerings. The Company will make one or more offerings (“Offerings”) to employees
to purchase Common Stock under this Plan. The Board or the Committee shall determine the
commencement dates of each of the Offerings (the “Offering Commencement Dates”). Each Offering
Commencement Date will begin a period (a “Plan Period”) during which payroll deductions will be
made and held for the purchase of Common Stock at the end of the Plan Period. The Board or the
Committee shall choose a Plan Period of twelve (12) months or less for each of the Offerings and
may, at its discretion, choose a different Plan Period for each Offering.



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     4. Participation. An employee eligible on the Offering Commencement Date of any
Offering may participate in such Offering by completing and forwarding a payroll deduction
authorization form to the Controller of the Company at least 14 days prior to the applicable
Offering Commencement Date. The form will authorize a regular payroll deduction from the
Compensation received by the employee during the Plan Period. Unless an employee files a new form
or withdraws from the Plan, his deductions and purchases will continue at the same rate for future
Offerings under the Plan as long as the Plan remains in effect. The term “Compensation” means the
amount of money reportable on the employee’s Federal Income Tax Withholding Statement, excluding
overtime, shift premium, incentive or bonus awards, allowances and reimbursements for expenses such
as relocation allowances for travel expenses, income or gains on the exercise of Company stock
options or stock appreciation rights, and similar items, whether or not shown on the employee’s
Federal Income Tax Withholding Statement, but including, in the case of salespersons, sales
commissions to the extent determined by the Board or the Committee.



     5. Deductions.



          (a) The Company will maintain payroll deduction accounts for all participating employees.
With respect to any Offering made under this Plan, an employee may authorize a payroll deduction in
any dollar amount up to a maximum of 10% of the Compensation he or she receives during the Plan
Period or such shorter period during which deductions from payroll are made. Payroll deductions
may be at the rate of 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%, 9% or 10% of Compensation.



          (b) No employee may be granted an Option which permits his rights to purchase Common Stock
under this Plan and any other stock purchase plan of the Company and its subsidiaries, to accrue at
a rate which exceeds $25,000 of the fair market value of such Common Stock (determined at the
Offering Commencement Date of the Plan Period) for each calendar year in which the Option is
outstanding at any time.



     6. Deduction Changes. An employee may decrease or discontinue his payroll deduction
once during any Plan Period by filing a new payroll deduction authorization form. However, an
employee may not increase his payroll deduction during a Plan Period. If an employee elects to
discontinue his payroll deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to discontinue will be applied
to the purchase of Common Stock on the Exercise Date (as defined below).



     7. Interest. Interest will not be paid on any employee payroll deduction accounts,
except to the extent that the Board or its Committee, in its sole discretion, elects to credit such
accounts with interest at such per annum rate as it may from time to time determine.



     8. Withdrawal of Funds. An employee may on any one occasion during a Plan Period and
for any reason withdraw all or part of the balance accumulated in the employee’s payroll deduction
account. Any such withdrawal must be effected prior to the close of business on the last day of
the Plan Period. If the employee withdraws all of such balance, the employee shall thereby
withdraw from participation in the Offering and may not begin participation again



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during the remainder of the Plan Period. Any employee withdrawing all or part of such balance
may participate in any subsequent Offering in accordance with terms and conditions established by
the Board or the Committee, except that, unless otherwise permitted under Section 16 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules promulgated
thereunder, any employee who is also a director and/or officer of the Company within the meaning of
Section 16 of the Exchange Act may not (a) withdraw less than all of the balance accumulated in
such employee’s payroll deduction account or (b) participate again for a period of at least six
months as provided in Rule 16b-3(d)(2)(i) or any successor provision under the Exchange Act.



     9. Purchase of Shares.



          (a) On the Offering Commencement Date of each Plan Period, the Company will grant to each
eligible employee who is then a participant in the Plan an option (an “Option”) to purchase on the
last business day of such Plan Period (the “Exercise Date”), at the Option Price hereinafter
provided for, such number of whole shares of Common Stock of the Company reserved for the purposes
of the Plan as does not exceed the number of shares determined by dividing 15% of such employee’s
annualized Compensation for the immediately prior six-month period by the price determined in
accordance with the formula set forth in the following paragraph but using the closing price on the
Offering Commencement Date of such Plan Period.



          (b) The Option Price for each share purchased will be 85% of the closing price of the Common
Stock on (i) the first business day of such Plan Period or (ii) the Exercise Date, whichever
closing price shall be less. Such closing price shall be (A) the closing price of the Common Stock
on any national securities exchange on which the Common Stock is listed, or (B) the closing price
of the Common Stock on the Nasdaq National Market (“Nasdaq”) or (C) the average of the closing bid
and asked prices in the over-the-counter market, whichever is applicable, as published in The
Wall Street Journal. If no sales of Common Stock were made on such a day, the price of the
Common Stock for purposes of clauses (A) and (B) above shall be the reported price for the next
preceding day on which sales were made.



          (c) Each employee who continues to be a participant in the Plan on the Exercise Date shall be
deemed to have exercised his Option at the Option Price on such date and shall be deemed to have
purchased from the Company the number of full shares of Common Stock reserved for the purpose of
the Plan that his accumulated payroll deductions on such date will pay for pursuant to the formula
set forth above (but not in excess of the maximum number determined in the manner set forth above).



          (d) Any balance remaining in an employee’s payroll deduction account at the end of a Plan
Period will be automatically refunded to the employee, except that any balance which is less than
the purchase price of one share of Common Stock will be carried forward into the employee’s payroll
deduction account for the following Offering, unless the employee elects not to participate in the
following Offering under the Plan, in which case the balance in the employee’s account shall be
refunded.



     10. Issuance of Certificates. Certificates representing shares of Common Stock
purchased under the Plan may be issued only in the name of the employee, in the name of the



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employee and another person of legal age as joint tenants with rights of survivorship, or (in
the Company’s sole discretion) in the street name of a brokerage firm, bank or other nominee holder
designated by the employee.



     11. Rights on Retirement, Death or Termination of Employment. In the event of a
participating employee’s termination of employment prior to the last business day of a Plan Period
(whether as a result of the employee’s voluntary or involuntary termination, retirement, death or
otherwise), no payroll deduction shall be taken from any pay due and owing to the employee and the
balance in the employee’s payroll deduction account shall be paid to the employee or, in the event
of the employee’s death, (a) to a beneficiary previously designated in a revocable notice signed by
the employee (with any spousal consent required under state law) or (b) in the absence of such a
designated beneficiary, to the executor or administrator of the employee’s estate or (c) if no such
executor or administrator has been appointed to the knowledge of the Company, to such other
person(s) as the Company may, in its discretion, designate. If, prior to the last business day of
the Plan Period, the Designated Subsidiary by which an employee is employed shall cease to be a
subsidiary of the Company, or if the employee is transferred to a subsidiary of the Company that is
not a Designated Subsidiary, the employee shall be deemed to have terminated employment for the
purposes of this Plan.



     12. Optionees Not Stockholders. Neither the granting of an Option to an employee nor
the deductions from his pay shall constitute such employee a stockholder of the shares of Common
Stock covered by an Option under this Plan until such shares have been purchased by and issued to
him.



     13. Rights Not Transferable. Rights under this Plan are not transferable by a
participating employee other than by will or the laws of descent and distribution, and are
exercisable during the employee’s lifetime only by the employee.



     14. Application of Funds. All funds received or held by the Company under this Plan
may be combined with other corporate funds and may be used for any corporate purpose.



     15. Adjustment in Case of Changes Affecting Common Stock. In the event of a
subdivision of outstanding shares of Common Stock, or the payment of a dividend in Common Stock,
the number of shares approved for this Plan, and the share limitation set forth in Section 9, shall
be increased proportionately, and such other adjustment shall be made as may be deemed equitable by
the Board or the Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the Committee to give proper
effect to such event.



     16. Merger.



          (a) If the Company shall at any time merge or consolidate with another corporation and the
holders of the capital stock of the Company immediately prior to such merger or consolidation
continue to hold at least 80% by voting power of the capital stock of the surviving corporation
(“Continuity of Control”), the holder of each Option then outstanding will thereafter be entitled
to receive at the next Exercise Date upon the exercise of such Option for each share as to which
such Option shall be exercised the securities or property which a holder of



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one share of the Common Stock was entitled to upon and at the time of such merger, and the
Board or the Committee shall take such steps in connection with such merger as the Board or the
Committee shall deem necessary to assure that the provisions of Section 15 shall thereafter be
applicable, as nearly as reasonably may be, in relation to the said securities or property as to
which such holder of such Option might thereafter be entitled to receive thereunder.



          (b) In the event of a merger or consolidation of the Company with or into another corporation
which does not involve Continuity of Control, or of a sale of all or substantially all of the
assets of the Company while unexercised Options remain outstanding under the Plan, (i) subject to
the provisions of clauses (ii) and (iii), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to receive in lieu of
shares of Common Stock, shares of such stock or other securities as the holders of shares of Common
Stock received pursuant to the terms of such transaction; or (ii) all outstanding Options may be
cancelled by the Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participating employees; or (iii)
all outstanding Options may be cancelled by the Board or the Committee as of the effective date of
any such transaction, provided that notice of such cancellation shall be given to each holder of an
Option, and each holder of an Option shall have the right to exercise such Option in full based on
payroll deductions then credited to his account as of a date determined by the Board or the
Committee, which date shall not be less than ten (10) days preceding the effective date of such
transaction.



     17. Amendment of the Plan. The Board may at any time, and from time to time, amend
this Plan in any respect, except that (a) if the approval of any such amendment by the stockholders
of the Company is required by Section 423 of the Code or by Rule 16b-3 under the Exchange Act, such
amendment shall not be effected without such approval, and (b) in no event may any amendment be
made which would cause the Plan to fail to comply with Section 16 of the Exchange Act and the rules
promulgated thereunder, as in effect from time to time, or Section 423 of the Code.



     18. Insufficient Shares. In the event that the total number of shares of Common Stock
specified in elections to be purchased under any Offering plus the number of shares purchased under
previous Offerings under this Plan exceeds the maximum number of shares issuable under this Plan,
the Board or the Committee will allot the shares then available on a pro rata basis.



     19. Termination of the Plan. This Plan may be terminated at any time by the Board.
Upon termination of this Plan all amounts in the payroll deduction accounts of participating
employees shall be promptly refunded.



     20. Governmental Regulations.



          (a) The Company’s obligation to sell and deliver Common Stock under this Plan is subject to
listing on a national stock exchange or quotation on Nasdaq and the approval of all governmental
authorities required in connection with the authorization, issuance or sale of such stock.



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          (b) The Plan shall be governed by the laws of the State of Delaware except to the extent that
such law is preempted by federal law.



          (c) The Plan is intended to comply with the provisions of Rule 16b-3 promulgated under the
Exchange Act. Any provision inconsistent with such Rule shall to that extent be inoperative and
shall not affect the validity of the Plan.



     21. Issuance of Shares. Shares may be issued upon exercise of an Option from
authorized but unissued Common Stock, from shares held in the treasury of the Company, or from any
other proper source.



     22. Notification upon Sale of Shares. Each employee agrees, by entering the Plan, to
promptly give the Company notice of any disposition of shares purchased under the Plan where such
disposition occurs within two years after the date of grant of the Option pursuant to which such
shares were purchased.



     23. Effective Date and Approval of Stockholders. The Plan shall take effect upon the
closing of the Company’s initial public offering of Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, subject to approval by the
stockholders of the Company as required by Rule 16b-3 under the Exchange Act and by Section 423 of
the Code, which approval must occur within twelve months of the adoption of the Plan by the Board.




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