Document:

exv10w3

 

Exhibit 10.3

MASTER SECURITY AGREEMENT

dated as of April 23, 2007 (“Agreement”)

     THIS AGREEMENT is between General Electric Capital Corporation (together with its successors
and assigns, if any, “Secured Party”) and Idera Pharmaceuticals, Inc. (“Debtor”). Secured Party
has an office at 83 Wooster Heights Road, Danbury, CT 06810. Debtor is a corporation organized
and existing under the laws of the state of Delaware (“the State”). Debtor’s mailing address and
chief place of business is 345 Vassar St, Cambridge, MA 02139.

	1.	 	CREATION OF SECURITY INTEREST.

     Debtor grants to Secured Party, its successors and assigns, a security interest in and against
all property listed on any collateral schedule now or in the future annexed to or made a part of
this Agreement (“Collateral Schedule”), and in and against all additions, attachments, accessories
and accessions to such property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and collectively called
the “Collateral”). This security interest is given to secure the payment and performance of all
debts, obligations and liabilities of any kind whatsoever of Debtor to Secured Party, now existing
or arising in the future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule (collectively “Notes” and
each a “Note”), and any renewals, extensions and modifications of such debts, obligations and
liabilities (such Notes, debts, obligations and liabilities are called the “Indebtedness”).

	2.	 	REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

     Debtor represents, warrants and covenants as of the date of this Agreement and as of the date
of each Collateral Schedule that:

     (a) Debtor’s exact legal name is as set forth in the preamble of this Agreement and Debtor is,
and will remain, duly organized, existing and in good standing under the laws of the State set
forth in the preamble of this Agreement, has its chief executive offices at the location specified
in the preamble, and is, and will remain, duly qualified and licensed in every jurisdiction
wherever necessary to carry on its business and operations;

     (b) Debtor has adequate power and capacity to enter into, and to perform its obligations under
this Agreement, each Note and any other documents evidencing, or given in connection with, any of
the Indebtedness (all of the foregoing are called the “Debt Documents”);

     (c) This Agreement and the other Debt Documents have been duly authorized, executed and
delivered by Debtor and constitute legal, valid and binding agreements enforceable in accordance
with their terms, except to the extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws;

     (d) No approval, consent or withholding of objections is required from any governmental
authority or instrumentality with respect to the entry into, or performance by Debtor of any of the
Debt Documents, except any already obtained;

     (e) The entry into, and performance by, Debtor of the Debt Documents will not (i) violate any
of the organizational documents of Debtor or any judgment, order, law or regulation applicable to
Debtor, or (ii) result in any breach of or constitute a default under any contract to which Debtor
is a party, or result in the creation of any lien, claim or encumbrance on any of Debtor’s property
(except for liens in favor of Secured Party) pursuant to any indenture, mortgage, deed of trust,
bank loan, credit agreement, or other agreement or instrument to which Debtor is a party;

     (f) There are no suits or proceedings pending in court or before any commission, board or
other administrative agency against or affecting Debtor which could, in the aggregate, have a
material adverse effect on Debtor, its business or operations, or its ability to perform its
obligations under the Debt Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;

     (g) All financial statements delivered to Secured Party in connection with the Indebtedness
have been prepared in accordance with generally accepted accounting principles, and since the date
of the most recent financial statement, there has been no material adverse change in Debtors
financial condition;

     (h) The Collateral is not, and will not be, used by Debtor for personal, family or household
purposes;

     (i) The Collateral is, and will remain, in good condition and repair (normal wear and tear
excepted) and Debtor will not be negligent in its care and use;

     (j) Debtor is, and will remain, the sole and lawful owner, and in possession of, the
Collateral, and has the sole right and lawful authority to grant the security interest described in
this Agreement;

 

 

     (k) The Collateral is, and will remain, free and clear of all liens, claims and encumbrances
of any kind whatsoever, except for (i) liens in favor of Secured Party, (ii) liens for taxes not
yet due or for taxes being contested in good faith and which do not involve, in the judgment of
Secured Party, any risk of the sale, forfeiture or loss of any of the Collateral and with respect
to which adequate reserves have been set aside for the payment thereof in accordance with GAAP, and
(iii) inchoate materialmen’s, mechanic’s, repairmen’s and similar liens arising by operation of law
in the normal course of business for amounts which are not delinquent (all of such liens are called
“Permitted Liens”); and

     (l) Debtor is and will remain in full compliance with all laws and regulations applicable to
it including, without limitation, (i) ensuring that no person who owns a controlling interest in or
otherwise controls Debtor is or shall be (Y) listed on the Specially Designated Nationals and
Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the
Treasury, and/or any other similar lists maintained by OFAC pursuant to any authorizing statute,
Executive Order or regulation or (Z) a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other
similar Executive Orders, and (ii) compliance with all applicable Bank Secrecy Act (“BSA”) laws,
regulations and government guidance on BSA compliance and on the prevention and detection of money
laundering violations.

	3.	 	COLLATERAL.

     (a) Until the declaration of any default, Debtor shall remain in possession of the Collateral;
except that Secured Party shall have the right to possess (i) any chattel paper or instrument that
constitutes a part of the Collateral, and (ii) any other Collateral in which Secured Party’s
security interest may be perfected only by possession. Secured Party may inspect any of the
Collateral during normal business hours after giving Debtor reasonable prior notice. If Secured
Party asks, Debtor will promptly notify Secured Party in writing of the location of any Collateral.

     (b) Debtor shall (i) use the Collateral only in its trade or business, (ii) maintain all of
the Collateral in good operating order and repair, normal wear and tear excepted, (iii) use and
maintain the Collateral only in compliance with manufacturers recommendations and all applicable
laws, and (iv) keep all of the Collateral free and clear of all liens, claims and encumbrances
(except for Permitted Liens).

     (c) Secured Party does not authorize and Debtor agrees it shall not (i) part with possession
of any of the Collateral (except to Secured Party or for maintenance and repair), (ii) remove any
of the Collateral from the continental United States, or (iii) sell, rent, lease, mortgage,
license, grant a security interest in or otherwise transfer or encumber (except for Permitted
Liens) any of the Collateral.

     (d) Debtor shall pay promptly when due all taxes, license fees, assessments and public and
private charges levied or assessed on any of the Collateral, on its use, or on this Agreement or
any of the other Debt Documents. At its option, Secured Party may discharge taxes, liens, security
interests or other encumbrances that remain outstanding for more than sixty (60) days on the
Collateral and may pay for the maintenance, insurance and preservation of the Collateral and effect
compliance with the terms of this Agreement or any of the other Debt Documents. Debtor agrees to
reimburse Secured Party, on demand, all costs and expenses incurred by Secured Party in connection
with such payment or performance and agrees that such reimbursement obligation shall constitute
Indebtedness.

     (e) Debtor shall, at all times, keep accurate and complete records of the Collateral, and
Secured Party shall have the right to inspect and make copies of all of Debtor’s books and records
relating to the Collateral during normal business hours, after giving Debtor reasonable prior
notice.

     (f) Debtor agrees and acknowledges that any third person who may at any time possess all or
any portion of the Collateral shall be deemed to hold, and shall hold, the Collateral as the agent
of, and as pledge holder for, Secured Party. Secured Party may at any time give notice to any third
person, described in the preceding sentence, notifying Debtor, that such third person is holding
the Collateral as the agent of, and as pledge holder for, the Secured Party.

	4.	 	INSURANCE.

     (a) Debtor shall at all times bear the entire risk of any loss, theft, damage to, or
destruction of, any of the Collateral from any cause whatsoever.

     (b) Debtor shall maintain and keep in full force and effect, with financially sound and
reputable insurance companies reasonably acceptable to the Secured Party, insurance in such amounts
and covering such risks (including, without limitation, risk of fire, public liability, property
damage, business interruption and workmen’s compensation) as is usually carried by entities engaged
in similar businesses and owning similar properties in the same general areas in which the debtor
operates, all policies of insurance to be in form and substance reasonably satisfactory to the
Secured Party. Such insurance shall include insurance covering the Collateral against risk of loss
or damage by fire, theft, and such other casualties as the Lender may require. The insurance
coverage shall be in an amount no less than the full replacement value of the Collateral, and
deductible amounts, insurers and policies shall be acceptable to Secured Party, which acceptance
shall not be unreasonable withheld. Debtor shall deliver to Secured Party policies or certificates
of insurance evidencing such coverage. Each policy shall name Secured Party as additional insured
and lender’s loss payee, shall not be subject to co-insurance, and shall provide that coverage may
not be canceled or altered by the insurer

 

 

except upon thirty (30) days prior written notice to Secured Party. Debtor appoints Secured Party as its attorney-in-fact to make proof of loss, claim
for insurance and adjustments with insurers, and to receive payment of and execute or endorse all
documents, checks or drafts in connection with insurance payments for loss or damage to Collateral.
Secured Party shall not have authority to act as Debtor’s attorney-in-fact unless Debtor is in
default. Proceeds of insurance shall be applied, at the option of Secured Party, to repair or
replace the Collateral or to reduce any of the Indebtedness.

	5.	 	REPORTS.

     (a) Debtor shall promptly notify Secured Party of (i) any change in the name of Debtor, (ii)
any change in the state of its incorporation, organization or registration, (iii) any relocation
of its chief executive offices, (iv) any relocation of any of the Collateral, (v) any of the
Collateral being lost, stolen, missing, destroyed, materially damaged or worn out, or (vi) any
lien, claim or encumbrance other than Permitted Liens attaching to or being made against any of the
Collateral.

     (b) Debtor will deliver to Secured Party financial statements as follows. If Debtor is a
privately held company, then Debtor agrees to provide monthly financial statements, certified by
Debtor’s president or chief financial officer including a balance sheet, statement of operations
and cash flow statement within 30 days of each month end and its complete audited annual financial
statements, certified by a recognized firm of certified public accountants, within 120 days of
fiscal year end or at such time as Debtor’s Board of Directors receives the audit. If Debtor is a
publicly held company, then Debtor agrees to provide quarterly unaudited statements and annual
audited statements, certified by a recognized firm of certified public accountants, within 10 days
after the statements are provided to the Securities and Exchange Commission (“SEC”);
provided that such financial statements shall be deemed delivered upon the posting by
Debtor of such statements to EDGAR or similar platform provided by the Securities Exchange
Commission; provided further that if Secured Party shall not have access to such
posting or for any other reason cannot access the statements, Debtor shall furnish the relevant
financial statements to Secured Party immediately upon its request. All such statements are to be
prepared using generally accepted accounting principles (“GAAP”) and, if Debtor is a publicly held
company, are to be in compliance with SEC requirements.

	6.	 	FURTHER ASSURANCES.

     (a) Debtor shall, upon request of Secured Party, furnish to Secured Party such further
information, execute and deliver to Secured Party such documents and instruments (including,
without limitation, Uniform Commercial Code financing statements) and shall do such other acts and
things as Secured Party may at any time reasonably request relating to the perfection or protection
of the security interest created by this Agreement or for the purpose of carrying out the intent of
this Agreement. Without limiting the foregoing, Debtor shall cooperate and do all acts deemed
necessary for Secured Party to continue in Secured Party a perfected first security interest in the
Collateral, and shall obtain and furnish to Secured Party any subordinations, releases, landlord
waivers, lessor waivers, mortgagee waivers, or control agreements, and similar documents as may be
from time to time requested by, and in form and substance reasonably satisfactory to, Secured
Party.

     (b) Debtor authorizes Secured Party to file a financing statement and amendments thereto
describing the Collateral and containing any other information required by the applicable Uniform
Commercial Code. During the term of this Agreement, Debtor irrevocably grants to Secured Party the
power to sign Debtor’s name and generally to act on behalf of Debtor to execute and file
applications for title, transfers of title, financing statements, notices of lien and other
documents pertaining to any or all of the Collateral; this power is coupled with Secured Party’s
interest in the Collateral. Debtor shall, if any certificate of title be required or permitted by
law for any of the Collateral, obtain and promptly deliver to Secured Party such certificate
showing the lien of this Agreement with respect to the Collateral. Debtor ratifies its prior
authorization for Secured Party to file financing statements and amendments thereto describing the
Collateral and containing any other information required by the Uniform Commercial Code if filed
prior to the date hereof.

     (c) Debtor shall indemnify and defend the Secured Party, its successors and assigns, and their
respective directors, officers and employees, from and against all third party claims, actions and
suits (including, without limitation, related attorneys’ fees) of any kind whatsoever arising,
directly or indirectly, in connection with any of the Collateral, this agreement, any other Debt
Document, and the transactions contemplated hereby or thereby, except for claims, actions or suits
arising from the gross negligence or willful misconduct of Secured Party or its successors or
assigns and their respective directors, officers and employees as determined by final judgment of a
court of competent jurisdiction.

	7.	 	DEFAULT AND REMEDIES.

     (a) Debtor shall be in default under this Agreement and each of the other Debt Documents if:

          (i) Debtor breaches its obligation to pay when due any installment or other amount due or
coming due under any of the Debt Documents and fails to cure the breach within fifteen (15)
business days;

 

 

          (ii) Debtor, without the prior written consent of Secured Party, attempts to or does sell,
rent, lease, license, mortgage, grant a security interest in, or otherwise transfer or encumber
(except for Permitted Liens) any of the Collateral;

          (iii) Debtor breaches any of its insurance obligations under Section 4;

          (iv) Debtor breaches any of its other obligations under any of the Debt Documents and fails to
cure that breach within thirty (30) days after written notice from Secured Party;

          (v) Any warranty, representation or statement made by Debtor in any of the Debt Documents or
otherwise in connection with any of the Indebtedness shall be false or intentionally misleading in
any material respect;

          (vi) Any of the Collateral is subjected to attachment, execution, levy, seizure or
confiscation in any legal proceeding or otherwise, or if any legal or administrative proceeding is
commenced against Debtor or any of the Collateral, which in the good faith judgment of Secured
Party subjects any of the Collateral to a material risk of attachment, execution, levy, seizure or
confiscation and no bond is posted or protective order obtained to negate such risk;

          (vii) Debtor breaches or is in default under any other agreement between Debtor and Secured
Party;

          (viii) Debtor or any guarantor or other obligor for any of the Indebtedness (collectively
“Guarantor”) dissolves, terminates its existence, becomes insolvent or ceases to do business as a
going concern;

          (ix) If Debtor or any Guarantor is a natural person, Debtor or any such Guarantor dies or
becomes incompetent;

          (x) A receiver is appointed for all or of any part of the property of Debtor or any Guarantor,
or Debtor or any Guarantor makes any assignment for the benefit of creditors;

          (xi) Debtor or any Guarantor files a petition under any bankruptcy, insolvency or similar law,
or any such petition is filed against Debtor or any Guarantor and is not dismissed within
forty-five (45) days;

          (xii) Debtor’s improper filing of an amendment or termination statement relating to a filed
financing statement describing the Collateral, which could result in a material impairment of
Lender’s security interest in such Collateral;

          (xiii) There is a material adverse change in the Debtor’s business, operations, financial
condition and prospects, taken as a whole, as determined in the reasonable judgment of Secured
Party;

          (xiv) Any Guarantor revokes or attempts to revoke its guaranty of any of the Indebtedness or
fails to observe or perform any covenant, condition or agreement to be performed under any guaranty
or other related document to which it is a party;

          (xv) A default or breach occurs under any other agreement, document or instrument to which
Debtor is a party that is not cured within any applicable grace period therefor, and such default
or breach (i) involves the failure to make any payment when due in respect of any indebtedness or
guaranteed indebtedness (other than the obligations owed under the Debt Documents) of Debtor in
excess of $10,000 in the aggregate;

          (xvi) At any time during the term of this Agreement Debtor experiences a change of control
such that any person or entity acquires either more than 50% of the voting stock of Debtor or all
or substantially all of Debtor’s assets, in either case, without Secured Party’s prior written
consent, which shall not be unreasonably or untimely withheld.

     (b) If Debtor is in default, the Secured Party, at its option, may declare any or all of the
Indebtedness to be immediately due and payable, without demand or notice to Debtor or any
Guarantor. The accelerated obligations and liabilities shall bear interest (both before and after
any judgment) until paid in full at the lower of eighteen percent (18%) per annum or the maximum
rate not prohibited by applicable law.

     (c) After default, Secured Party shall have all of the rights and remedies of a Secured Party
under the Uniform Commercial Code, and under any other applicable law. Without limiting the
foregoing, Secured Party shall have the right to (i) notify any account debtor of Debtor or any
obligor on any instrument which constitutes part of the Collateral to make payment to the Secured
Party, (ii) with or without legal process, enter any premises where the Collateral may be and take
possession of and remove the Collateral from the premises or store it on the premises, (iii) sell
the Collateral at public or private sale, in whole or in part, and have the right to bid and
purchase at said sale, each in accordance with the relevant terms set forth in the Uniform
Commercial Code or (iv) lease or otherwise dispose of all or part of the Collateral, applying
proceeds from such disposition to the obligations then in default. If requested by Secured Party,
Debtor shall promptly assemble the Collateral and make it available to Secured Party at a place to
be designated by Secured Party, which is reasonably convenient to both parties. Any notice that
Secured Party is required to give to Debtor under the Uniform Commercial Code of the time and place
of any public sale or the time after

 

 

which any private sale or other intended disposition of the Collateral is to be made shall be deemed to constitute reasonable notice if such notice is
delivered by certified mail to the last known address of Debtor at least ten (10) days prior to
such action.

     (d) Proceeds from any sale or lease or other disposition shall be applied: first, to all
documented costs of repossession, storage, and disposition including without limitation attorneys’,
appraisers’, and auctioneers’ fees; second, to discharge the obligations then in default; third, to
discharge any other Indebtedness of Debtor to Secured Party, whether as obligor, endorser,
guarantor, surety or indemnitor; fourth, to expenses incurred in paying or settling liens and
claims against the Collateral; and lastly, to Debtor, if there exists any surplus. Debtor shall
remain fully liable for any deficiency of Indebtedness.

     (e) Debtor agrees to pay all reasonable attorneys’ fees and other fees, costs and expenses
incurred by Secured Party (including, without limitation, the allocated cost of in-house legal
counsel) in connection with the enforcement, assertion, defense or preservation of Secured Party’s
rights and remedies under this Agreement, or if prohibited by law, such lesser sum as may be
permitted. Debtor further agrees that such fees and costs shall constitute Indebtedness.

     (f) Secured Party’s rights and remedies under this Agreement or otherwise arising are
cumulative and may be exercised singularly or concurrently. Neither the failure nor any delay on
the part of the Secured Party to exercise any right, power or privilege under this Agreement shall
operate as a waiver, nor shall any single or partial exercise of any right, power or privilege
preclude any other or further exercise of that or any other right, power or privilege. SECURED
PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER
AGREEMENT, INSTRUMENT OR PAPER SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND
SIGNED BY SECURED PARTY. A waiver on any one occasion shall not be construed as a bar to or waiver
of any right or remedy on any future occasion.

     (g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS,
ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS
BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE.
THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

	8.	 	MISCELLANEOUS.

     (a) This Agreement, any Note and/or any of the other Debt Documents may be assigned, in whole
or in part, by Secured Party without notice to Debtor, and Debtor agrees not to assert against any
such assignee, or assignee’s assigns, any defense, set-off, recoupment claim or counterclaim which
Debtor has or may at any time have against Secured Party for any reason whatsoever;
provided that this provision shall not affect any defense, set-off, recoupment claim or
counterclaim which Debtor has or may at any time have directly against Secured Party. Debtor
agrees that if Debtor receives written notice of an assignment from Secured Party, Debtor will pay
all amounts payable under any assigned Debt Documents to such assignee or as instructed by Secured
Party. Debtor also agrees to confirm in writing receipt of the notice of assignment as may be
reasonably requested by Secured Party or assignee.

     (b) All notices to be given in connection with this Agreement shall be in writing, shall be
addressed to the parties at their respective addresses set forth in this Agreement (unless and
until a different address may be specified in a written notice to the other party), and shall be
deemed given (i) on the date of receipt if delivered in hand or by facsimile transmission, (ii)
on the next business day after being sent by express mail, and (iii) on the fourth business day
after being sent by regular, registered or certified mail. As used herein, the term “business day”
shall mean and include any day other than Saturdays, Sundays, or other days on which commercial
banks in New York, New York are required or authorized to be closed.

     (c) Debtor agrees to pay all reasonable attorneys’ fees and all other fees, costs and expenses
incurred by Secured Party (including, without limitation, the allocated cost of in-house legal
counsel) in connection with the preparation, negotiation and closing of the transactions
contemplated in this Agreement and all related documents and schedules and in connection with the
continued administration thereof, including, without limitation, any amendments, modifications,
consents or waivers thereof and in connection with the protection, monitoring or preservation of
the Collateral. Debtor further agrees that such fees and costs shall constitute Indebtedness.

     (d) Secured Party may correct patent errors and fill in all blanks in this Agreement or in any
Collateral Schedule consistent with the agreement of the parties.

     (e) Time is of the essence of this Agreement. This Agreement shall be binding, jointly and
severally, upon all parties described as the “Debtor” or “Secured Party” and their respective
heirs, executors, representatives, successors and assigns, and shall inure to the benefit of their
respective successors and assigns.

 

 

     (f) This Agreement and its Collateral Schedules constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and supersede all prior understandings
(whether written, verbal or implied) with respect to such subject matter. THIS AGREEMENT AND ITS
COLLATERAL SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT ONLY BY
A WRITING SIGNED BY BOTH PARTIES. Section headings contained in this Agreement have been included
for convenience only, and shall not affect the construction or interpretation of this Agreement.

     (g) This Agreement shall continue in full force and effect until all of the Indebtedness has
been indefeasibly paid in full to Secured Party or its assignee. The surrender, upon payment or
otherwise, of any Note or any of the other documents evidencing any of the Indebtedness shall not
affect the right of Secured Party to retain the Collateral for such other Indebtedness as may then
exist. This Agreement shall automatically be reinstated if Secured Party is ever required to
return or restore the payment of all or any portion of the Indebtedness (all as though such payment
had never been made).

     (h) [Intentionally omitted].

     (i) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
DELAWARE (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.

     (j) In the event either party hereunder shall be delayed or hindered in or prevented from
the performance of any act required hereunder by reasons of strike, lockouts, labor troubles,
inability to procure materials, failure of power or restrictive government or judicial orders, or
decrees, riots, insurrection, war, acts of God, inclement weather or other similar reason or cause
beyond that party’s control, then performance of such act shall be excused for the period of such delay; provided, however, that such
excused performance shall not exceed fifteen (15) business days.

IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally bound hereby, have duly executed this Agreement in one or
more counterparts, each of which shall be deemed to be an original, as of the day and year first aforesaid.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	SECURED PARTY:	 	 	 	DEBTOR:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	General Electric Capital Corporation	 	 	 	Idera Pharmaceuticals, Inc.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:
	 	/S/ DANIJELA GJENERO	 	 	 	By:	 	/S/ ROBERT ANDERSON	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Name:   Danijela Gjenero	 	 	 	 	 	Name: Robert G. Anderson	 	 	 	 
	 
	 	Title:  Duly Authorized Signatory	 	 	 	 	 	Title: CFO, VP Operations	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	By:	 	/S/ SUDHIR AGRAWAL	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	Name : Sudhir Agrawal	 	 	 	 
	 
	 	 	 	 	 	 	 	Title: CEO, CSOexv10w4

 

Exhibit 10.4

IDERA PHARMACEUTICALS, INC.

Restricted Stock Agreement

	 	 	 	 
	 
	Name of Recipient:

	 	 

	 
	 	 
	Number of shares of restricted common stock awarded:

	 	 

	 
	 	 
	Grant Date:

	 	 

     Idera Pharmaceuticals, Inc. (the “Company”) has selected you to receive the restricted stock
award described above, which is subject to the provisions of the Company’s 2005 Stock Incentive
Plan (the “Plan”) and the terms and conditions contained in this Restricted Stock Agreement.
Please confirm your acceptance of this restricted stock award and of the terms and conditions of
this Agreement by signing a copy of this Agreement where indicated below.

	 	 	 	 	 
	 	IDERA PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Accepted and Agreed:

 

[insert name of recipient]

 

 

IDERA PHARMACEUTICALS, INC.

Restricted Stock Agreement

     The terms and conditions of the award of shares of restricted common stock of the Company (the
“Restricted Shares”) made to the Recipient, as set forth on the cover page of this Agreement, are
as follows:

     1.    Issuance of Restricted Shares.

             (a) The Restricted Shares are issued to the Recipient, effective as of the Grant Date (as set
forth on the cover page of this Agreement), in consideration of employment services rendered and to
be rendered by the Recipient to the Company.

             (b) As promptly as practicable following the Grant Date, the Company shall issue one or more
certificates in the name of the Recipient for the Restricted Shares. Such certificate(s) shall
initially be held on behalf of the Recipient by the Secretary of the Company. Following the
vesting of any Restricted Shares pursuant to Section 2 below, the Secretary shall, if requested by
the Recipient, deliver to the Recipient a certificate representing the vested Restricted Shares.
The Recipient agrees that the Restricted Shares shall be subject to the forfeiture provisions set
forth in Section 3 of this Agreement and the restrictions on transfer set forth in Section 4 of
this Agreement.

     2.    Vesting Schedule.

     Unless otherwise provided in this Agreement or the Plan, the Restricted Shares shall vest in
accordance with the following vesting schedule: ___% of the total number of Restricted Shares
shall vest on the first anniversary of the Grant Date and ___% of the total number of Restricted
Shares shall vest at the end of each successive ___-month period following the first anniversary
of the Grant Date, through and including the ___anniversary of the Grant Date. Any fractional
number of Restricted Shares resulting from the application of the foregoing percentages shall be
rounded down to the nearest whole number of Restricted Shares.

     3.    Forfeiture of Unvested Restricted Shares Upon Employment Termination.

     In the event that the Recipient ceases to be an Eligible Participant (as defined below) for
any reason or no reason, with or without cause, all of the Restricted Shares that are unvested as
of the time of such employment termination shall be forfeited immediately and automatically to the
Company, without the payment of any consideration to the Recipient, effective as of such
termination of employment. The Recipient hereby authorizes the Company to take any actions
necessary or appropriate to cancel any certificate(s) representing forfeited Restricted Shares and
transfer ownership of such forfeited Restricted Shares to the Company; and if the Company or its
transfer agent requires an executed stock power or similar confirmatory instrument in connection
with such cancellation and transfer, the Recipient shall promptly execute and deliver the same to
the Company. The Recipient shall have no further rights with respect to any Restricted Shares that
are so forfeited. If the Recipient is employed by a subsidiary of the Company, any references in
this Agreement to employment with the Company shall instead be deemed to refer

 

 

to employment with such subsidiary. For purposes hereof, an “Eligible Participant” means an
employee, director or officer of, or a consultant or advisor to, the Company.

     4.    Restrictions on Transfer.

     The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of,
by operation of law or otherwise (collectively “transfer”) any Restricted Shares, or any interest
therein, until such Restricted Shares have vested, except that the Recipient may transfer such
Restricted Shares: (a) to or for the benefit of any spouse, children, parents, uncles, aunts,
siblings, grandchildren and any other relatives approved by the Compensation Committee
(collectively, “Approved Relatives”) or to a trust established solely for the benefit of the
Recipient and/or Approved Relatives, provided that such Restricted Shares shall remain
subject to this Agreement (including without limitation the forfeiture provisions set forth in
Section 3 and the restrictions on transfer set forth in this Section 4) and such permitted
transferee shall, as a condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and conditions of this
Agreement; or (b) as part of the sale of all or substantially all of the shares of capital stock of
the Company (including pursuant to a merger or consolidation). The Company shall not be required
(i) to transfer on its books any of the Restricted Shares which have been transferred in violation
of any of the provisions of this Agreement or (ii) to treat as owner of such Restricted Shares or
to pay dividends to any transferee to whom such Restricted Shares have been transferred in
violation of any of the provisions of this Agreement.

     5.    Restrictive Legends.

     All certificates representing Restricted Shares shall have affixed thereto a legend in
substantially the following form, in addition to any other legends that may be required under
applicable law:

“These shares of stock are subject to forfeiture provisions and
restrictions on transfer set forth in a certain Restricted Stock
Agreement between the corporation and the registered owner of these shares (or his or her predecessor in interest), and such Agreement
is available for inspection without charge at the office of the
Secretary of the corporation.”

     6.    Rights as a Shareholder.

     Except as otherwise provided in this Agreement, for so long as the Recipient is the registered
owner of the Restricted Shares, the Recipient shall have all rights as a shareholder with respect
to the Restricted Shares, whether vested or unvested, including, without limitation, any rights to
receive dividends and distributions with respect to the Restricted Shares and to vote the
Restricted Shares and act in respect of the Restricted Shares at any meeting of shareholders.
Recipient will be entitled to all ordinary cash dividends paid with respect to the Restricted
Shares. If any dividends or distribution are paid in shares, or consist of a dividend or
distribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash or
other property will be subject to the same restrictions on transferability and forefeitability as
the shares

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of Restricted Stock with respect to which they were paid. Each dividend payment will be made
no later than the end of the calendar year in which the dividends are paid to shareholders of that
class of stock or, if later, the 15th day of the third month following the date the
dividends are paid to shareholders of that class of stock.

     7.    Provisions of the Plan.

     This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the
Recipient with this Agreement. As provided in the Plan, upon the occurrence of a Reorganization
Event (as defined in the Plan), the rights of the Company hereunder (including the right to receive
forfeited Restricted Shares) shall inure to the benefit of the Company’s successor and, unless the
Board determines otherwise, shall apply to the cash, securities or other property which the
Restricted Shares were converted into or exchanged for pursuant to such Reorganization Event in the
same manner and to the same extent as they applied to the Restricted Shares under this Agreement.

     8.    Tax Matters.

             (a) Acknowledgments; Section 83(b) Election. The Recipient acknowledges that he or
she is responsible for obtaining the advice of the Recipient’s own tax advisors with respect to the
acquisition of the Restricted Shares and the Recipient is relying solely on such advisors and not
on any statements or representations of the Company or any of its agents with respect to the tax
consequences relating to the Restricted Shares. The Recipient understands that the Recipient (and
not the Company) shall be responsible for the Recipient’s tax liability that may arise in
connection with the acquisition, vesting and/or disposition of the Restricted Shares. The
Recipient acknowledges that he or she has been informed of the availability of making an election
under Section 83(b) of the Internal Revenue Code, as amended, with respect to the issuance of the
Restricted Shares and that the Recipient has decided not to file a Section 83(b) election.

             (b) Withholding. The Recipient acknowledges and agrees that the Company has the right
to deduct from payments of any kind otherwise due to the Recipient any federal, state, local or
other taxes of any kind required by law to be withheld with respect to the vesting of the
Restricted Shares. On each date on which Restricted Shares vest, the Company shall deliver written
notice to the Recipient of the amount of withholding taxes due with respect to the vesting of the
Restricted Shares that vest on such date; provided, however, that the total tax withholding cannot
exceed the Company’s minimum statutory withholding obligations (based on minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes, that are applicable
to such supplemental taxable income). The Recipient shall satisfy such tax withholding obligations
by making a cash payment to the Company on the date of vesting of the Restricted Shares, in the
amount of the Company’s withholding obligation in connection with the vesting of such Restricted
Shares. The Recipient may, at the option of the Recipient, satisfy such tax withholding
obligations by transferring to the Company, on each date on which Restricted Shares vest under this
Agreement, such number of Restricted Shares that vest on such date as have a fair market value
(calculated using the last reported sale price of the common stock of the Company on the American
Stock Exchange on the trading date immediately prior to such vesting

-3-

 

date) equal to the amount of the Company’s tax withholding obligation in connection with the
vesting of such Restricted Shares. To effect such delivery of Restricted Shares, the Recipient
hereby authorizes the Company to take any actions necessary or appropriate to cancel any
certificate(s) representing such Restricted Shares and transfer ownership of such Restricted Shares
to the Company; and if the Company or its transfer agent requires an executed stock power or
similar confirmatory instrument in connection with such cancellation and transfer, the Recipient
shall promptly execute and deliver the same to the Company.

     9.    Miscellaneous.

             (a) No Right to Continued Employment. The Recipient acknowledges and agrees that,
notwithstanding the fact that the vesting of the Restricted Shares is contingent upon his or her
continued employment by the Company, this Agreement does not constitute an express or implied
promise of continued employment or confer upon the Recipient any rights with respect to continued
employment by the Company.

             (b) Governing Law. This Agreement shall be construed, interpreted and enforced in
accordance with the internal laws of the Commonwealth of Massachusetts without regard to any
applicable conflicts of laws provisions.

             (c) Recipient’s Acknowledgments. The Recipient acknowledges that he or she has read
this Agreement, has received and read the Plan, and understands the terms and conditions of this
Agreement and the Plan.

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