Document:

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                                                                    Exhibit 10.1

          Confidential Materials omitted and filed separately with the

         Securities and Exchange Commission. Asterisks denote omissions.

                              EXCLUSIVE LICENSE AND
                        RESEARCH COLLABORATION AGREEMENT

                                 BY AND BETWEEN

                                MERCK & CO., INC.

                                       AND

                           IDERA PHARMACEUTICALS, INC.

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                                TABLE OF CONTENTS

1. DEFINITIONS.............................................................    1

2. RESEARCH PROGRAM........................................................   11

      2.1   General........................................................   11

      2.2   Conduct of Research............................................   11

      2.3   Use of Research Funding; FTE Commitments.......................   11

      2.4   Principal Scientists...........................................   12

      2.5   Joint Research Committee.......................................   12

      2.6   Exchange of Information........................................   13

      2.7   Records and Reports............................................   13

      2.8   Disclosure, Evaluation and Selection of Collaboration
               Compounds...................................................   14

      2.9   Ownership of Materials, Information and Inventions.............   15

      2.10  Research Program Term..........................................   16

      2.11  Merck Materials................................................   16

      2.12  Exclusive Efforts..............................................   16

      2.13  Use of Human Materials.........................................   16

3. LICENSES; DEVELOPMENT AND COMMERCIALIZATION.............................   17

      3.1   License Grants to Merck........................................   17

      3.2   License Grants to Idera........................................   18

      3.3   No Implied Licenses............................................   18

      3.4   Development and Commercialization..............................   18

      3.5   Excused Performance............................................   18

      3.6   Exclusive Negotiation Period...................................   19

      3.7   Adverse Experience Reporting...................................   19

4.    CONFIDENTIALITY AND PUBLICATION......................................   20

      4.1   Nondisclosure Obligation.......................................   20

      4.2   Idera Know-How.................................................   21

      4.3   Publication....................................................   21

      4.4   Publicity/Use of Names.........................................   22

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5. PAYMENTS; ROYALTIES AND REPORTS.........................................   22

      5.1   License Fee....................................................   22

      5.2   Research Program FTE Funding; Additional Supply................   22

      5.3   Milestone Payments.............................................   23

      5.4   Royalties......................................................   25

      5.5   Reports; Payment of Royalty....................................   28

      5.6   Audits.........................................................   28

      5.7   Payment Exchange Rate..........................................   29

      5.8   Income Tax Withholding.........................................   29

6. REPRESENTATIONS AND WARRANTIES; COVENANTS...............................   29

      6.1   Representations and Warranties of Idera........................   29

      6.2   Representations and Warranties of Merck........................   30

      6.3   Covenants of Idera.............................................   30

7. PATENT PROVISIONS.......................................................   30

      7.1   Filing, Prosecution and Maintenance of Patents.................   30

      7.2   Option of Merck to Prosecute and Maintain Patents..............   31

      7.3   Interference, Opposition, Reexamination and Reissue............   32

      7.4   Enforcement and Defense........................................   32

      7.5   Cooperation; Patent Term Extension and Restoration.............   34

8. TERM AND TERMINATION....................................................   34

      8.1   Term and Expiration............................................   34

      8.2   Termination by Merck...........................................   34

      8.3   Termination for Cause..........................................   35

      8.4   Effect of Expiration or Termination; Survival..................   37

9. INDEMNIFICATION.........................................................   37

      9.1   Indemnification by Merck.......................................   37

      9.2   Indemnification by Idera.......................................   37

      9.3   Claims for Indemnification.....................................   37

      9.4   Limitation of Liability........................................   38

10.MISCELLANEOUS...........................................................   38

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      10.1  Force Majeure..................................................   38

      10.2  Assignment/ Change of Control..................................   38

      10.3  Severability...................................................   39

      10.4  Notices........................................................   40

      10.5  Applicable Law.................................................   40

      10.6  Dispute Resolution.............................................   40

      10.7  Entire Agreement; Amendments...................................   41

      10.8  Affiliates.....................................................   42

      10.9  Headings.......................................................   42

      10.10 Independent Contractors........................................   42

      10.11 Waiver.........................................................   42

      10.12 Cumulative Remedies............................................   42

      10.13 Waiver of Rule of Construction.................................   42

      10.14 Counterparts...................................................   42

                                    SCHEDULES

SCHEDULE 1.18     EVALUATION CRITERIA....................................      i

SCHEDULE 1.25     IDERA BACKGROUND PATENT RIGHTS.........................     ii

SCHEDULE 1.29     IDERA MATERIALS........................................     ix

SCHEDULE 1.50     MERCK MATERIALS........................................      x

SCHEDULE 1.73     SELECTION CRITERIA.....................................     xi

SCHEDULE 2.1      RESEARCH PROGRAM.......................................    xii

SCHEDULE 2.3.2    DEPLOYMENT OF FTEs.....................................    xvi

SCHEDULE 2.12     IDERA OBLIGATIONS UNDER THE IMMUNE RESPONSE CORPORATION
                     AGREEMENT...........................................   xvii

SCHEDULE 4.4      FORM OF PRESS RELEASE..................................  xviii

SCHEDULE 5.4.4    ROYALTY REDUCTION......................................   xxii

SCHEDULE 6.1(d)   SCHEDULE OF EXCEPTIONS.................................  xxiii

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                                                                  EXECUTION COPY

             EXCLUSIVE LICENSE AND RESEARCH COLLABORATION AGREEMENT

     THIS AGREEMENT (this "Agreement"), effective as of December 8, 2006 (the
"Effective Date"), by and between Merck & Co., Inc., a corporation organized and
existing under the laws of New Jersey ("Merck"), and Idera Pharmaceuticals,
Inc., a corporation organized and existing under the laws of Delaware ("Idera").

                                    RECITALS:

     WHEREAS, Idera has expertise and possesses Idera Technology (as hereinafter
defined) relating to certain Toll-like Receptor agonists;

     WHEREAS, Merck has expertise and possesses Merck Technology (as hereinafter
defined) relating to the research, development, manufacturing and marketing of
Vaccines and other related biological products;

     WHEREAS, Merck and Idera desire to enter into a research collaboration to
develop Collaboration Compounds (as hereinafter defined) for use in Merck's
Vaccines upon the terms and conditions set forth herein;

     WHEREAS, Merck desires to obtain a license upon the terms and conditions
set forth herein and Idera desires to grant such a license; and

     WHEREAS, Merck and Idera have entered into a Stock Purchase Agreement and
Registration Rights Agreement as of the Effective Date;

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:

1.   DEFINITIONS

     Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:

1.1  "ACT" shall mean, as applicable, the United States Federal Food, Drug and
     Cosmetic Act, 21 U.S.C. Sections 301 et seq., and/or the Public Health
     Service Act, 42 U.S.C. Sections 262 et seq., as such may be amended from
     time to time.

1.2  "ADJUVANT" shall mean a compound, complex or other agent that enhances the
     immune response to an Antigen or Antigens and is intended to act as an
     agonist to TLR 7, TLR 8, TLR 7/8 and/or TLR 9.

1.3  "AFFILIATE" shall mean, with respect to a Person, any corporation or
     business entity of which more than fifty percent (50%) of the securities or
     other ownership interests representing the equity, the voting stock or
     general partnership interest are owned, controlled or held, directly or
     indirectly, by such Person.

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1.4  "ALZHEIMER'S DISEASE FIELD" shall mean the use of Evaluation Collaboration
     Compound(s) and Selected Collaboration Compound(s) as an Adjuvant contained
     in or administered in conjunction with any prophylactic and/or therapeutic
     Vaccine(s) for the prevention and/or treatment of Alzheimer's disease.

1.5  "ANTIGEN" shall mean any ingredient that either alone or as part of a
     Vaccine elicits a specific immune response to itself and/or to a pathogenic
     micro-organism or a human self molecule, including, without limitation,
     live attenuated or modified micro-organisms, whole killed micro-organisms,
     proteins, polysaccharides, polysaccharide conjugates, peptides, recombinant
     proteins, glycolipids and fragments thereof.

1.6  "CALENDAR QUARTER" shall mean the respective periods of three (3)
     consecutive calendar months ending on March 31, June 30, September 30 and
     December 31.

1.7  "CALENDAR YEAR" shall mean each successive period of twelve (12) months
     commencing on January 1 and ending on December 31.

1.8  "CHANGE OF CONTROL" shall mean with respect to a Party: (i) the sale of all
     or substantially all of such Party's assets or business relating to this
     Agreement; (ii) the closing of a merger, reorganization or consolidation
     involving such Party in which the voting securities of such Party
     outstanding immediately prior thereto cease to represent at least fifty
     percent (50%) of the combined voting power of the surviving entity
     immediately after such merger, reorganization or consolidation; or (iii) a
     person or entity, or group of persons or entities, acting in concert to
     acquire more than [**] percent ([**]%) of the voting equity securities or
     management control of such Party.

1.9  "CLINICAL TRIAL" shall mean a Phase I Clinical Trial, Phase II Clinical
     Trial or Phase III Clinical Trial, as applicable.

1.10 "COLLABORATION COMPOUNDS" shall mean (a) any IMO provided by Idera to Merck
     under this Agreement, (b) any other IMO created, modified or developed by
     the Parties pursuant to the Research Program and (c) any improvement or
     enhancement to the IMOs described in (a) or (b).

1.11 "COMPETING PHARMA CHANGE OF CONTROL" means a Change of Control involving a
     Person or group of Persons acting in concert (a) with annual worldwide
     sales of human pharmaceutical, vaccine and/or biological products greater
     than [**] Dollars ($[**]) or (b) having a market capitalization greater
     than [**] U.S. Dollars ($[**]) or (c) having an active clinical development
     or commercialization program for any prophylactic and/or therapeutic
     Vaccine for the prevention and/or treatment of Alzheimer's Disease, any
     type of cancer and/or any disease within the Infectious Disease Field.

1.12 "COMBINATION PRODUCT" shall mean, on a country by country basis, with
     respect to a given Product, a Product that contains one or more Antigens in
     addition to the Antigen(s) contained in the given Product at the time it
     achieves First Commercial Sale in such country. For example, if a given
     Product in a country, at the time it achieves First Commercial Sale
     contains Antigens A and B, a Combination Product with respect to such given
     Product in such country would be a Product that contains at least one other
     Antigen, in addition to Antigens A and B, and achieves First Commercial
     Sale in such country after the given Product has achieved First Commercial
     Sale.

1.13 "COMPETING PRODUCT" shall mean, with respect to a Product in a country, a
     Vaccine product that (a) contains a compound targeting the same TLR as the
     Adjuvant contained in the Product and

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     has received Marketing Authorization for the same Indication in a Field for
     which the Product has received Marketing Authorization in such country and
     (b) has safety and efficacy equivalent or materially similar to the Product
     and has or attains on a Calendar Year basis a market share of [**] percent
     ([**]%) or more in the country as measured by prescriptions or other
     similar information.

1.14 "CONTROL," "CONTROLS" OR "CONTROLLED BY" shall mean with respect to any
     item or right under Patent Rights, know-how or other intellectual property
     right or technology, the possession of (whether by ownership or license,
     other than pursuant to this Agreement), or the ability of a Party to grant
     access to, or a license or sublicense of, such item or right as provided
     for herein without violating the terms of any agreement or other
     arrangement with any Third Party existing at the time such Party would be
     required hereunder to grant the other Party such access or license or
     sublicense.

1.15 "DATA PROTECTION" shall mean the exclusive right to reference data filed in
     a Marketing Authorization with a Regulatory Authority in such country for
     Selected Collaboration Compound or Product under a pharmaceutical law,
     regulation or any other governmental decree or order of such country within
     the Territory. For the purposes of clarity, such exclusive right to
     reference data shall exclude any party other than Merck or its Related
     Parties from referencing such data in such party's own regulatory filings
     for authorization to register or sell a generic product in such country
     filed with the Regulatory Authority.

1.16 "EMEA" shall mean the European Medicines Agency.

1.17 "EVALUATION COLLABORATION COMPOUND" shall have the meaning given such term
     in Section 2.8.1.

1.18 "EVALUATION CRITERIA" shall mean the criteria set forth in Schedule 1.18
     attached hereto.

1.19 "FIELDS" shall mean the Oncology Field, the Infectious Disease Field and
     the Alzheimer's Disease Field, collectively.

1.20 "FILING" of an IND or NDA shall mean the acceptance by a Regulatory
     Authority of an IND or NDA for filing, if such a legally-recognized concept
     applies to filings in the applicable jurisdiction or, if such concept does
     not apply, the filing of the IND or NDA.

1.21 "FIRST COMMERCIAL SALE" shall mean, with respect to any Product, the first
     sale for end use or consumption of such Product in a country, excluding,
     however, any sale or other distribution for use in a Clinical Trial.

1.22 "FULL TIME EQUIVALENT" or "FTE" shall mean the equivalent of a full-time
     scientist's work time over a twelve (12) month period (including normal
     vacations, sick days and holidays), provided that a single person cannot
     account for more than one FTE over the course of any Calendar Year. For
     example, a single person cannot equal one FTE plus a portion of an
     additional FTE resulting in more than one FTE (i.e. 1.5 FTE's) in a given
     Calendar Year, regardless of the aggregate number of hours worked by such
     person during that Calendar Year. The portion of an FTE year devoted by a
     scientist to the Research Program shall be determined by dividing the
     number of full days during any twelve-month period devoted by such employee
     to the Research Program by the total number of working days during such
     twelve-month period.

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1.23 "FTE RATE" shall mean the amount Merck will pay Idera over a consecutive
     twelve (12) month period during the Research Program Term to support one
     (1) Idera FTE dedicated to the Research Program. The FTE Rate shall be [**]
     dollars (USD $[**]) per FTE. The FTE Rate shall include all personnel,
     equipment, reagents and all other expenses including support staff and
     overhead for or associated with an FTE.

1.24 "GLP" or "GOOD LABORATORY PRACTICE" shall mean the applicable then-current
     standards for laboratory activities for pharmaceuticals or biologicals, as
     set forth in the Act and any regulations or guidance documents promulgated
     thereunder, as amended from time to time, together with any similar
     standards of good laboratory practice as are required by any Regulatory
     Authority in the country in which the laboratory activities are conducted.

1.25 "IDERA BACKGROUND PATENT RIGHTS" shall mean any and all Patent Rights
     Controlled by Idera on the Effective Date that claim or cover (a) the
     composition of matter or method of use of an Evaluation Collaboration
     Compound or a Selected Collaboration Compound or (b) Idera Materials, and
     any divisionals, continuations, continuations-in-part, reissues, renewals,
     substitutions, registrations, re-examinations, revalidations, supplementary
     protection certificates, pediatric exclusivity periods, any other patent
     term extensions and exclusivity periods and the like of any such Patent
     Rights, and any and all U.S. and foreign equivalents of the foregoing. As
     of the Effective Date, the Idera Background Patent Rights include, without
     limitation, the Patent Rights set forth on Schedule 1.25.

1.26 "IDERA FIELD" shall mean the use of Non-Selected Collaboration Compounds
     for any and all purposes outside of the Fields.

1.27 "IDERA INFORMATION AND INVENTIONS" shall mean (a) all information and
     inventions, including, but not limited to, all discoveries, findings,
     improvements, processes, methods, protocols, formulas, data, composition of
     matter, article of manufacture, know-how and trade secrets, that is
     conceived and/or reduced to practice as a result of the Research Program,
     whether or not patentable, that is developed or invented solely by
     employees of Idera or its Affiliates or other Persons acting on their
     behalf (other than Merck, its Affiliates or other Persons acting on their
     behalf) and (b) Idera Oligonucleotide Inventions but shall exclude Merck
     Materials Inventions.

1.28 "IDERA KNOW-HOW" shall mean all information and materials, including but
     not limited to discoveries, improvements, processes, methods, protocols,
     formulas, data, inventions (including, without limitation, Idera
     Information and Inventions and Idera's rights in Joint Information and
     Inventions), know-how and trade secrets, patentable or otherwise, which
     during the term of this Agreement (i) are in the Control of Idera, (ii) are
     not generally known and (iii) are necessary or useful to Merck with respect
     to an Evaluation Collaboration Compound or Selected Collaboration Compound
     in the Fields, including without limitation, in connection with the
     Research Program and the research, development, manufacture, marketing, use
     or sale of Product in the Territory.

1.29 "IDERA MATERIALS" shall mean those IMOs to be provided by Idera as set
     forth on Schedule 1.29, which may be amended from time to time.

1.30 "IDERA OLIGONUCLEOTIDE INVENTIONS" shall mean all information and
     inventions, including, but not limited to, all discoveries, findings,
     improvements, processes, methods, protocols, formulas, data, composition of
     matter, article of manufacture, know-how and trade secrets, that is
     conceived and/or reduced to practice as a result of the Research Program,
     whether or not patentable, that are solely related to the modification of,
     derivatives of, manufacture or use of immunomodulatory oligonucleotide
     structures which do not include Merck Technology, regardless of whether the

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     invention is conceived and/or reduced to practice (a) solely by employees
     of Idera or its Affiliates or other Persons acting on their behalf (other
     than Merck, its Affiliates or a Third Party acting on their behalf); (b)
     solely by employees of Merck or its Affiliates or other Persons acting on
     their behalf (other than Idera, its Affiliates or a Third Party acting on
     their behalf); or (c) jointly by employee(s) of Merck, its Affiliate or a
     Third Party acting on behalf of Merck or its Affiliate within the scope of
     the Research Program, on the one hand, and employee(s) of Idera, its
     Affiliate or a Third Party acting on behalf of Idera or its Affiliate
     within the scope of the Research Program, on the other hand.

1.31 "IDERA PATENT RIGHTS" shall mean any Idera Background Patent Rights and
     Idera Program Patent Rights.

1.32 "IDERA PROGRAM PATENT RIGHTS" shall mean any and all Patent Rights other
     than Idera Background Patent Rights, that (a) during the term of this
     Agreement are Controlled by Idera and claim or cover (i) the composition of
     matter or method of use of an Evaluation Collaboration Compound or a
     Selected Collaboration Compound or (ii) Idera Materials, Idera Information
     and Inventions or Joint Information and Inventions; or (b) claim or cover
     Idera Oligonucleotide Inventions. For avoidance of doubt, Idera Program
     Patent Rights shall not include any Patent Rights that claim or cover Merck
     Materials, including, without limitation, any modifications, derivatives,
     or methods of manufacture thereof.

1.33 "IDERA TECHNOLOGY" shall mean Idera Patent Rights, Idera Know-How, Idera
     Materials and Idera Information and Inventions.

1.34 "IMO" shall mean any and all immune modulatory oligonucleotides, the
     primary purpose of which is to induce or modulate an immune response and
     that are targeted to and intended to act as agonists of TLR 7, TLR 8, TLR
     7/8 or TLR 9, as the case may be.

1.35 "IND" shall mean an Investigational New Drug application, Clinical Study
     Application, Clinical Trial Exemption, or similar application or submission
     for approval to conduct human clinical investigations filed with or
     submitted to a Regulatory Authority in conformance with the requirements of
     such Regulatory Authority.

1.36 "INDICATION" shall mean a separate and distinct disease or medical
     condition in humans which a Product is intended to treat and/or prevent and
     for which the Product has received Marketing Authorization.

1.37 "INFECTIOUS DISEASE FIELD" shall mean the use of Evaluation Collaboration
     Compound(s) and Selected Collaboration Compound(s) as an Adjuvant contained
     in or administered in conjunction with any prophylactic and/or therapeutic
     Vaccine(s) for the prevention and/or treatment of any viral and/or
     microbial infectious disease, provided that the following diseases shall be
     excluded: (i) [**]; (ii) [**]; (iii) [**]; and (iv) [**].

1.38 "INFORMATION" shall mean any and all information and data, including
     without limitation all Merck Know-How, Idera Know-How, and all other
     scientific, pre-clinical, clinical, regulatory, manufacturing, marketing,
     financial and commercial information or data, whether communicated in
     writing or orally or by any other method, which is provided by one Party to
     the other Party in connection with this Agreement.

1.39 "JOINT INFORMATION AND INVENTIONS" shall mean all information and
     inventions, including, but not limited to, all discoveries, findings,
     improvements, processes, methods, protocols, formulas,

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     data, composition of matter, article of manufacture, know-how and trade
     secrets combining Merck Technology and Idera Technology, that is conceived
     and/or reduced to practice as a result of the Research Program, whether or
     not patentable, and is conceived and/or reduced to practice jointly by
     employee(s) of Merck, its Affiliate or a Third Party acting on behalf of
     Merck or its Affiliate within the scope of the Research Program, on the one
     hand, and employee(s) of Idera, its Affiliate or a Third Party acting on
     behalf of Idera or its Affiliate within the scope of the Research Program,
     on the other hand. Idera Oligonucleotide Inventions and Merck Materials
     Inventions shall be excluded from Joint Information and Inventions.

1.40 "JOINT PATENT RIGHTS" shall mean any and all Patent Rights which claim
     Joint Information and Inventions. For avoidance of doubt, Joint Patent
     Rights shall exclude Idera Patent Rights and Merck Patent Rights.

1.41 "JOINT PROGRAM TECHNOLOGY" shall mean Joint Patent Rights and Joint
     Information and Inventions.

1.42 "JRC" shall mean the joint research committee established to facilitate the
     Research Program, as more fully described in Section 2.5.1.

1.43 "KNOW-HOW ROYALTY" shall have the meaning given such term in Section 5.4.1
     hereof.

1.44 "MAJOR EU MARKET" shall mean France, Germany, Italy, Spain or the United
     Kingdom.

1.45 "MARKETING AUTHORIZATION" shall mean all approvals from the relevant
     Regulatory Authority necessary to market and sell a Product in any country
     (including without limitation, all applicable pricing and governmental
     reimbursement approvals even if not legally required to sell Product in a
     country).

1.46 "MAJOR INDICATION" shall mean an Indication for the treatment of the
     following solid tumor cancers: non-small cell lung cancer, prostate cancer,
     breast cancer and colo-rectal cancer.

1.47 "MERCK ADJUVANT" shall mean a compound, complex or other agent that
     enhances the immune response to an Antigen or Antigens that is Controlled
     by Merck or its Affiliates other than pursuant to this Agreement.

1.48 "MERCK INFORMATION AND INVENTIONS" shall mean (a) all information and
     inventions, including, but not limited to, all discoveries, findings,
     improvements, processes, methods, protocols, formulas, data, composition of
     matter, article of manufacture, know-how and trade secrets, that is
     conceived and/or reduced to practice as a result of the Research Program,
     whether or not patentable, that is developed or invented solely by
     employees of Merck or its Affiliates or other Persons acting on their
     behalf (other than Idera, its Affiliates or other Persons acting on their
     behalf) and (b) Merck Materials Inventions but shall exclude Idera
     Oligonucleotide Inventions.

1.49 "MERCK KNOW-HOW" shall mean any information and materials, including but
     not limited to discoveries, improvements, processes, methods, protocols,
     formulas, data, inventions (including without limitation Merck's
     Information and Inventions and Merck's rights in Joint Information and
     Inventions), know-how and trade secrets, patentable or otherwise, which
     during the term of this Agreement, (i) are in the Control of Merck or its
     Affiliates, (ii) are not generally known and (iii) are necessary to Idera
     in the performance of its obligations under the Research Program.

1.50 "MERCK MATERIALS" shall mean [**] and other materials to be provided by
     Merck as set forth on

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     Schedule 1.50, which may be amended from time to time.

1.51 "MERCK MATERIALS INVENTIONS" shall mean all information and inventions,
     including, but not limited to, all discoveries, findings, improvements,
     processes, methods, protocols, formulas, data, composition of matter,
     article of manufacture, know-how and trade secrets, that is conceived
     and/or reduced to practice as a result of the Research Program, whether or
     not patentable, that are solely related to the modification of, derivatives
     of, manufacture or use of Merck Materials and which do not include Idera
     Technology, regardless of whether the inventions are conceived and/or
     reduced to practice (a) solely by employees of Idera or its Affiliates or
     other Persons acting on their behalf (other than Merck, its Affiliates or a
     Third Party acting on their behalf); (b) solely by employees of Merck or
     its Affiliates or other Persons acting on their behalf (other than Idera,
     its Affiliates or a Third Party acting on their behalf); or (c) jointly by
     employee(s) of Merck, its Affiliate or a Third Party acting on behalf of
     Merck or its Affiliate within the scope of the Research Program, on the one
     hand, and employee(s) of Idera, its Affiliate or a Third Party acting on
     behalf of Idera or its Affiliate within the scope of the Research Program,
     on the other hand, but shall exclude Idera Oligonucleotide Inventions.

1.52 "MERCK PATENT RIGHTS" shall mean (a) Patent Rights Controlled by Merck or
     its Affiliates that are necessary to Idera in the performance of Idera's
     obligations under the Research Program and (b) Patent Rights that claim or
     cover Merck Materials Inventions.

1.53 "MERCK TECHNOLOGY" shall mean Merck Patent Rights, Merck Know-How, Merck
     Materials and Merck Information and Inventions.

1.54 "NDA" shall mean a New Drug Application, Biologics License Application,
     Worldwide Marketing Application, Marketing Authorization Application,
     filing pursuant to Section 510(k) of the United States Federal Food, Drug
     and Cosmetics Act, or similar application or submission for Marketing
     Authorization of a Product filed with a Regulatory Authority to obtain
     marketing approval for a biological, pharmaceutical or diagnostic product
     in that country or in that group of countries.

1.55 "NET SALES" shall mean the gross invoice price of Product sold by Merck or
     its Related Parties to the first Third Party after deducting, if not
     previously deducted, from the amount invoiced or received:

     (A)  trade and quantity discounts other than early payment cash discounts;

     (B)  returns, rebates, chargebacks and other allowances;

     (C)  retroactive price reductions that are actually allowed or granted; and

     (D)  a fixed amount equal to [**] percent ([**]%) of the amount invoiced to
          cover bad debt, early payment cash discounts, transportation and
          insurance, and custom duties.

     For the avoidance of doubt, the gross invoice price of Product does not
     include value added taxes and other similar taxes on Product.

     With respect to sales of Combination Products, Net Sales shall be
     calculated using the following formula:

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     [**] * Net Sales of         =  Net Sales for the purpose of calculating
            Combination Product     royalties for Combination Product

     Where:

     (I)  "A" equals the invoice price of Product containing the same Antigen(s)
          sold without containing one or more other Antigens;

     (II) "B" equals the invoice price of the Combination Product; and

     (III) all invoice prices of the Product and the Combination Product shall
          be calculated as the average invoice price during the applicable
          accounting period for which the Net Sales are being calculated. The
          deductions set forth in paragraphs (a) through (d) above will be
          applied in calculating Net Sales for a Combination Product. If,
          however, the Product is sold only as a Combination Product, then the
          Parties shall negotiate in good faith an appropriate calculation of
          Net Sales that is subject to the royalty payment under this Agreement
          so as to fairly allocate the relative value of the active ingredients
          in the Combination Product.

     With respect to a given Product (containing a given Selected Collaboration
     Compound) to achieve First Commercial Sale in a country, such Product shall
     not be deemed a Combination Product in such country, in which case the
     above Combination Product Net Sales formula shall not apply to such given
     Product, but only to subsequent Combination Products.

1.56 "NON-SELECTED COLLABORATION COMPOUND" shall have the meaning given such
     term in Section 2.8.4.

1.57 "NOVARTIS AGREEMENTS" shall mean the Research Collaboration and Option
     Agreement, dated May 31, 2005, by and between Idera (formerly known as
     Hybridon, Inc.) and Novartis International Pharmaceutical Ltd. and the
     License, Development and Commercialization Agreement, dated May 31, 2005,
     by and between Idera (formerly known as Hybridon, Inc.) and Novartis
     International Pharmaceutical Ltd., as such agreements may be amended from
     time to time.

1.58 "ONCOLOGY FIELD" shall mean the use of Evaluation Collaboration Compound(s)
     and Selected Collaboration Compound(s) as an Adjuvant contained in or
     administered in conjunction with any prophylactic and/or therapeutic
     Vaccine(s) for the prevention and/or treatment of any type of cancer. For
     avoidance of doubt, Vaccines for the prevention and/or treatment of human
     papilloma virus and other viruses that are considered precursors to cancer
     are included in the Oncology Field.

1.59 "PARTY" shall mean Merck and Idera, individually, and "PARTIES" shall mean
     Merck and Idera, collectively.

1.60 "PATENT RIGHTS" shall mean any and all issued patents and patent
     applications in the Territory (which for the purposes of this Agreement
     shall be deemed to include certificates of invention and applications for
     certificates of invention) and any divisionals, continuations,
     continuations-in-part, reissues, renewals, substitutions, registrations,
     re-examinations, revalidations, supplementary protection certificates,
     pediatric exclusivity periods, any other patent term extensions and
     exclusivity periods and the like of any such patents and patent
     applications, and any and all U.S.

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     and foreign equivalents of the foregoing.

1.61 "PERSON" shall mean any individual, corporation, joint venture, limited
     liability company, partnership, limited partnership, limited liability
     partnership, trust or any other private, public or governmental entity.

1.62 "PHASE I CLINICAL TRIAL" shall mean a human clinical trial in the United
     States that would satisfy the requirements of 21 CFR 312.21(a) or an
     equivalent human clinical trial in any country outside the United States
     that would satisfy the requirements applicable to such human clinical trial
     in such country.

1.63 "PHASE II CLINICAL TRIAL" shall mean a human clinical trial in the United
     States that would satisfy the requirements of 21 CFR 312.21(b) or an
     equivalent human clinical trial in any country outside the United States
     that would satisfy the requirements applicable to such human clinical trial
     in such country.

1.64 "PHASE III CLINICAL TRIAL" shall mean a human clinical trial in the United
     States that would satisfy the requirements of 21 CFR 312.21(c) or an
     equivalent human clinical trial in any country outside the United States
     that would satisfy the requirements applicable to such human clinical trail
     in such country.

1.65 "PRODUCT(S)" shall mean any prophylactic or therapeutic Vaccine(s) that
     contains Selected Collaboration Compound or is administered in conjunction
     with Selected Collaboration Compound, for any and all uses in the Fields,
     including without limitation any Combination Product, (i) in final form for
     sale by prescription, over-the-counter or any other method, or (ii) for
     administration in a Clinical Trial.

1.66 "REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
     Agreement, dated as of the Effective Date, by and between Idera and Merck.

1.67 "REGULATORY AUTHORITY" shall mean any applicable government regulatory
     authority involved in granting approvals for the manufacturing, marketing,
     reimbursement and/or pricing of a Product in the Territory, including, in
     the United States, the United States Food and Drug Administration and any
     successor governmental authority having substantially the same function.

1.68 "REGULATORY-BASED EXCLUSIVITY" shall mean, with respect to a Product in a
     country in the Territory, that Merck and/or any of the Related Parties has
     been granted the exclusive legal right by a Regulatory Authority (or is
     otherwise entitled to the exclusive legal right by operation of law) in
     such country to market and sell the Product in such country, including,
     without limitation, through orphan drug exclusivity or Data Protection.

1.69 "RELATED PARTY" shall mean each of Merck, its Affiliates, and their
     respective sublicensees (which term does not include distributors), as
     applicable.

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1.70 "RESEARCH PROGRAM" shall mean the research activities undertaken by the
     Parties hereto as set forth in Article 2 and Schedule 2.1.

1.71 "RESEARCH PROGRAM TERM" shall have the meaning given such term in Section
     2.10. All references to Research Program Term shall be deemed to include
     any Research Program Term extension provided pursuant to Section 2.10.

1.72 "SELECTED COLLABORATION COMPOUND" shall have the meaning given such term in
     Section 2.8.3.

1.73 "SELECTION CRITERIA" shall mean those criteria set forth on Schedule 1.73
     attached hereto.

1.74 "SENSITIVE INFORMATION" shall have the meaning given such term in Section
     10.2.3(d).

1.75 "STARTING MATERIAL" shall have the meaning given such term in Section
     2.8.1.

1.76 "STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement, dated
     as of the Effective Date, by and between Idera and Merck.

1.77 "TERRITORY" shall mean all of the countries in the world, and their
     territories and possessions.

1.78 "THE IMMUNE RESPONSE CORPORATION AGREEMENT" shall mean the Collaboration
     and License Agreement, dated October 8, 2003, by and between Idera
     (formerly known as Hybridon, Inc.) and The Immune Response Corporation, as
     such agreement may be amended from time to time.

1.79 "THIRD PARTY" shall mean any Person other than Merck and its Related
     Parties, and Idera and its Affiliates.

1.80 "TLR" shall mean Toll-like Receptor.

1.81 "TYPE I PRODUCT" shall mean a Product(s) containing or administered in
     conjunction with (i) a Selected Collaboration Compound targeting and which
     is intended to act as an agonist of TLR 9; or (ii) a Selected Collaboration
     Compound targeting and which is intended to act as an agonist of TLR 9 and
     a Selected Collaboration Compound targeting TLR 7 and/or TLR 8.

1.82 "TYPE II PRODUCT" shall mean a Product(s) containing or administered in
     conjunction with (i) a Selected Collaboration Compound targeting and which
     is intended to act as an agonist of TLR 7; (ii) a Selected Collaboration
     Compound targeting and which is intended to act as an agonist of TLR 8; or
     (iii) a Selected Collaboration Compound targeting and which is intended to
     act as an agonist of both TLR 7 and TLR 8.

1.83 "VACCINE" shall mean any preparation that elicits a cellular mediated
     and/or humoral immune response in humans provided that in each case such a
     preparation contains an Antigen or Antigens.

1.84 "VALID PATENT CLAIM" shall mean a claim of an issued and unexpired patent
     included within the Idera Patent Rights or Joint Patent Rights which claims
     a Selected Collaboration Compound as a composition of matter or method of
     use, which claim has not been revoked or held unenforceable or invalid by a
     decision of a court or other governmental agency of competent jurisdiction
     (which decision is not appealable or has not been appealed within the time
     allowed for appeal), and which claim has not been disclaimed, denied or
     admitted to be invalid or unenforceable through reissue, re-examination or
     disclaimer or otherwise.

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2.   RESEARCH PROGRAM

2.1  GENERAL

     Idera and Merck shall engage in the Research Program upon the terms and
     conditions set forth in this Agreement. The activities to be undertaken in
     the course of the Research Program are set forth in Schedule 2.1, which may
     be amended from time to time upon mutual written agreement of the JRC in
     accordance with this Article 2. The objectives of the Research Program are
     (a) to discover and synthesize Evaluation Collaboration Compounds that are
     intended to act as agonists of TLR 7, TLR 8 or both TLR 7 and TLR 8, from
     which Merck will identify Selected Collaboration Compounds for further
     development by Merck as Type II Products in the Fields and (b) to evaluate
     Evaluation Collaboration Compounds that are intended to act as agonists of
     TLR 9, from which Merck will identify Selected Collaboration Compounds for
     further development by Merck as Type I Products in the Fields.

2.2  CONDUCT OF RESEARCH

     Idera and Merck each shall proceed diligently with the work set out in the
     Research Program by using their respective good faith efforts to allocate
     sufficient time, effort, equipment and facilities to the Research Program
     and to use personnel with sufficient skills and experience as are required
     to accomplish the Research Program in accordance with the terms of this
     Agreement and Schedule 2.1.

     Merck shall be entitled to utilize the services of its Affiliates and Third
     Parties to perform its Research Program activities. Idera shall be entitled
     to utilize the services of Third Parties to perform its Research Program
     activities only upon Merck's prior written consent or as specifically set
     forth in Schedule 2.1, provided that Merck shall not unreasonably withhold,
     delay or condition its consent to Idera's use of Third Party service
     providers. Notwithstanding any such consent, each Party shall remain at all
     times fully liable for its respective responsibilities under the Research
     Program.

2.3  USE OF RESEARCH FUNDING; FTE COMMITMENTS

     2.3.1 Idera shall apply the FTE funding it receives from Merck under this
          Agreement pursuant to Section 5.2 solely to carry out its Research
          Program activities in accordance with Schedule 2.1 and the terms and
          conditions of this Agreement.

     2.3.2 During the Research Program Term, Idera shall provide the number of
          FTEs that are approved by the Joint Research Committee pursuant to
          Section 2.5.2 to work on the Research Program. Such FTEs shall be
          funded by Merck in accordance with Section 5.2. The number of FTEs to
          be dedicated by Idera to the Research Program during the first two
          years is set forth in Schedule 2.3.2. If the Research Program Term is
          extended by Merck as provided in Section 2.10 or is otherwise extended
          by mutual agreement of the Parties, the Parties shall discuss in good
          faith the level of FTE staffing during the extended Research Program
          Term. During the Research Program Term, the Joint Research Committee
          shall provide Idera with at least 90 days prior written notice of any
          required increase or decrease in the number of such FTEs, provided
          that the Joint Research Committee cannot increase the number of FTEs
          such that the total number of FTEs exceeds [**].

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     2.3.3 Idera shall require (i) by written agreement that all FTEs and all
          other Idera personnel, employees, and agents involved in the Research
          Program have entered into confidentiality and invention assignment
          agreements that are consistent with the provisions of this Agreement
          and shall be obligated to assign any rights they may have in any Idera
          Information and Inventions and Joint Information and Inventions made
          during such work to Idera consistent with any rights granted to Merck
          in any such Information and Inventions under this Agreement; and (ii)
          that each FTE who works on the Research Program is qualified by
          appropriate experience and qualifications to perform the Research
          Program work assigned to such FTE in a capable and professional
          manner.

2.4  PRINCIPAL SCIENTISTS

     The principal scientists for the Research Program are [**] for Idera and
     [**] for Merck. The Research Program and all work assignments to be
     performed by Idera and Merck shall be carried out under the direction and
     supervision of the principal scientists noted above. During the first year
     of the Research Program Term, [**] shall serve as the principal scientists
     for Idera.

     After the first year of the Research Program Term, each Party shall notify
     the other Party as soon as practicable upon the changing of its principal
     scientist and shall require that its principal scientist be qualified by
     the appropriate experience and qualifications to direct and supervise its
     performance of the Research Program.

2.5  JOINT RESEARCH COMMITTEE

     The Parties hereby establish a committee to facilitate the Research Program
     as follows:

     2.5.1 Composition of the Joint Research Committee. The Research Program
          shall be conducted under the direction of a joint research committee
          (the "JRC") comprised of three (3) representatives of Merck and three
          (3) representatives of Idera. Each Party shall name its JRC
          representatives and notify the other Party of its JRC representatives
          promptly following the Effective Date. Each Party may change its
          representatives to the JRC from time to time, in its sole discretion,
          effective upon notice to the other Party of such change. These
          representatives shall have appropriate technical credentials,
          experience and knowledge, and ongoing familiarity with the Research
          Program. Additional representatives or consultants may from time to
          time, by mutual consent of the Parties, be invited to attend JRC
          meetings, subject to such representatives' or consultants' written
          agreement to comply with the requirements of Section 4.1. The JRC
          shall be chaired by a representative of Merck. Each Party shall bear
          its own expenses related to the attendance at such meetings by its
          representatives.

     2.5.2 Scope of JRC Oversight. The JRC's oversight responsibilities shall be
          limited to the Research Program activities specified in Schedule 2.1
          and within such scope the JRC shall (a) confer regularly regarding the
          status of the Research Program, (b) review relevant data, consider and
          advise on any technical issues that arise, (c) consider issues of
          priority, (d) review and approve the efforts of the Parties in the
          conduct of the Research Program; (e) review and approve amendments to
          the Research Program as set forth in Schedule 2.1; (f) reallocate
          resources, including FTEs, within the Research Program; (g) subject to
          Section 2.3.2, designate the number of FTEs for each Calendar Quarter,
          (h) receive updates on the identity of any Third Party conducting
          Research Program work on behalf of either Party in accordance with
          Section 2.2 (which each Party shall provide to the JRC), (i) address
          such other matters relating to the activities of the Research Program
          as either Party may bring before the JRC; and (j) attempt to resolve
          any disputes within

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          the JRC on an informal basis. Notwithstanding anything to the contrary
          in the foregoing, the JRC shall not (i) have any supervisory or
          decision making authority beyond the Research Program activities
          specified in Schedule 2.1; (ii) without the consent of Idera, require
          Idera to commit its FTE resources beyond those set forth in Section
          2.3.2; or (iii) except for Schedule 2.1, modify or amend any terms of
          this Agreement.

     2.5.3 Decision-Making. Decisions of the JRC shall be made unanimously, with
          each Party having one vote. In the event that the JRC cannot or does
          not, after good faith efforts, reach agreement on an issue, the issue
          shall be elevated to a Vice President of MRL for Merck and the Chief
          Scientific Officer for Idera. If such executives cannot resolve the
          issue, it shall be further elevated to an Executive Vice President or
          Franchise Head of MRL for Merck and the Chief Executive Officer of
          Idera for Idera. If such executives cannot resolve the issue, the
          resolution and/or course of conduct shall be determined by Merck in
          good faith, taking Idera's reasonable interests into account.

     2.5.4 Meetings. The JRC shall meet in accordance with a schedule
          established by mutual written agreement of the Parties, but no less
          frequently than once per Calendar Quarter, with the location for such
          meetings alternating between Idera and Merck facilities (or such other
          location as may be determined by the JRC). Alternatively, the JRC may
          meet by means of teleconference, videoconference or other similar
          communications equipment.

2.6  EXCHANGE OF INFORMATION

     Upon execution of this Agreement, and on an ongoing basis during the
     Research Program Term, Idera shall promptly disclose to Merck in writing or
     in an electronic format all Idera Know-How not previously disclosed. Merck
     shall promptly disclose to Idera during the Research Program Term all Merck
     Know-How.

2.7  RECORDS AND REPORTS

     2.7.1 Records. Idera shall maintain records, in sufficient detail and in
          good scientific manner appropriate for patent and regulatory purposes,
          which shall fully and properly reflect all work done and results
          achieved in the performance of the Research Program by Idera.

     2.7.2 Copies and Inspection of Records. Merck shall have the right, during
          normal business hours and upon reasonable notice, to inspect and copy
          all such records of Idera referred to in Section 2.7.1. Merck shall
          maintain such records and the information disclosed therein in
          confidence in accordance with Section 4.1. Merck shall have the right
          to arrange for its employees and/or consultants involved in the
          activities contemplated hereunder to visit the offices and
          laboratories of Idera and any of its Third Party contractors as
          permitted under Section 2.2 during normal business hours and upon
          reasonable notice, and at reasonable intervals, to discuss in the
          presence of Idera's principal scientist the Research Program work and
          its results in detail with the technical personnel of Idera involved
          in the Research Program. Upon request, Idera shall provide copies of
          the records described in Section 2.7.1 above.

     2.7.3 Quarterly Reports. Within thirty (30) days following the end of each
          Calendar Quarter during the Research Program Term, Idera shall provide
          to Merck a written progress report in English which shall describe in
          sufficient detail the work performed to date by Idera so that Merck
          may evaluate Idera's progress in relation to the goals of the Research

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<PAGE>

          Program. Further, Idera shall promptly respond to reasonable requests
          by Merck for additional information regarding Idera's performance of
          Research Program activities.

2.8  DISCLOSURE, EVALUATION AND SELECTION OF COLLABORATION COMPOUNDS

     2.8.1 Disclosure of Evaluation Collaboration Compounds and Starting
          Material. Following the Effective Date and during the Research Program
          Term, Idera shall disclose to Merck in writing all Collaboration
          Compounds satisfying the Evaluation Criteria as set forth in Schedule
          1.18 ("EVALUATION COLLABORATION COMPOUNDS") in the manner and to the
          extent described below. In addition, Idera shall provide Merck with
          sufficient samples of such Evaluation Collaboration Compounds, along
          with their structures, results of characterization studies on the
          Evaluation Collaboration Compounds and such other information as may
          be required by Schedule 2.1.

          During the first [**] months of the Research Program Term, Idera shall
          provide Merck with a total of [**] Evaluation Collaboration Compounds
          targeting TLR 9 and a total of [**] Evaluation Collaboration Compounds
          targeting TLR 7, TLR 8 and/or TLR 7 and TLR 8 (collectively "STARTING
          MATERIAL"). The Starting Material shall not incorporate any Merck
          Material. Idera shall use reasonable efforts to deliver Starting
          Material according to the following schedule: [**] Evaluation
          Collaboration Compounds targeting TLR 9 and [**] Evaluation
          Collaboration Compounds targeting TLR 7, TLR 8 and/or TLR 7 and TLR 8
          at the beginning of each [**]. Idera may, subject to JRC approval,
          change the delivery schedule of Starting Material. Following the
          initial delivery of Starting Material, Idera shall use commercially
          reasonable efforts to incorporate guidance from Merck regarding the
          desired properties of the Starting Material so that Idera can
          synthesize and/or modify new Starting Material incorporating such
          guidance from Merck or provide Starting Material from Idera's existing
          library to address Merck's guidance. The benchmark for synthesizing
          Starting Material shall be those Collaboration Compounds listed in
          Schedule 1.18. In the event that the JRC determines that the benchmark
          Collaboration Compounds should be replaced by different Collaboration
          Compounds, Schedule 1.18 shall be amended to reflect the new benchmark
          Collaboration Compounds subject to the written consent of both
          Parties, which consent shall not be unreasonably withheld. Subject to
          Section 2.8.2, Merck covenants and agrees, for itself and its Related
          Parties, not to re-create any Starting Material.

     2.8.2 Creation and Modification of Evaluation Collaboration Compounds
          Targeting TLR 7, TLR 8 and/or TLR 7 and TLR 8. As set forth in
          Schedule 2.1, the Parties shall use commercially reasonable efforts to
          perform their respective obligations in the creation, modification and
          development of Evaluation Collaboration Compounds targeting TLR 7, TLR
          8 and/or TLR 7 and TLR 8 throughout the Research Program Term. There
          shall be no limit on the number of such Evaluation Collaboration
          Compounds that the Parties may create, modify or develop during the
          Research Program Term, provided that the number of Starting Materials
          as set forth in Section 2.8.1 cannot be changed without the mutual
          written consent of both Parties.

     2.8.3 Designation of Selected Collaboration Compounds. Upon receipt of
          samples of Evaluation Collaboration Compounds and the information set
          forth above, Merck shall use reasonable efforts to evaluate such
          Evaluation Collaboration Compounds to determine in its sole discretion
          whether they satisfy the Selection Criteria. If an Evaluation
          Collaboration Compound satisfies the Selection Criteria, Merck shall
          promptly notify Idera in writing and such Evaluation Collaboration
          Compound shall be deemed a "SELECTED COLLABORATION COMPOUND." Merck
          may designate such Selected

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          Collaboration Compounds at any time during the Research Program but no
          later than [**] following the end of the Research Program Term. With
          respect to Evaluation Collaboration Compounds targeting TLR 9, Merck
          shall have the right to select up to [**] Selected Collaboration
          Compounds for use in the Fields. With respect to Evaluation
          Collaboration Compounds targeting TLR 7 and/or TLR 8, Merck shall have
          the right to select up to [**] Selected Collaboration Compounds for
          use in the Fields.

          In the event that a Selected Collaboration Compound fails in
          pre-clinical and/or clinical development for reasons due to safety,
          tolerability or efficacy, then at Merck's request, Idera shall provide
          additional Evaluation Collaboration Compounds for consideration as a
          Selected Collaboration Compound in the applicable Field at any time
          during the term of the Agreement, provided that Merck may exercise
          such right only for a period of [**] from the expiration of the
          Research Program Term. In the event that Merck, in its sole
          discretion, determines such Evaluation Collaboration Compound
          satisfies the Selection Criteria, such Evaluation Collaboration
          Compound shall be deemed a Selected Collaboration Compound.

     2.8.4 Designation of Non-Selected Collaboration Compounds. Within [**] of
          the end of the Research Program Term, Merck shall designate among the
          Evaluation Collaboration Compounds which ones shall be deemed
          "NON-SELECTED COLLABORATION COMPOUNDS." Idera may develop and
          commercialize Non-Selected Collaboration Compounds only in the Idera
          Field. For avoidance of doubt, Merck and its Affiliates shall retain
          the right to use any Non-Selected Collaboration Compounds that are
          claimed in or covered by the Joint Information and Inventions solely
          for internal research purposes of Merck or its Affiliates which
          includes research carried out by any Third Party on behalf of Merck or
          its Affiliates. Internal research purposes expressly excludes use of
          any Non-Selected Collaboration Compounds by Merck or its Related
          Parties in any Clinical Trial.

2.9  OWNERSHIP OF MATERIALS, INFORMATION AND INVENTIONS

     2.9.1 Ownership of Materials. Neither Party shall obtain any ownership
          rights in the materials of the other Party by virtue of this
          Agreement. Except to the extent licensed herein, Merck shall retain
          all right, title and interest in and to the Merck Materials, and Idera
          shall retain all right, title and interest to the Idera Materials.
          Ownership of materials will remain with the respective Parties
          regardless of any modification or derivative thereof made by either
          Party solely or by both Parties jointly. Each Party shall have the
          right to license or transfer any such modification and/or derivative
          thereof, to any Third Party in the Party's sole discretion for any
          purpose, provided that such uses do not conflict with the licenses
          granted under this Agreement.

     2.9.2 Ownership of Information and Inventions. The entire right, title and
          interest in:

          (A)  Idera Information and Inventions shall be owned solely by Idera;

          (B)  Merck Information and Inventions shall be owned solely by Merck;
               and

          (C)  Joint Information and Inventions shall be owned jointly by Idera
               and Merck.

          Idera shall promptly disclose to Merck in writing the development,
          making, conception or reduction to practice of Idera Information and
          Inventions, Joint Information and Inventions and Merck Materials
          Inventions. Merck shall promptly disclose to Idera in

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          writing the development, making, conception or reduction to practice
          of Idera Oligonucleotide Inventions and Joint Information and
          Inventions.

     2.9.3 Inventorship. Inventorship of inventions, whether or not patentable,
          conceived and/or reduced to practice by the Parties in the course of
          exercising rights or performing obligations pursuant to this
          Agreement, all related intellectual property rights, and all other
          information developed in the course of the Parties' exercise of rights
          under or performance of this Agreement shall be determined in
          accordance with the rules of inventorship under United States patent
          laws.

     2.9.4 Assignment of Inventions. The Parties shall execute such documents
          and perform such acts, at their own expense, as may be reasonably
          necessary to effect an assignment of Patent Rights relating to
          Oligonucleotide Inventions and Merck Materials Inventions, as the case
          may be, to the other Party in a timely manner to allow such Party to
          prosecute and maintain Patent Rights relating to such inventions.

2.10 RESEARCH PROGRAM TERM

     Except as otherwise provided herein, the initial term of the Research
     Program shall commence on the Effective Date and continue for a period of
     two (2) years. Merck may extend such term by an additional year by
     providing Idera with ninety (90) days written notice, for a total of up to
     two (2) renewals. Merck shall provide Idera with written notice of such
     one-year renewal and the Parties shall amend Schedule 2.1 as applicable.
     The initial term and subsequent extension terms are collectively referred
     to in this Agreement as the "RESEARCH PROGRAM TERM."

2.11 MERCK MATERIALS

     Merck shall provide Idera with sufficient quantities of the materials set
     forth in Schedule 1.50 ("MERCK MATERIALS") solely for the purpose of
     enabling Idera to perform its activities under the Research Program in
     accordance with the terms of this Agreement. Idera covenants and agrees,
     for itself and its Affiliates, not to re-create or modify any Merck
     Materials. The Merck Materials are not to be used in humans, nor shall any
     of the Merck Materials, or any derivatives, analogs, modifications or
     components thereof, be transferred, delivered or disclosed to any Third
     Party without the prior written approval of Merck. Any unused Merck
     Materials and any derivatives, analogs, modifications or components thereof
     shall be, at Merck's option, either returned to Merck, or destroyed in
     accordance with instructions by Merck.

2.12 EXCLUSIVE EFFORTS

     During the term of the Agreement, except as set forth in Schedule 2.12,
     Idera shall work exclusively (even as to Idera itself) with Merck and its
     Affiliates in efforts to research, develop and commercialize any
     Adjuvant(s) for use in conjunction with Vaccine(s) or Vaccine products
     containing such Adjuvant(s), including without limitation, Evaluation
     Collaboration Compound(s) and Selected Collaboration Compound(s), for the
     prevention and/or treatment of Alzheimer's Disease, any type of cancer
     and/or any disease within the Infectious Disease Field.

2.13 USE OF HUMAN MATERIALS

     If any human primary cell lines, human tissue, human clinical isolates or
     similar human-derived materials ("HUMAN MATERIALS") have been or are to be
     collected and/or used in the Research Program, Idera represents and
     warrants (i) that it has complied, or shall comply, with all

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     applicable laws, guidelines and regulations relating to the collection
     and/or use of the Human Materials and (ii) that it has obtained, or shall
     obtain, all necessary approvals and appropriate informed consents, in
     writing, for the collection and/or use of such Human Materials. Idera shall
     provide documentation of such approvals and consents upon Merck's request.
     Idera further represents and warrants that such Human Materials may be used
     as contemplated in this Agreement without any obligations to the
     individuals or entities ("PROVIDERS") who contributed the Human Materials,
     including, without limitation, any obligations of compensation to such
     Providers or any other Third Party for the intellectual property associated
     with the Human Materials or the commercial use thereof for any purposes.

3.   LICENSES; DEVELOPMENT AND COMMERCIALIZATION

3.1  LICENSE GRANTS TO MERCK

     3.1.1 Exclusive License Grant. Subject to the terms and conditions of this
          Agreement, Idera hereby grants to Merck an exclusive license (even as
          to Idera) in the Territory under Idera Technology and Idera's interest
          in Joint Program Technology, with a right of sublicense, (a) to
          research and develop Evaluation Collaboration Compounds in the Fields
          and (b) to research, develop, make, have made, use, offer to sell,
          sell, have sold, import and export Selected Collaboration Compound(s)
          and Product(s) in the Fields. The foregoing exclusive license is
          subject to the non-exclusive rights granted to The Immune Response
          Corporation as set forth in Schedule 2.12 attached hereto.
          Notwithstanding anything to the contrary contained in this Agreement,
          Idera retains all rights under Idera Technology and Idera's interest
          in Joint Program Technology to research, develop, make, have made,
          use, offer to sell, sell, have sold, import and export IMO-2055 and
          IMO-2125 outside the Fields, both during and after the Research
          Program Term.

     3.1.2 Non-Exclusive License Grant. In the event that the researching,
          developing, making, having made, use, offer for sale, sale, import or
          export by Merck, or Merck's Related Parties, of Evaluation
          Collaboration Compound(s), Selected Collaboration Compound(s) or
          Product(s) in accordance with the license granted pursuant to Section
          3.1.1 would infringe during the term of this Agreement a claim of
          issued letters patent which Idera Controls and which patents are not
          covered by the grant in Section 3.1.1, Idera hereby grants to Merck,
          to the extent Idera is legally able to do so, a non-exclusive,
          sublicensable, royalty-free license in the Territory under such issued
          letters patent for Merck and Merck's Related Parties to research,
          develop, make, have made, use, sell, offer for sale, import and export
          such Evaluation Collaboration Compound(s), Selected Collaboration
          Compound(s) and Product(s) in the Fields.

     3.1.3 Sublicense Rights. Subject to the terms and conditions of this
          Agreement, Merck shall have the right to grant sublicenses of the
          rights granted to it under this Section 3.1 to (i) its Affiliates,
          (ii) Third Parties engaged in research, development and marketing of
          Products, and (iii) contract service providers providing services for
          Merck or its Affiliates, to the extent such sublicenses are necessary
          for the research, development, manufacturing and commercialization of
          Evaluation Collaboration Compounds, Selected Collaboration Compounds
          and Products in the Fields by or on behalf of Merck or its Affiliates.
          Merck shall require each sublicensee to be bound by the applicable
          terms of this Agreement.

                                       17

<PAGE>

3.2  LICENSE GRANTS TO IDERA

     3.2.1 Exclusive License Grant. Subject to the terms and conditions of this
          Agreement, Merck hereby grants to Idera an exclusive (even as to
          Merck), royalty-free license in the Territory under Merck's interest
          in Joint Program Technology, with a right of sublicense, to research,
          develop, make, have made, use, offer to sell, sell, have sold, import
          and export Non-Selected Collaboration Compounds, IMO-2055 and IMO-2125
          in the Idera Field. For avoidance of doubt, except for IMO-2055 and
          IMO-2125, this exclusive license grant shall not include the grant of
          any rights to Idera to research, develop, make, have made, use, offer
          to sell, sell, have sold, import and export Selected Collaboration
          Compounds for any purpose, including, without limitation, in the Idera
          Field.

     3.2.2 Non-Exclusive License Grant. Merck hereby grants to Idera a
          non-exclusive, non-sublicensable, royalty-free license in the
          Territory under Merck Technology for the sole purpose of discharging
          Idera's obligations under the Research Program during the Research
          Program Term.

3.3  NO IMPLIED LICENSES

     Except as specifically set forth in this Agreement, neither Party shall
     acquire any license or other intellectual property interest, by implication
     or otherwise, in any Information or materials disclosed to it under this
     Agreement or under any patents or patent applications owned or Controlled
     by the other Party or its Affiliates.

3.4  DEVELOPMENT AND COMMERCIALIZATION

     Merck shall use reasonable efforts and resources, including reasonably
     necessary personnel and financial resources, consistent with the usual
     practice followed by Merck in pursuing the commercialization and marketing
     of its other Vaccine products of a similar commercial value, at its own
     expense, to develop and commercialize a Product in such countries in the
     Territory where in Merck's opinion it is commercially viable to do so. To
     the extent reasonable and relevant, Merck shall take into consideration the
     following factors: issues of safety and efficacy, Product profile,
     difficulty in developing or manufacturing the Product, competitiveness of
     alternative Third Party products in the marketplace, the patent or other
     proprietary position of the Product, the regulatory structure involved and
     market potential of the Product. During the term of the Agreement, Merck
     shall keep Idera regularly informed regarding the development of Products
     by Merck or its Affiliates. Such information shall be communicated to Idera
     through the JRC during the Research Program Term. After the end of the
     Research Program Term, and until the First Commercial Sale of a Product,
     Merck shall promptly respond to reasonable requests by Idera for
     information regarding development activities by Merck and its Related
     Parties but no more than twice per year.

3.5  EXCUSED PERFORMANCE

     The obligations of Merck with respect to any Product under Section 3.4 are
     expressly conditioned upon the continuing absence of any material adverse
     condition or event relating to the safety or efficacy of the Product, and
     the obligation of Merck to develop or market any such Product shall be
     delayed or suspended so long as in Merck's opinion any such condition or
     event exists. In resolving or addressing such material adverse condition or
     event, Merck shall apply the level of efforts and resources described in
     Section 3.4 that Merck typically devotes to overcome similar

                                       18

<PAGE>

     material adverse conditions and events with respect to its own compounds or
     products, regardless of whether such compound or product is subject to a
     license from a Third Party.

3.6  EXCLUSIVE NEGOTIATION PERIOD

     Idera agrees that for a period of three (3) months commencing on the
     Effective Date, Idera shall not enter into any negotiations or any
     agreement with any Third Party regarding any rights or licenses to develop
     and commercialize TLR antagonists in the area of immunosuppression. After
     such three (3) month period, Idera shall be free to grant rights and
     licenses to Third Parties with respect to the development and
     commercialization of TLR antagonists in the area of immunosuppression,
     subject to any agreement that the Parties may elect, in each Party's
     absolute discretion, to enter into during such three (3) month period.

3.7  ADVERSE EXPERIENCE REPORTING

     Idera agrees throughout the term of this Agreement to notify Merck within
     two (2) working days in English of any information of which Idera becomes
     aware in the Territory concerning any side effect, injury, toxicity or
     sensitivity reaction, or any unexpected incident, and the severity thereof,
     whether or not determined to be attributable to any Evaluation
     Collaboration Compound or Selected Collaboration Compound (hereinafter
     "Adverse Experience"), where such Adverse Experience is serious and
     associated with the clinical uses, studies, investigations, tests and
     marketing of Evaluation Collaboration Compounds or Selected Collaboration
     Compounds, whether or not determined to be attributable to Evaluation
     Collaboration Compound or Selected Collaboration Compound. With respect to
     all other adverse experiences (non-serious expected or non-serious
     unexpected adverse experiences), Idera shall furnish Merck with copies of
     such non-serious adverse experiences reported to Idera in connection with
     the marketing of Evaluation Collaboration Compound or Selected
     Collaboration Compound in English within 10 working days after receipt. For
     clarity, Idera shall provide Adverse Experience reports to Merck with
     respect to those Adverse Experiences relating to IMO-2055 under The Immune
     Response Corporation Agreement, to the extent Idera is aware of such
     information, in accordance with the term of this Section 2.7. Merck shall
     provide Adverse Experience reports to Idera with respect to IMO-2055 and
     IMO-2125 within the same time frames as set forth above. The Parties
     acknowledge that information provided in the timeframes set forth in this
     Section 3.7 may be in the form of raw data.

     "Serious" as used in this Section refers to an experience which results in
     death, is immediately life threatening, results in persistent and
     significant disability/incapacity or requires in-patient hospitalization,
     or prolongation of existing hospitalization, or is a congenital anomaly,
     cancer or an overdose. Other important medical events that may jeopardize
     the patient or may require intervention to prevent one of the outcomes
     previously listed should also be considered serious. "Unexpected" as used
     in this Section refers to a condition or development not listed in the
     current labeling for Evaluation Collaboration Compound or Selected
     Collaboration Compound, and includes an event that may be symptomatically
     and pathophysiologically related to an event listed in the labeling, but
     differs from the event because of increased frequency or greater severity
     or specificity. Furthermore, Idera agrees throughout the Term to notify
     Merck in English of any "Serious" Adverse Experience which occurs in the
     Territory within two (2) working days after Idera becomes aware of such
     event and of any Non-serious Adverse Experience which occurs in the
     Territory within 10 working days after Idera becomes aware of such event.

     It is understood and agreed that these adverse experience reporting
     requirement provisions are based on the policies and procedures of Merck
     and regulatory reporting requirements.

                                       19

<PAGE>

     Accordingly, in the event of changes to regulatory requirements for adverse
     experience reporting, Idera agrees to comply with such revised notification
     requirements.

     As soon as practicable after the Execution Date, but no later than the
     start of Merck Clinical Trials, the Parties shall enter into a separate and
     more detailed agreement concerning adverse experience exchange and
     reporting.

4.   CONFIDENTIALITY AND PUBLICATION

4.1  NONDISCLOSURE OBLIGATION

     All Information disclosed by one Party to the other Party hereunder shall
     be maintained in confidence by the receiving Party and its Affiliates and
     shall not be disclosed to any Third Party or used for any purpose except as
     set forth herein without the prior written consent of the disclosing Party,
     except to the extent that such Information:

     (A)  is known by the receiving Party at the time of its receipt, and not
          through a prior disclosure by the disclosing Party, as documented by
          the receiving Party's business records;

     (B)  is in the public domain by use and/or publication before its receipt
          from the disclosing Party, or thereafter enters the public domain
          through no fault of the receiving Party;

     (C)  is subsequently disclosed to the receiving Party by a Third Party who
          may lawfully do so and is not under an obligation of confidentiality
          to the disclosing Party;

     (D)  is developed by the receiving Party independently of Information
          received from the disclosing Party, as documented by the receiving
          Party's business records;

     (E)  is reasonably necessary to disclose to governmental or other
          regulatory agencies (i) in order to obtain patents or to gain or
          maintain approval to conduct clinical trials or to market Product, but
          such disclosure may be only to the extent reasonably necessary to
          obtain patents or Marketing Authorizations or (ii) to comply with
          disclosure obligations under securities laws, rules or regulations,
          including, without limitation, the rules and regulations of any stock
          exchange;

     (F)  is deemed necessary by Merck to be disclosed to subliceenses, agents,
          consultants, and/or other Third Parties for any and all purposes Merck
          and its Affiliates deem necessary or advisable to research, develop
          and commercialize Evaluation Collaboration Compounds, Selected
          Collaboration Compounds and Products in accordance with this Agreement
          on the condition that such Persons agree to be bound by the
          confidentiality and non-use obligations at least as strict as those
          contained in this Agreement; provided, however, that the term of
          confidentiality for such Third Parties shall be no less than [**]
          years;

     (G)  is deemed necessary by counsel to the receiving Party to be disclosed
          to such Party's attorneys, independent accountants or financial
          advisors for the sole purpose of enabling such attorneys, independent
          accountants or financial advisors to provide advice to the receiving
          Party, on the condition that such attorneys, independent accountants
          and financial advisors agree to be bound by confidentiality and
          non-use obligations at least as strict as those contained in this
          Agreement; provided, however, that the term of confidentiality for
          such attorneys, independent accountants and financial advisors shall
          be no less than [**] years;

                                       20

<PAGE>

     (H)  is deemed necessary by the receiving Party to be disclosed to a Third
          Party that has provided the receiving Party with a bona fide written
          offer to purchase all or substantially all of the assets of the
          receiving Party or acquire fifty percent (50%) or more of the voting
          equity securities or management control of such receiving Party, on
          the condition that such Third Party and its attorneys, independent
          accountants and financial advisors agree to be bound by
          confidentiality and non-use obligations at least as strict as those
          contained in this Agreement; provided, however, that the term of
          confidentiality for such Third Party and its attorneys, independent
          accountants and financial advisors shall be no less than [**] years;
          or

     (I)  is an Adverse Experience relating to IMO-2055, provided that such
          disclosure may be made by Idera only to The Immune Response
          Corporation as required by The Immune Response Corporation Agreement.

     Any combination of features or disclosures shall not be deemed to fall
     within the foregoing exclusions merely because individual features are
     published or available to the general public or in the rightful possession
     of the receiving Party unless the combination itself and principle of
     operation are published or available to the general public or in the
     rightful possession of the receiving Party.

     If a Party is required by judicial or administrative process to disclose
     Information that is subject to the non-disclosure provisions of this
     Section 4.1 or Section 4.2, such Party shall promptly inform the other
     Party of the disclosure that is being sought in order to provide the other
     Party an opportunity to challenge or limit the disclosure obligations.
     Information that is disclosed by judicial or administrative process shall
     remain otherwise subject to the confidentiality and non-use provisions of
     this Section 4.1 and Section 4.2.

4.2  IDERA KNOW-HOW

     Idera agrees to keep all Idera Information and Inventions solely related to
     Evaluation Collaboration Compounds and Selected Collaboration Compounds in
     the Fields confidential subject to exceptions (b) and (e) in Section 4.1
     above and subject to Section 4.3.

4.3  PUBLICATION

     Merck and Idera each acknowledge the other Party's interest in publishing
     the results of its research in order to obtain recognition within the
     scientific community and to advance the state of scientific knowledge. Each
     Party also recognizes the mutual interest in obtaining valid patent
     protection and in protecting business interests and trade secret
     information. Consequently, except for disclosures permitted pursuant to
     Section 4.1, prior to the expiration of the one-year anniversary of the end
     of the Research Program Term, either Party, its employees or consultants
     wishing to make a publication regarding an Evaluation Collaboration
     Compound shall deliver to the other Party a copy of the proposed written
     publication or an outline of an oral disclosure at least sixty (60) days
     prior to submission for publication or presentation. The reviewing Party
     shall have the right (a) to propose modifications to the publication or
     presentation for patent reasons, trade secret reasons or business reasons
     or (b) to request a reasonable delay in publication or presentation in
     order to protect patentable information. If the reviewing Party requests a
     delay, the publishing Party shall delay submission or presentation for a
     period of ninety (90) days to enable patent applications protecting each
     Party's rights in such information to be filed in accordance with Article 7
     below. Upon expiration of such ninety (90) days, the publishing Party shall
     be free to proceed with the publication or presentation. If the reviewing

                                       21

<PAGE>

     Party requests modifications to the publication or presentation, the
     publishing Party shall edit such publication to prevent disclosure of trade
     secret or proprietary business information prior to submission of the
     publication or presentation. For the avoidance of doubt, Merck acknowledges
     and agrees that Idera shall have the right to publish the results of its
     research with respect to IMO-2055, IMO-2125, IDR-002 and IDR-004 outside
     the Fields.

4.4  PUBLICITY/USE OF NAMES

     Upon execution of this Agreement, the Parties shall issue a joint press
     release in the form attached hereto as Schedule 4.4. No disclosure of the
     existence, or the terms, of this Agreement, the Stock Purchase Agreement or
     the Registration Rights Agreement may be made by either Party, and neither
     Party shall use the name, trademark, trade name or logo of the other Party,
     its Affiliates or their respective employees in any publicity, promotion,
     news release or disclosure relating to this Agreement or its subject
     matter, without the prior express written permission of the other Party,
     except as may be required by law. With respect to the achievement of
     milestones as set forth in Section 5.3.2, Idera may issue a press release
     regarding such achievement, provided that Merck is given five (5) business
     days to review and comment on the proposed press release or public
     disclosure.

5.   PAYMENTS; ROYALTIES AND REPORTS

5.1  LICENSE FEE

     In consideration for the licenses granted herein under Idera Technology and
     Idera's interest in Joint Program Technology and other rights granted under
     this Agreement upon the terms and conditions contained herein, Merck shall
     pay to Idera Twenty Million Dollars (USD $20,000,000) within ten (10)
     business days after the Effective Date and shall make an equity investment
     of Ten Million Dollars (USD $10,000,000) in Idera accordance with the terms
     and conditions of the Stock Purchase Agreement and Registration Rights
     Agreement.

5.2  RESEARCH PROGRAM FTE FUNDING; ADDITIONAL SUPPLY

     Merck shall fund each JRC-approved FTE provided by Idera pursuant to
     Section 2.3 at the FTE Rate. Merck will pay Idera the FTE Rate [**]
     installments, each installment equal to [**] of the FTE Rate multiplied by
     the number of FTEs for the subsequent [**]; provided that the FTE payment
     for (a) the first [**] shall be prorated from the Effective Date and will
     be due within [**] days of the Effective Date and (b) the final [**] during
     the Research Program Term shall be pro rated to the date of expiration or
     termination of the Research Program Term. If for any [**] during the
     Research Program Term, the number of Idera FTEs dedicated to the Research
     Program falls below the number funded by Merck, Idera will promptly notify
     Merck of such discrepancy, and, without limiting any other rights Merck may
     have under this Agreement, Merck will be entitled to adjust the Research
     Program funding payment under this Section as appropriate. In the event
     that the Research Program Term is terminated in accordance with this
     Agreement, Merck shall be entitled to a refund of any prepaid FTE funding
     to the extent it covers any period after the effective date of such
     termination. If Merck requests quantities of Evaluation Collaboration
     Compound from Idera in excess of [**] for any study, Merck shall reimburse
     Idera for Idera's out-of-pocket expenses incurred in procuring such
     additional quantities within [**] days of receipt of such materials and an
     invoice from Idera.

                                       22

<PAGE>

5.3  MILESTONE PAYMENTS

     5.3.1 Pre-Clinical Development Milestones. Subject to the terms and
          conditions of this Agreement, Merck shall pay to Idera the following
          milestone payments based upon the achievement of such milestones:

          (A)  In the Oncology Field, [**] Dollars (USD $[**]) upon
               demonstration of the following: (i) [**]; (ii) [**]; and (iii)
               [**]. The baseline for comparison shall be the [**] that does not
               [**] or [**] in the [**].

          (B)  In the Infectious Disease Field or Alzheimer's Disease Field,
               [**] Dollars (USD $[**]) upon demonstration of a [**] after the
               [**] or [**] in [**]. The baseline for comparison shall be the
               [**] containing a [**] but not an [**] or [**].

          Merck shall notify Idera in writing within fifteen (15) days following
          the achievement of each milestone, and shall make the appropriate
          milestone payment to Idera within thirty (30) days after providing
          such written notice. Each of the above milestone payments described in
          subsections (a) and (b) hereof shall be payable only once upon the
          initial achievement of such milestone and no amounts shall be due
          hereunder for subsequent or repeated achievement of such milestone.
          For the avoidance of doubt, the achievement of the above milestones
          does not affect the obligations of the Parties to develop
          Collaboration Compounds under the Research Program.

     5.3.2 Clinical Development Milestones. With respect to each Type I Product
          and each Type II Product in the Fields, Merck shall pay to Idera the
          following milestone payments upon the achievement of such milestones
          subject to the terms and conditions of this Agreement.

                                       23
<PAGE>

(A)  Oncology Field

<TABLE>
<CAPTION>
               TYPE I PRODUCT   TYPE II PRODUCT
               --------------   ---------------
<S>            <C>              <C>
(i)     [**]        [**]              [**]
(ii)    [**]        [**]              [**]
(iii)   [**]        [**]              [**]
(iv)    [**]        [**]              [**]
(v)     [**]        [**]              [**]
(vi)    [**]        [**]              [**]
(vii)   [**]        [**]              [**]
(viii)  [**]        [**]              [**]
(ix)    [**]        [**]              [**]
(x)     [**]        [**]              [**]
(xi)    [**]        [**]              [**]
</TABLE>

(B)  Infectious Disease Field

<TABLE>
<CAPTION>
                TYPE I PRODUCT   TYPE II PRODUCT
                --------------   ---------------
<S>             <C>              <C>
(i)      [**]        [**]              [**]
(ii)     [**]        [**]              [**]
(iii)    [**]        [**]              [**]
(iv)     [**]        [**]              [**]
(v)      [**]        [**]              [**]
(vi)     [**]        [**]              [**]
(vii)    [**]        [**]              [**]
(viii)   [**]        [**]              [**]
</TABLE>

                                       24

<PAGE>

(C)  Alzheimer's Disease Field

<TABLE>
<CAPTION>
                TYPE I PRODUCT   TYPE II PRODUCT
                --------------   ---------------
<S>             <C>              <C>
(i)      [**]        [**]              [**]
(ii)     [**]        [**]              [**]
(iii)    [**]        [**]              [**]
(iv)     [**]        [**]              [**]
(v)      [**]        [**]              [**]
(vi)     [**]        [**]              [**]
(vii)    [**]        [**]              [**]
(viii)   [**]        [**]              [**]
</TABLE>

     Each of the above milestones shall be payable once with respect to each
     Type I Product and each Type II Product that achieves such milestone. In
     the event that a milestone is skipped for a Product, the corresponding
     milestone payment shall become due upon the achievement of the next
     milestone event with respect to such Product. Merck shall notify Idera in
     writing within fifteen (15) days following the achievement of each
     milestone, and shall make the appropriate milestone payment to Idera within
     thirty (30) days after providing such written notice.

5.4  ROYALTIES

     5.4.1 Royalties Payable By Merck. Subject to the terms and conditions of
          this Agreement, Merck shall pay Idera royalties, calculated on a
          Product-by-Product basis, as set forth in this Section 5.4.1.

          (A)  Patent Royalties. Subject to the provisions of Section 5.4.1(b),
               Merck shall pay Idera royalties in an amount equal to a certain
               percentage of Net Sales of Product(s) by Merck or its Related
               Parties as set forth below, provided that the sale of such
               Product(s) would infringe a Valid Patent Claim in the country of
               sale ("PATENT ROYALTY"):

               (I)  Type I Products - Oncology Field. Merck shall pay Idera
                    royalties in an amount equal to the following percentage of
                    Net Sales of Type I Products in the Oncology Field by Merck
                    or its Related Parties, provided that the sale of such
                    Products would infringe a Valid Patent Claim in the country
                    of sale:

                    (AA) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year up to and including [**] Dollars (USD
                         $[**]);

                    (BB) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year for the portion of Net Sales exceeding
                         [**] Dollars (USD $[**]) up to and including [**]
                         Dollars (USD $[**]); and

                    (CC) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year for the portion of Net Sales exceeding
                         [**] Dollars (USD $[**]).

               (II) Type I Products -Alzheimer's Disease Field. Merck shall pay
                    Idera royalties in an amount equal to the following
                    percentage of Net Sales of

                                       25

<PAGE>

                    Type I Products in the Alzheimer's Disease Field by Merck or
                    its Related Parties, provided that the sale of such Products
                    would infringe a Valid Patent Claim in the country of sale:

                    (AA) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year up to and including [**] Dollars (USD
                         $[**]);

                    (BB) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year for the portion of Net Sales exceeding
                         [**] Dollars (USD $[**]) up to and including [**]
                         Dollars (USD $[**]); and

                    (CC) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year for the portion of Net Sales exceeding
                         [**] Dollars (USD $[**]).

               (III) Type I Products - Infectious Disease Field. Merck shall pay
                    Idera royalties in an amount equal to the following
                    percentage of Net Sales of Type I Products in the Infectious
                    Disease Field by Merck or its Related Parties, provided that
                    the sale of such Products would infringe a Valid Patent
                    Claim in the country of sale:

                    (AA) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year up to and including [**] Dollars (USD
                         $[**]);

                    (BB) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year for the portion of Net Sales exceeding
                         [**] Dollars (USD $[**]) up to and including [**]
                         Dollars (USD $[**]); and

                    (CC) [**] percent ([**]%) of worldwide Net Sales in each
                         Calendar Year for the portion of Net Sales exceeding
                         [**] Dollars (USD $[**]).

               (IV) Type II Products - All Fields. Merck shall pay Idera
                    royalties in an amount equal to the following percentage of
                    Net Sales of Type II Products in each of the Oncology,
                    Alzheimer's Disease and Infectious Disease Fields by Merck
                    or its Related Parties, provided that the sale of such
                    Products would infringe a Valid Patent Claim in the country
                    of sale:

                    (AA) [**] percent ([**]%) of worldwide Net Sales in the
                         applicable Field in each Calendar Year up to and
                         including [**] Dollars (USD $[**]);

                    (BB) [**] percent ([**]%) of worldwide Net Sales in the
                         applicable Field in each Calendar Year for the portion
                         of Net Sales exceeding [**] Dollars (USD $[**]) up to
                         and including [**] Dollars (USD $[**]); and

                    (CC) [**] percent ([**]%) of worldwide Net Sales in the
                         applicable Field in each Calendar Year for the portion
                         of Net Sales exceeding [**] Dollars (USD $[**]).

          (B)  Know-How Royalty. Notwithstanding the provisions of Section
               5.4.1(a) above, in countries where the sale of Product by Merck
               or its Related Parties would not

                                       26

<PAGE>

               infringe a Valid Patent Claim, Merck shall pay royalty rates that
               shall be set at [**] percent ([**]%) of the applicable royalty
               rate determined according to Section 5.4.1(a) hereof ("Know-How
               Royalty"). Such royalties shall be calculated after first
               calculating royalties under Section 5.4.1(a) above.

          (C)  Royalty Tiers; Royalty Term. Royalty tiers pursuant to 5.4.1(a)
               and 5.4.1(b) shall be calculated based on worldwide Net Sales of
               each Product, provided that the determination of whether the
               royalty shall be calculated under 5.4.1(a) or 5.4.1(b) shall be
               determined on a country-by-country basis. Patent Royalties on
               each Product at the rates set forth in Section 5.4.1(a) shall
               continue on a country-by-country basis until the expiration of
               the later of: (i) the last-to-expire Valid Patent Claim which
               would otherwise be infringed by sale of Product in such country
               or (ii) the expiration of Regulatory-Based Exclusivity. Know-How
               Royalties on each Product at the rates set forth in Section
               5.4.1(a) shall continue on a country-by-country basis until ten
               (10) years from the date of First Commercial Sale of the Product
               in such country, provided that during any period in which sales
               of a Competing Product by a third party(ies) are equal to at
               least [**] percent ([**]%) of the aggregate volume of the Product
               and Competing Product in such country (the volume as measured by
               prescriptions or other similar information available in such
               country), all applicable Know-How Royalties in effect with
               respect to such Product in such country shall be reduced to [**]
               percent ([**]%). The foregoing Competing Product reduction
               applies only in those countries where Know-How Royalties would be
               payable and does not apply to Patent Royalties.

               All royalties are subject to the following conditions:

               (I)  that only one royalty shall be due with respect to the same
                    unit of Product;

               (II) that no royalties shall be due upon the sale or other
                    transfer among Merck or its Related Parties, but in such
                    cases the royalty shall be due and calculated upon Merck's
                    or its Related Party's Net Sales to the first independent
                    Third Party;

               (III) no royalties shall accrue on the sale or other disposition
                    of Product by Merck or its Related Parties for use in a
                    Clinical Trial or other clinical trial conducted after the
                    First Commercial Sale of Product; and

               (IV) no royalties shall accrue on the disposition of Product in
                    reasonable quantities by Merck or its Related Parties as
                    samples (promotion or otherwise) or as donations (for
                    example, to non-profit institutions or government agencies
                    for a non-commercial purpose) consistent with Merck's
                    practices for its products other than the Product.

     5.4.2 Royalties for Bulk Compound. In those cases in which Merck sells bulk
          Selected Collaboration Compound rather than Product in packaged form,
          or sells Selected Collaboration Compound and Vaccine separately for
          use in conjunction with one another, to an independent Third Party,
          the royalty obligations of Section 5.4.1 shall be applicable to (a)
          the bulk Selected Collaboration Compound together with other
          components of the Product sold by Merck or its Related Party (i.e. the
          royalty shall be payable in respect of the entire Product and not just
          the Selected Collaboration Compound) or (b) the separately sold
          Selected Collaboration Compound and Vaccine (i.e. the royalty shall be

                                       27

<PAGE>

          payable in respect of the Selected Collaboration Compound and
          Vaccine), as the case may be.

     5.4.3 Compulsory Licenses. If a compulsory license required pursuant to
          applicable law or regulation in a country is granted to a Third Party
          with respect to Product in any country in the Territory with a royalty
          rate lower than the royalty rate provided by Section 5.4.1, then the
          royalty rate to be paid by Merck on Net Sales in that country under
          Section 5.4.1 shall be reduced to the rate paid by the compulsory
          licensee.

     5.4.4 Royalty Abatement; Third Party Licenses. In the event that (a) one or
          more patent licenses from other Third Parties are required by Merck or
          its Related Parties in order to make, have made, use, offer to sell,
          sell or import Selected Collaboration Compound or Product(s) in a
          country (hereinafter "THIRD PARTY PATENT LICENSES"), including,
          without limitation, any patent license claiming a Merck Adjuvant and
          (b) the total royalty percentage rate payable by Merck under the Third
          Party Patent Licenses (including royalties payable to Idera) exceeds
          [**] percent ([**]%), the royalty obligation to Idera shall be reduced
          by the formula set forth in Schedule 5.4.4, provided, however, that in
          no event shall the royalties owed by Merck to Idera for such Product
          in such Calendar Quarter in such country be reduced by more than [**]
          percent ([**]%).

5.5  REPORTS; PAYMENT OF ROYALTY

     During the term of this Agreement following the First Commercial Sale of a
     Product, Merck shall furnish to Idera a quarterly written report for the
     Calendar Quarter showing the Net Sales on a country-by-country basis of all
     Products subject to royalty payments sold by Merck and its Related Parties
     in the Territory during the reporting period, total deductions and the
     royalties payable under this Agreement. Reports shall be due on the [**]
     day following the close of each Calendar Quarter. Royalties shown to have
     accrued by each royalty report shall be due and payable on the date such
     royalty report is due. Merck shall keep complete and accurate records in
     sufficient detail to enable the royalties payable hereunder to be
     determined.

5.6  AUDITS

     (A)  Upon the written request of Idera and not more than once in each
          Calendar Year, Merck shall permit an independent certified public
          accounting firm of nationally recognized standing selected by Idera
          and reasonably acceptable to Merck, at Idera's expense, to have access
          during normal business hours to such of the records of Merck as may be
          reasonably necessary to verify the accuracy of the royalty reports
          hereunder for any year ending not more than twenty-four (24) months
          prior to the date of such request. The accounting firm shall disclose
          to Idera only whether the royalty reports are correct or incorrect and
          the amount of any discrepancy. No other information shall be provided
          to Idera.

     (B)  If such accounting firm correctly identifies a discrepancy made during
          such period, the appropriate Party shall pay the other Party the
          amount of the discrepancy within thirty (30) days of the date Idera
          delivers to Merck such accounting firm's written report so correctly
          concluding, or as otherwise agreed upon by the Parties. The fees
          charged by such accounting firm shall be paid by Idera; provided,
          however, that if such audit uncovers an underpayment of royalties by
          Merck that exceeds [**] Dollars (USD $[**]) and five percent (5%) of
          the total royalties owed, then the fees of such accounting firm shall
          be paid by Merck.

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<PAGE>

     (C)  Merck shall include in each sublicense granted by it pursuant to this
          Agreement a provision requiring the sublicensee to make reports to
          Merck, to keep and maintain records of sales made pursuant to such
          sublicense and to grant access to such records by Idera's independent
          accountant to the same extent required of Merck under this Agreement.
          Upon the expiration of twenty-four (24) months following the end of
          any year, the calculation of royalties payable with respect to such
          year shall be binding and conclusive upon Idera, and Merck and its
          Related Parties shall be released from any liability or accountability
          with respect to royalties for such year.

     (D)  Idera shall treat all financial information subject to review under
          this Section 5.6(d) or under any sublicense agreement in accordance
          with the confidentiality and non-use provisions of this Agreement, and
          shall cause its accounting firm to enter into an acceptable
          confidentiality agreement with Merck and/or its Related Parties
          obligating it to retain all such information in confidence pursuant to
          such confidentiality agreement.

5.7  PAYMENT EXCHANGE RATE

     All payments to be made by Merck to Idera under this Agreement shall be
     made in United States dollars and may be paid by check made to the order of
     Idera or bank wire transfer in immediately available funds to such bank
     account in the United States as may be designated in writing by Idera from
     time to time. In the case of sales outside the United States, the rate of
     exchange to be used in computing the monthly amount of currency equivalent
     in United States dollars due Idera shall be made at the monthly rate of
     exchange utilized by Merck in its worldwide accounting system, prevailing
     on the third to the last business day of the month preceding the month in
     which such sales are recorded by Merck.

5.8  INCOME TAX WITHHOLDING

     If laws, rules or regulations require withholding of income taxes or other
     taxes imposed upon payments set forth in this Article 5, Merck shall make
     such withholding payments as may be required and shall subtract such
     withholding payments from the payments set forth in this Article 5. Merck
     shall submit appropriate proof of payment of the withholding taxes to Idera
     within a reasonable period of time. Merck shall reasonably cooperate with
     Idera to minimize such withholdings, subject to compliance with all
     applicable laws and regulations. If Merck had a duty to withhold taxes in
     connection with any payment it made to Idera under the Agreement but Merck
     failed to withhold, and such taxes were assessed against and paid by Merck,
     then Idera will reimburse and hold harmless Merck from and against such
     taxes (including interest). If Merck makes a claim under this section, it
     will comply with the obligations imposed by this section as if Merck had
     withheld taxes from a payment to Idera.

6. REPRESENTATIONS AND WARRANTIES; COVENANTS

6.1 REPRESENTATIONS AND WARRANTIES OF IDERA

     Idera represents and warrants to Merck that as of the Effective Date:

     (A)  to the best of Idera's knowledge, Idera Know-How exists and Idera
          Patent Rights (i) if granted, are not invalid or unenforceable, in
          whole or in part; and (ii) if pending, are patentable;

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<PAGE>

     (B)  it has all requisite corporate power and authority to enter into this
          Agreement, to perform its obligations under the Research Program, to
          grant the licenses to Merck as set forth in Sections 3.1.1 and 3.1.2
          and to otherwise perform its obligations under this Agreement;

     (C)  except as set forth in Schedule 2.12, it has not previously assigned,
          transferred, conveyed or otherwise encumbered its right, title and
          interest in Idera Patent Rights, Idera Know-How or Idera Materials;

     (D)  except as set forth in Schedule 6.1(d), it is the sole and exclusive
          owner of Idera Patent Rights, Idera Know-How and Idera Materials, all
          of which are free and clear of any liens, charges and encumbrances in
          the Fields, and no other Person has any claim of ownership whatsoever
          with respect to Idera Patent Rights, Idera Know-How and Idera
          Materials;

     (E)  to the best of Idera's knowledge, the exercise of the license granted
          to Merck with respect to Evaluation Collaboration Compounds and
          Selected Collaboration Compounds under Idera Technology, including
          without limitation the research, development, manufacture, use, sale
          and import of Evaluation Collaboration Compounds and Selected
          Collaboration Compounds in the Fields does not interfere with or
          infringe any intellectual property rights owned or possessed by any
          Third Party claiming or covering the composition of matter or method
          of use of such Evaluation Collaboration Compounds or Selected
          Collaboration Compounds;

     (F)  there are no claims, judgments or settlements against or owed by Idera
          and to the best of Idera's knowledge, no pending or threatened claims
          or litigation relating to Idera Patent Rights, Idera Know-How and
          Idera Materials;

     (G)  Idera has provided to Merck, except for redacted confidential
          information, full and complete copies of the Novartis Agreements and
          The Immune Response Corporation Agreement.

6.2 REPRESENTATIONS AND WARRANTIES OF MERCK

     Merck represents and warrants to Idera that as of the date of this
     Agreement it has all requisite corporate power and authority to enter into
     this Agreement, to perform its obligations under the Research Program, to
     grant the licenses set forth in Sections 3.2.1 and 3.2.2 and to otherwise
     perform its obligations under this Agreement.

6.3 COVENANTS OF IDERA

     During the term of this Agreement, Idera covenants and agrees that it will
     not amend the Novartis Agreements or The Immune Corporation Agreement in
     any manner that would interfere with or diminish the licenses to Merck as
     set forth in Sections 3.1.1 and 3.1.2 and other rights granted to Merck and
     its Affiliates in this Agreement.

7. PATENT PROVISIONS

7.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS

     (A)  Idera agrees to prosecute and maintain in the Territory the Idera
          Background Patent Rights. Such prosecution shall be at Idera's sole
          expense, discretion, and control. Idera

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<PAGE>

          agrees to file, prosecute and maintain in the Territory, upon
          appropriate consultation with Merck, the Idera Program Patent Rights
          licensed to Merck under this Agreement.

     (B)  With respect to Joint Information and Inventions, the Parties agree to
          select outside counsel acceptable to both Parties to file prosecute
          and maintain in the Territory, upon appropriate consultation with the
          Parties, patent applications and patents with respect to Joint
          Information and Inventions. The costs, fees and expenses related to
          patent applications and patents for Joint Information and Inventions
          shall be shared equally by Idera and Merck.

     (C)  The Parties agree that whenever possible, Idera Oligonucleotide
          Inventions and Merck Materials Inventions shall be filed in separate
          patent applications.

     (D)  With respect to Idera Information and Inventions, Idera may elect not
          to file and if so, Idera shall promptly notify Merck and Merck shall
          have the right to file such patent applications. In such event, Idera
          shall execute such documents and perform such acts at Idera's expense
          as may be reasonably necessary to effect an assignment of such Idera
          Program Patent Rights to Merck in a timely manner to allow Merck to
          continue such prosecution or maintenance. In each case, the filing
          Party shall give the non-filing Party an opportunity to review the
          text of the application before filing, shall consult with the
          non-filing Party with respect thereto, and shall supply the non-filing
          Party with a copy of the application as filed, together with notice of
          its filing date and serial number. The filing Party shall keep the
          non-filing Party advised of the status of the actual and prospective
          patent filings and, upon the non-filing Party's request, shall provide
          advance copies of any papers related to the filing, prosecution and
          maintenance of such patent filings. The filing Party shall promptly
          give notice to the non-filing Party of the grant, lapse, revocation,
          surrender, invalidation or abandonment of any Patent Rights licensed
          to the non-filing Party. Except as provided in Section 7.2(b), the
          filing Party shall be responsible for payment of all costs and
          expenses related to all filings hereunder.

     (E)  The Parties shall consult on the prosecution of any patent
          application(s) within the Idera Patent Rights which includes a
          claim(s) that covers a Selected Collaboration Compound as a
          composition of matter, method of manufacture or a method of use. As to
          such Idera Patent Rights, within [**] days of receipt by Idera, or
          Idera's prosecution counsel, of any United States or European patent
          office communication(s), Idera shall use reasonable efforts to provide
          to Merck a copy of the communication and a draft of a response
          thereto. Merck shall use reasonable efforts to promptly deliver
          comments on the communication and draft response to Idera, but in no
          event later than [**] days after receiving Idera's draft response.
          Thereafter, the Parties shall in good faith consult on Merck's
          comments and the drafting of the response to the patent office. The
          time periods in this Section 7.1(e) may be extended by mutual
          agreement of the Parties.

7.2 OPTION OF MERCK TO PROSECUTE AND MAINTAIN PATENTS

     (A)  Idera shall give prompt written notice to Merck of its desire to cease
          prosecution (including the filing of continuations and divisional
          applications) and/or maintenance of Idera Background Patent Rights on
          a country by country basis in the Territory and, in such case, shall
          permit Merck, in its sole discretion, to continue prosecution or
          maintenance of such Idera Background Patent Rights, in Idera's name,
          at Merck's own expense. Idera shall provide Merck with any Powers of
          Attorney necessary for Merck to conduct such prosecution or
          maintenance. If Merck elects to continue such prosecution or
          maintenance of such Idera Background Patent Rights, such patents or
          patent

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<PAGE>

          applications shall no longer constitute Idera Patent Rights for
          purposes of determining Patent Royalties under this Agreement.

     (B)  For patent applications within the Idera Patent Rights, Merck and
          Idera shall consult on, and Merck may request, the filing of a
          continuation or divisional patent application(s) having a claim(s)
          that solely covers a Selected Collaboration Compound as a composition
          of matter, a method of manufacture or a method of use. If Merck
          requests the filing of such continuation or divisional application,
          then Merck shall reimburse Idera for the costs, fees and expenses of
          filing, prosecuting, and maintaining said application. Merck and Idera
          shall consult in good faith on the prosecution of such applications.
          Any continuation or divisional application(s) requested hereunder by
          Merck will remain within the Idera Patent Rights.

7.3 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE

     (A)  Idera shall inform Merck of any request for, or filing or declaration
          of, any interference, opposition, reissue or reexamination of Idera
          Patent Rights within [**] days of becoming aware of such event. Merck
          and Idera shall thereafter consult and cooperate fully to determine a
          course of action with respect to any such proceeding. In the case of
          any such proceedings on Idera Program Patent Rights, Merck shall have
          the right to review and approve any submission to be made in
          connection with such proceeding. In the case of any such proceedings
          on Idera Background Patent Rights, to the extent that Idera's
          attorney-client privilege is not breached and to the extent
          permissible under Idera's express obligations under Idera's agreements
          with Third Parties, Merck shall have the right to review and comment
          on any submission to be made in connection with such proceeding.

     (B)  Idera shall not initiate any reexamination, interference or reissue
          proceeding of Idera Program Patent Rights without the prior written
          consent of Merck, which consent shall not be unreasonably withheld.

     (C)  In connection with any interference, opposition, reissue, or
          reexamination proceeding of Idera Patent Rights, Merck and Idera will
          cooperate fully and will provide each other with any information or
          assistance that either Party may reasonably request. Idera shall keep
          Merck informed of developments in any such action or proceeding,
          including, without limitation and to the extent permissible by law,
          consultation on and approval of any settlement, the status of any
          settlement negotiations and the terms of any offer related thereto.

     (D)  The Parties shall share equally the expense of any interference,
          opposition, reexamination, or reissue proceeding relating to Idera
          Patent Rights that claim or cover Selected Collaboration Compounds.

     (E)  If an interference, opposition, reexamination or reissue proceeding
          involves an Idera Program Patent Right in a Selected Collaboration
          Compound, Merck may, at its discretion, direct the course of action
          with respect to such proceeding to the extent any action impacts
          Merck's interest in the Selected Collaboration Compound.

7.4 ENFORCEMENT AND DEFENSE

     (A)  Idera shall give Merck prompt written notice of (i) any infringement
          of Idera Background Patent Right in any of the Fields, (ii) any
          infringement of Idera Program Patent Rights, or (iii) any
          misappropriation or misuse of Idera Know-How.

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<PAGE>

     (B)  In the case of infringement of Idera Program Patent Rights or
          misappropriation or misuse of Idera Know-How, Merck and Idera shall
          consult and cooperate fully to determine a course of action, including
          but not limited to, the commencement of legal action by either Merck
          or Idera or both Parties, to terminate any infringement of Idera
          Program Patent Rights or any misappropriation or misuse of Idera
          Know-How. However, Idera, upon notice to Merck, shall have the first
          right (i) to initiate and prosecute such legal action at its own
          expense and subject to Merck's written consent, initiate and prosecute
          such legal action in the name of Idera and Merck and (ii) to control
          the defense of any declaratory judgment action relating to Idera
          Program Patent Rights or Idera Know-How. In either such case, Idera
          shall promptly inform Merck if it elects not to exercise such first
          right and Merck shall thereafter have the right to either initiate and
          prosecute such action or to control the defense of such declaratory
          judgment action in the name of Merck and subject to Idera's written
          consent, in the name of Merck and Idera. For any case that Merck
          either initiates or prosecutes, Merck shall reasonably consider the
          rights and interests of Idera. Each Party shall have the right to be
          represented by counsel of its own choice.

     (C)  In the case of infringement of Idera Background Patent Rights outside
          the Fields, Idera shall in its sole discretion, determine a course of
          action, including but not limited to, the commencement of legal
          action, to terminate any such infringement of Idera Background Patent
          Rights. Idera shall have the right to initiate and prosecute such
          legal action at its own expense and in the name of Idera, or to
          control the defense of any declaratory judgment action relating to
          Idera Background Patent Rights. For any case that Idera either
          initiates, prosecutes or participates in, Idera shall reasonably
          consider the rights and interests of Merck and regularly confer with
          Merck regarding the status of such litigation. To the extent that
          Idera's attorney-client privilege is not breached and to the extent
          permissible under Idera's express obligations under Idera's agreements
          with Third Parties, Idera shall also provide Merck with the
          opportunity to review and comment on filings and the conduct of such
          litigation.

     (D)  In the case of infringement of Idera Background Patent Right in a
          Selected Collaboration Compound within any of the Fields, Merck and
          Idera shall consult and cooperate fully to determine a course of
          action, including but not limited to, the commencement of legal action
          by either Merck or Idera or both Parties, to terminate any such
          infringement of Idera Background Patent Rights. However, Idera, upon
          written notice to Merck, shall have the first right to initiate and
          prosecute such legal action at its own expense and subject to Merck's
          written consent, in the name of Idera and Merck, or to control the
          defense of any declaratory judgment action relating to Idera Program
          Patent Rights or Idera Know-How. In such case, Idera shall promptly
          inform Merck if it elects not to exercise such first right and Merck
          shall thereafter have the right to either initiate and prosecute such
          action or to control the defense of such declaratory judgment action
          in the name of Merck and, subject to Idera's written consent, in the
          name of Merck and Idera. For any action that Merck either initiates or
          prosecutes, Merck shall reasonably consider the rights and interests
          of Idera. Each Party shall have the right to be represented by counsel
          of its own choice.

     (E)  In the event that Idera elects not to initiate and prosecute an action
          as provided in Sections 7.4 (b) and (d) and Merck elects to do so, the
          costs of any agreed-upon course of action to terminate infringement of
          Idera Patent Rights or misappropriation or misuse of Idera Know-How,
          including without limitation, the costs of any legal action commenced
          or the defense of any declaratory judgment, shall be paid by Merck.

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<PAGE>

     (F)  For any action to terminate any infringement of Idera Patent Rights or
          any misappropriation or misuse of Idera Know-How, in the event that
          Merck is unable to initiate or prosecute such action solely in its own
          name, Idera will join such action voluntarily and will execute and
          cause its Affiliates to execute all documents necessary for Merck to
          initiate litigation and to prosecute and maintain such action. In
          connection with any action, Merck and Idera will cooperate fully and
          will provide each other with any information or assistance that either
          Party may reasonably request. Each Party shall keep the other informed
          of developments in any action or proceeding, including, without
          limitation and to the extent permissible by law, consultation on and
          approval of any settlement, the status of any settlement negotiations
          and the terms of any offer related thereto.

     (G)  Any recovery obtained by either Merck or Idera or both Parties in
          connection with or as a result of any action for (i) infringement of
          Idera Program Patent Rights, (ii) misappropriation or misuse of Idera
          Know-How or (iii) infringement of Idera Background Patent Rights in
          any of the Fields, whether by settlement or otherwise, shall be shared
          in the following order of priority:

          (I)     [**];

          (II)    [**]; and

          (III)   [**].

7.5 COOPERATION; PATENT TERM EXTENSION AND RESTORATION

     The Parties agree to cooperate and to take reasonable actions to maximize
     the protections available under the provisions of 35 U.S.C. 103(c) for U.S.
     patents/patent applications. The Parties hereto shall cooperate with each
     other, including without limitation, to provide necessary information and
     assistance as the other Party may reasonably request, in obtaining patent
     term extension, restoration or supplemental protection certificates or
     their equivalents in any country in the Territory where applicable to Idera
     Patent Rights. In the event that elections with respect to obtaining such
     patent term restoration are to be made, Merck shall have the right to make
     the election and Idera agrees to abide by such election. All costs, fees
     and expenses incurred in obtaining patent term extensions, restorations or
     supplemental protection certificates shall be borne by Idera, unless such
     election was made by Merck.

8. TERM AND TERMINATION

8.1 TERM AND EXPIRATION

     This Agreement shall be effective as of the Effective Date and unless
     terminated earlier pursuant to Sections 8.2 or 8.3 below, this Agreement
     shall continue in effect until expiration of all royalty obligations
     hereunder. Upon expiration of this Agreement, Merck's licenses pursuant to
     Sections 3.1.1 and 3.1.2 shall become fully paid-up, perpetual licenses.

8.2 TERMINATION BY MERCK

     Notwithstanding anything contained herein to the contrary, Merck shall have
     the right to terminate this Agreement at any time in its sole discretion by
     giving one hundred eighty (180)

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<PAGE>

     days' advance written notice to Idera during the Research Program Term and
     ninety (90) days' advance written notice to Idera once the Research Program
     Term has expired. No later than [**] days after the effective date of such
     termination, each Party shall return or cause to be returned to the other
     Party all Information in tangible form received from the other Party and
     all copies thereof; provided, however, that Idera may retain any
     Information reasonably necessary for such Party's continued practice under
     any license(s) which do not terminate pursuant to this Section 8.2, and
     each Party may keep one copy of Information received from the other Party
     in its confidential files for record purposes to ensure its compliance with
     the terms of this Agreement. In the event of termination under this Section
     8.2: (i) each Party shall pay all amounts then due and owing as of the
     termination date; and (ii) except for the license rights set out in Section
     3.2.1 which shall become a fully paid-up, perpetual license and the
     surviving provisions set forth in Section 8.4 hereof, the rights and
     obligations of the parties hereunder shall terminate as of the date of such
     termination.

8.3 TERMINATION FOR CAUSE

     8.3.1 Cause for Termination. This Agreement may be terminated at any time
          during the term of this Agreement:

          (A)  upon written notice by either Party if the other Party is in
               breach of its material obligations hereunder by causes and
               reasons within its control and has not cured such breach within
               [**] days after notice requesting cure of the breach; provided,
               however, that in the event of a good faith dispute with respect
               to the existence of a material breach, the [**] day cure period
               shall be tolled until such time as the dispute is resolved
               pursuant to Section 10.6 hereof;

          (B)  by either Party upon the filing or institution of bankruptcy,
               reorganization, liquidation or receivership proceedings, or upon
               an assignment of a substantial portion of the assets for the
               benefit of creditors by the other Party; provided, however, that
               in the case of any involuntary bankruptcy proceeding such right
               to terminate shall only become effective if the Party consents to
               the involuntary bankruptcy or such proceeding is not dismissed
               within one hundred twenty (120) days after the filing thereof;
               and

          (C)  (i) each Party shall pay all amounts then due and owing as of the
               termination date; and (ii) except as provided in Section 8.3.2
               and except for the surviving provisions set forth in this Article
               8 hereof, the rights and obligations of the Parties hereunder
               shall terminate as of the date of such termination.

     8.3.2 Effect of Termination for Cause on License; Section 365(n) Rights

          (A)  If Idera terminates this Agreement under Section 8.3.1(a) and an
               arbitration award has been granted pursuant to Section 10.6
               finding that Merck has breached a material obligation, (i)
               Idera's license pursuant to Section 3.2.1 shall become a fully
               paid-up, perpetual license; (ii) Merck's licenses pursuant to
               Sections 3.1.1 and 3.1.2 shall terminate as of such termination
               date; (iii) Merck shall pay all amounts then due and owing as of
               the terminate date; and (iv) Merck shall, within [**] days after
               the effective date of such termination, return or cause to be
               returned to Idera all Information in tangible form and all
               substances or compositions delivered or provided by Idera,
               including Idera Material, as well as any other material provided
               by Idera in any medium.

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<PAGE>

          (B)  If Merck terminates this Agreement under Section 8.3.1(a) and an
               arbitration award has been granted pursuant to Section 10.6
               finding that Idera has breached a material obligation, Merck's
               licenses pursuant to Sections 3.1.1 and 3.1.2 shall become fully
               paid-up, perpetual licenses and Merck's financial obligations
               pursuant to Sections 5.3 and 5.4 shall remain in full force and
               effect; provided, however, that Merck may (i) offset against such
               financial obligations the amount of any damages resulting from
               such material breach by Idera that are awarded to Merck pursuant
               to Section 10.6; (ii) in the case of Idera's breach of a material
               obligation that relates to or arises out of Idera's obligations
               under the Research Program or Idera's exclusive efforts under
               Section 2.12, reduce by [**]% any milestone and royalty payments
               that may become due and owing; and (iii) in the event such
               termination occurs before the one year anniversary of the end of
               the Research Program Term, Merck shall be entitled to exercise
               its right under Section 2.8.3 to select up to [**] Selected
               Collaboration Compounds targeting TLR 9, along with [**] back-up
               Selected Collaboration Compounds, and [**] Selected Collaboration
               Compounds targeting TLR 7, TLR 8 or both TLR 7 and TLR 8, along
               with [**] back-up Selected Collaboration Compounds, within 180
               days of the date of termination by Merck. Idera shall, within
               [**] days after the effective date of such termination, return or
               cause to be returned to Merck all Information in tangible form,
               and all substances or compositions delivered or provided by
               Merck, including Merck Material, as well as any other material
               provided by Merck in any medium.

          (C)  Upon termination of this Agreement by Merck pursuant to Section
               8.2, or by Idera pursuant to Section 8.3.1(a), Merck and its
               Affiliates, sublicensees and distributors shall be entitled,
               during the twelve (12) month period immediately following the
               effective date of termination, to finish any work-in-progress and
               to sell any Products remaining in inventory, in accordance with
               the terms of this Agreement.

          (D)  All licenses and rights to licenses granted under or pursuant to
               this Agreement to either Party are, and shall otherwise be deemed
               to be, for purposes of Section 365(n) of the United States
               Bankruptcy Code (the "CODE"), licenses of rights to "intellectual
               property" as defined under Section 101(35A) of the Code. The
               Parties agree that the licensee of such rights under this
               Agreement, shall retain and may fully exercise all of its rights
               and elections under the Code, and that upon commencement of a
               bankruptcy proceeding by or against the licensor under the Code,
               the licensee shall be entitled to a complete duplicate of, or
               complete access to (as the licensee deems appropriate), any such
               intellectual property and all embodiments of such intellectual
               property. Such intellectual property and all embodiments thereof
               shall be promptly delivered to the licensee (i) upon any such
               commencement of a bankruptcy proceeding upon written request
               therefor by the licensee, unless the licensor elects to continue
               to perform all of its obligations under this Agreement or (ii) if
               not delivered under (i) above, upon the rejection of this
               Agreement by or on behalf of the licensor upon written request
               therefor by the licensee.

               The foregoing provisions of this Section 8.3.2(d) are without
               prejudice to any rights the licensee may have arising under the
               Code or other applicable law.

                                       36

<PAGE>

8.4 EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL

     Expiration or termination of this Agreement shall not relieve the Parties
     of any obligation accruing prior to such expiration or termination. Any
     expiration or termination of this Agreement shall be without prejudice to
     the rights of either Party against the other accrued or accruing under this
     Agreement prior to expiration or termination, including without limitation,
     the obligation to pay royalties for Product(s) or Selected Collaboration
     Compound(s) sold prior to such expiration or termination. The provisions of
     Article 4 shall survive the expiration or termination of this Agreement and
     shall continue in effect for [**]. In addition, the provisions of Articles
     1, 7, 8 and 9, and Sections 2.9, 3.7, 10.4 through 10.7, 10.9 and 10.12
     shall survive any expiration or termination of this Agreement.

     In the event of termination of any of Merck's licenses hereunder, Merck
     shall be responsible for notifying each sublicensee of such termination and
     for ensuring that such sublicensee discontinues its practice of the rights
     sublicensed to it under the licenses granted to Merck in this Agreement. In
     the event of a material default by any sublicensee under a sublicense
     agreement, Merck will inform Idera and take such action, after consultation
     with Idera, that in Merck's reasonable business judgment will address such
     default.

9. INDEMNIFICATION

9.1 INDEMNIFICATION BY MERCK

     Subject to the limitation of liability set forth in Section 9.4, Merck
     agrees to defend Idera, its Affiliates and their respective directors,
     officers, employees and agents at Merck's cost and expense, and shall
     indemnify and hold harmless Idera and its Affiliates and their respective
     directors, officers, employees and agents from and against any liabilities,
     losses, costs, damages, fees or expenses arising out of any Third Party
     claim relating to (i) any breach by Merck of any of its representations,
     warranties or material obligations pursuant to this Agreement or (ii)
     personal injury and property damage resulting from the development,
     manufacture, use or sale of Selected Collaboration Compound(s) or
     Product(s) by Merck or its Related Parties, except to the extent such
     liabilities, losses, costs, damages, fees or expenses result from the gross
     negligence or willful misconduct of Idera.

9.2 INDEMNIFICATION BY IDERA

     Subject to the limitation of liability set forth in Section 9.4, Idera
     agrees to defend Merck, its Affiliates and their respective directors,
     officers, employees and agents at Idera's cost and expense, and shall
     indemnify and hold harmless Merck and its Affiliates and their respective
     directors, officers, employees and agents from and against any liabilities,
     losses, costs, damages, fees or expenses arising out of any Third Party
     claim relating to (i) any breach by Idera of any of its representations,
     warranties or material obligations pursuant to this Agreement or (ii)
     personal injury and property damage resulting from the development,
     manufacture, use or sale of Non-Selected Collaboration Compound(s) or
     product(s) containing such Non-Selected Collaboration Compounds by Idera or
     its sublicensees pursuant to Section 3.2.1, except to the extent such
     liabilities, losses, costs, damages, fees or expenses result from the gross
     negligence or willful misconduct of Merck.

9.3 CLAIMS FOR INDEMNIFICATION

     A Person entitled to indemnification under this Article 9 (an "INDEMNIFIED
     PARTY") shall give prompt written notification to the Person from whom
     indemnification is sought (the "INDEMNIFYING PARTY") of the commencement of
     any action, suit or proceeding relating to a

                                       37

<PAGE>

     Third Party claim for which indemnification may be sought or, if earlier,
     upon the assertion of any such claim by a Third Party (it being understood
     and agreed, however, that the failure by an Indemnified Party to give
     notice of a Third-Party claim as provided in this Section 9.3 shall not
     relieve the Indemnifying Party of its indemnification obligation under this
     Agreement except and only to the extent that such Indemnifying Party is
     actually damaged as a result of such failure to give notice). Within thirty
     (30) days after delivery of such notification, the Indemnifying Party may,
     upon written notice thereof to the Indemnified Party, assume control of the
     defense of such Third Party claim with counsel reasonably satisfactory to
     the Indemnified Party. If the Indemnifying Party does not assume control of
     such defense, the Indemnified Party shall control such defense. The Party
     not controlling such defense may participate therein at its own expense.
     The Party controlling such defense shall keep the other Party advised of
     the status of such action, suit, proceeding or claim and the defense
     thereof and shall consider recommendations made by the other Party with
     respect thereto. The Indemnified Party shall not agree to any settlement of
     such action, suit, proceeding or claim without the prior written consent of
     the Indemnifying Party, which shall not be unreasonably withheld, delayed
     or conditioned. The Indemnifying Party shall not agree to any settlement of
     such action, suit, proceeding or claim or consent to any judgment in
     respect thereof that does not include a complete and unconditional release
     of the Indemnified Party from all liability with respect thereto or that
     imposes any liability or obligation on the Indemnified Party without the
     prior written consent of the Indemnified Party.

9.4 LIMITATION OF LIABILITY

     IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL,
     PUNITIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING,
     WITHOUT LIMITATION, ANY LOSS OF PROFITS, LOSS OF BUSINESS, LOSS OF USE,
     LOSS OR INACCESSIBILITY OF DATA, OR INTERRUPTION OF BUSINESS, ARISING UNDER
     OR RELATING TO THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, EVEN IF SUCH
     PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

10. MISCELLANEOUS

10.1 FORCE MAJEURE

     Neither Party shall be held liable to the other Party nor be deemed to have
     defaulted under or breached this Agreement for failure or delay in
     performing any obligation under this Agreement to the extent that such
     failure or delay is caused by or results from causes beyond the reasonable
     control of the affected Party, potentially including, but not limited to,
     embargoes, war, acts of war (whether war be declared or not), acts of
     terrorism, insurrections, riots, civil commotions, strikes, lockouts or
     other labor disturbances, fire, floods, or other acts of God, or acts,
     omissions or delays in acting by any governmental authority or the other
     Party. The affected Party shall notify the other Party of such force
     majeure circumstances as soon as reasonably practical, and shall promptly
     undertake all reasonable efforts necessary to cure such force majeure
     circumstances.

10.2 ASSIGNMENT/ CHANGE OF CONTROL

     10.2.1 Except as provided in this Section 10.2, this Agreement may not be
          assigned or otherwise transferred, nor may any right or obligation
          hereunder be assigned or transferred, by either Party without the
          consent of the other Party.

                                       38

<PAGE>

     10.2.2 Merck may, without Idera's consent, assign this Agreement and its
          rights and obligations hereunder in whole or in part to a Merck
          Affiliate or in connection with a Change of Control.

     10.2.3 Idera may, without Merck's consent, assign this Agreement and its
          rights and obligations hereunder in whole in connection with a Change
          in Control; provided, however, that Idera must notify Merck at least
          [**] days prior to completion of any such Change of Control except
          that in the case of a Change of Control as set forth in Section
          1.8(iii) only, Idera shall provide Merck such notice [**] days after
          Idera becomes aware of such Change of Control.

          In connection with such Competing Pharma Change of Control, Merck
          shall have the right, at any time after receipt of such notice, to:

          (A)  terminate the Research Program and all FTE funding, in which
               event the Parties shall be released of their respective
               obligations under Article 2 and the non-exclusive license granted
               by Merck to Idera under Section 3.2.2 under this Agreement shall
               terminate;

          (B)  limit its obligations to provide Idera royalty related reports
               pursuant to Section 5.5 to reporting only Merck's worldwide
               royalty obligations;

          (C)  convert without penalty the exclusive license granted by Merck to
               Idera under Section 3.2.1 of this Agreement into a non-exclusive
               license; and/or

          (D)  require Idera, including the Change of Control party, to adopt
               reasonable procedures to be agreed upon in writing with Merck to
               prevent the disclosure of all Information of Merck and its
               Affiliates and other information with respect to the development
               of Evaluation Collaboration Compounds and Selected Collaboration
               Compounds (collectively "SENSITIVE INFORMATION") beyond Idera
               personnel having access to and knowledge of Sensitive Information
               prior to the Change of Control and to control the dissemination
               of Sensitive Information disclosed after the Change of Control.
               The purposes of such procedures shall be to strictly limit such
               disclosures to only those personnel having a need to know
               Sensitive Information in order for Idera to perform its
               obligations under this Agreement and to prohibit the use of
               Sensitive Information for competitive reasons against Merck and
               its Related Parties, including without limitation, the use of
               Sensitive Information for the development or commercialization of
               competing products.

     10.2.4 Any permitted assignee shall assume all assigned obligations of its
          assignor under this Agreement. Any attempted assignment not in
          accordance with this Section 10.2 shall be void.

10.3 SEVERABILITY

     If any one or more of the provisions contained in this Agreement is held
     invalid, illegal or unenforceable in any respect, the validity, legality
     and enforceability of the remaining provisions contained herein shall not
     in any way be affected or impaired thereby, unless the absence of the
     invalidated provision(s) adversely affects the substantive rights of the
     Parties. The Parties shall in such an instance use their best efforts to
     replace the invalid, illegal or unenforceable provision(s) with valid,
     legal and enforceable provision(s) which, insofar as practical, implement
     the purposes of this Agreement.

                                       39

<PAGE>

10.4 NOTICES

     All notices which are required or permitted hereunder shall be in writing
     and sufficient if delivered personally, sent by facsimile (and promptly
     confirmed by personal delivery, registered or certified mail or overnight
     courier), sent by nationally-recognized overnight courier or sent by
     registered or certified mail, postage prepaid, return receipt requested,
     addressed as follows:

          If to Idera, to:   Idera Pharmaceuticals, Inc.
                             345 Vassar Street
                             Cambridge, MA 02139
                             Attention: Chief Executive Officer
                             Facsimile: (617) 679-5572

                       and   Wilmer Cutler Pickering Hale and Dorr LLP
                             60 State Street
                             Boston, MA 02109
                             Attention: David E. Redlick, Esq.
                             Facsimile: (617) 526-5000

          If to Merck, to:   Merck & Co., Inc.
                             One Merck Drive (WS 3A-65)
                             P.O. Box 100
                             Whitehouse Station, NJ  08889-0100
                             Attention: Office of Secretary
                             Facsimile: (908) 735-1246

                       and   Merck & Co., Inc.
                             One Merck Drive (WS 2A-30)
                             P.O. Box 100
                             Whitehouse Station, NJ 08889-0100
                             Attention: Chief Licensing Officer
                             Facsimile: (908) 735-1214

     or to such other address(es) as the Party to whom notice is to be given may
     have furnished to the other Party in writing in accordance herewith. Any
     such notice shall be deemed to have been given: (a) when delivered, if
     personally delivered or sent by facsimile on a business day (or if
     delivered or sent on a non-business day, then on the next business day);
     (b) on the business day after dispatch, if sent by nationally-recognized
     overnight courier; or (c) on the fifth (5th) business day following the
     date of mailing, if sent by mail.

10.5 APPLICABLE LAW

     This Agreement shall be governed by and construed in accordance with the
     laws of the State of New York and the patent laws of the United States,
     without reference to any rules of conflict of laws or renvoi.

10.6 DISPUTE RESOLUTION

     10.6.1 The Parties shall negotiate in good faith and use reasonable efforts
          to settle any dispute, controversy or claim arising from or related to
          this Agreement or the breach thereof. If

                                       40

<PAGE>

          the Parties do not fully settle, and a Party wishes to pursue the
          matter, each such dispute, controversy or claim that is not an
          "Excluded Claim" shall be finally resolved by binding arbitration in
          accordance with the Commercial Arbitration Rules and Supplementary
          Procedures for Large Complex Disputes of the American Arbitration
          Association ("AAA"), and judgment on the arbitration award may be
          entered in any court having jurisdiction thereof.

     10.6.2 The arbitration shall be conducted by a panel of three persons
          experienced in the pharmaceutical business. Within thirty (30) days
          after initiation of arbitration, each Party shall select one person to
          act as arbitrator; and the two Party-selected arbitrators shall select
          a third arbitrator within thirty (30) days of their appointment. If
          the arbitrators selected by the Parties are unable or fail to agree
          upon the third arbitrator, the third arbitrator shall be appointed by
          the AAA. The place of arbitration shall be New York, New York, and all
          proceedings and communications shall be in English.

     10.6.3 Either Party may apply to the arbitrators for interim injunctive
          relief until the arbitration award is rendered or the controversy is
          otherwise resolved. Either Party also may, without waiving any remedy
          under this Agreement, seek from any court having jurisdiction any
          injunctive or provisional relief necessary to protect the rights or
          property of that Party pending the arbitration award. The arbitrators
          shall have no authority to award punitive or any other type of damages
          not measured by a Party's compensatory damages. Each Party shall bear
          its own costs and expenses and attorneys' fees and an equal share of
          the arbitrators' fees and any administrative fees of arbitration.

     10.6.4 Except to the extent necessary to confirm an award or as may be
          required by law, neither a Party nor an arbitrator may disclose the
          existence, content, or results of an arbitration without the prior
          written consent of both Parties. In no event shall an arbitration be
          initiated after the date when commencement of a legal or equitable
          proceeding based on the dispute, controversy or claim would be barred
          by the applicable New York statute of limitations.

     10.6.5 The Parties agree that, in the event of a dispute over the nature or
          quality of performance under this Agreement, neither Party may
          terminate this Agreement until final resolution of the dispute through
          arbitration or other judicial determination. The Parties further agree
          that any payments made pursuant to this Agreement pending resolution
          of the dispute shall be refunded if an arbitrator or court determines
          that such payments are not due.

     10.6.6 As used in this Section 10.6, the term "EXCLUDED CLAIM" shall mean a
          dispute, controversy or claim that concerns (a) the validity or
          infringement of a patent, trademark or copyright; or (b) any
          antitrust, anti-monopoly or competition law or regulation, whether or
          not statutory.

10.7 ENTIRE AGREEMENT; AMENDMENTS

     This Agreement, together with the Stock Purchase Agreement and Registration
     Rights Agreement, contains the entire understanding of the Parties with
     respect to the subject matter hereof. Any other express or implied
     agreements and understandings, either oral or written, with respect to the
     subject matter hereof are superseded by the terms of this Agreement.
     Notwithstanding the foregoing, the Material Transfer Agreement dated
     January 23, 2006 between Idera and Merck, as amended on July 28, 2006 and
     August 16, 2006, shall remain in full force

                                       41

<PAGE>

     and effect in accordance with its terms with respect to transfers of
     materials and disclosures of information governed thereby through the
     Effective Date, but shall be superseded by this Agreement with respect to
     such transfers and disclosures occurring on or after the Effective Date.
     This Agreement may be amended, or any term hereof modified, only by a
     written instrument duly executed by authorized representatives of both
     Parties hereto.

10.8 AFFILIATES

     Merck may perform its obligations hereunder personally or through one of
     more Affiliates, although Merck shall nonetheless be solely responsible for
     the performance of its Affiliates. Merck shall not permit any of its
     Affiliates to commit any act (including any act or omission) which Merck is
     prohibited thereunder from committing directly.

10.9 HEADINGS

     The captions to the several Articles and Sections hereof are not a part of
     this Agreement, but are merely for convenience to assist in locating and
     reading the several Articles and Sections hereof.

10.10 INDEPENDENT CONTRACTORS

     It is expressly agreed that Idera and Merck shall be independent
     contractors and that the relationship between the Parties shall not
     constitute a partnership, joint venture or agency. Neither Idera nor Merck
     shall have the authority to make any statements, representations or
     commitments of any kind, or to take any action, which shall be binding on
     the other Party, without the prior written consent of the other Party.

10.11 WAIVER

     The waiver by either Party hereto of any right hereunder, or of any failure
     of the other Party to perform, or of any breach by the other Party, shall
     not be deemed a waiver of any other right hereunder or of any other breach
     by or failure of such other Party, whether of a similar nature or
     otherwise.

10.12 CUMULATIVE REMEDIES

     No remedy referred to in this Agreement is intended to be exclusive, but
     each shall be cumulative and in addition to any other remedy referred to in
     this Agreement or otherwise available under law.

10.13 WAIVER OF RULE OF CONSTRUCTION

     Each Party has had the opportunity to consult with counsel in connection
     with the review, drafting and negotiation of this Agreement. Accordingly,
     the rule of construction that any ambiguity in this Agreement shall be
     construed against the drafting Party shall not apply.

10.14 COUNTERPARTS

     This Agreement may be executed in two or more counterparts, each of which
     shall be deemed an original, but all of which together shall constitute one
     and the same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       42

<PAGE>

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.

MERCK & CO., INC.                       IDERA PHARMACEUTICALS, INC.

By: /s/ Peter S. Kim                    By: /s/ Sudhir Agrawal
    ---------------------------------       ------------------------------------
    Peter S. Kim                            Sudhir Agrawal
    President, Merck Research               Chief Executive Officer
       Laboratories

                                       43
<PAGE>

                                                                   SCHEDULE 1.18

                               EVALUATION CRITERIA

Evaluation Criteria for Compounds Targeting TLR 9

     [**]

Evaluation Criteria for Compounds Targeting TLR 7, TLR 8 and/or TLR 7 and TLR 8

     [**]

                                        i

<PAGE>

                                                                   SCHEDULE 1.25

                       IDERA BACKGROUND PATENT RIGHTS

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION       COUNTRY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
    [**]                                         [**]    [**]           [**]              [**]          [**]       [**]
                   [**]                                  [**]           [**]              [**]          [**]
    [**]                                                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
    [**]                                         [**]    [**]           [**]              [**]       [**]          [**]
    [**]                                                 [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]       [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]       [**]          [**]
</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]          [**]       [**]
                                    [**]                 [**]           [**]              [**]          [**]       [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]           [**]              [**]          [**]       [**]
                   [**]                                  [**]           [**]              [**]          [**]
   [**]                                                  [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]          [**]       [**]
                                    [**]                 [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]           [**]              [**]          [**]       [**]
                   [**]                                  [**]           [**]              [**]          [**]
                   [**]                                  [**]           [**]              [**]          [**]
   [**]                                                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
                                   [**]                  [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
                                   [**]                  [**]           [**]              [**]          [**]       [**]
</TABLE>

                                      iii

<PAGE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
    [**]
                                    [**]                 [**]           [**]              [**]         [**]        [**]
                                    [**]                 [**]           [**]              [**]         [**]        [**]
                                    [**]                 [**]           [**]              [**]         [**]        [**]
                                    [**]                 [**]           [**]              [**]         [**]        [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]         [**]        [**]
                                    [**]                 [**]           [**]              [**]         [**]        [**]
                                    [**]                 [**]           [**]              [**]         [**]        [**]
                                    [**]                 [**]           [**]              [**]         [**]        [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
    [**]                                         [**]    [**]           [**]              [**]          [**]       [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
    [**]                                         [**]    [**]           [**]              [**]
    [**]                                                 [**]           [**]              [**]          [**]
                   [**]                                  [**]           [**]              [**]          [**]
                   [**]                                  [**]           [**]              [**]
                   [**]                                  [**]           [**]              [**]
    [**]                                                 [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]
                                   [**]                  [**]           [**]              [**]
</TABLE>

                                       iv

<PAGE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION       COUNTY        TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
    [**]                                         [**]    [**]           [**]              [**]         [**]
                   [**]                                  [**]           [**]              [**]         [**]
                   [**]                                  [**]           [**]              [**]         [**]
                   [**]                                  [**]           [**]              [**]         [**]
                   [**]                                  [**]           [**]              [**]         [**]
                   [**]                                  [**]           [**]              [**]         [**]
                   [**]                                  [**]           [**]              [**]
    [**]                                                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
                   [**]                                  [**]           [**]
                                    [**]                 [**]           [**]              [**]
                                    [**]                 [**]           [**]              [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION       COUNTY        TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
    [**]                                         [**]    [**]            [**]             [**]          [**]
    [**]                                                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]            [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION       COUNTY        TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
    [**]                                         [**]    [**]            [**]             [**]         [**]
                   [**]                                  [**]            [**]             [**]
                   [**]                                  [**]            [**]             [**]         [**]
                   [**]                                  [**]            [**]             [**]         [**]
    [**]                                                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
</TABLE>

                                        v

<PAGE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION       COUNTY        TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION       COUNTY        TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]            [**]             [**]          [**]
   [**]                                                  [**]            [**]             [**]
                                    [**]                 [**]            [**]             [**]
                                    [**]                 [**]
                                    [**]                 [**]
                                    [**]                 [**]
                                    [**]                 [**]
                                    [**]                 [**]
                                    [**]                 [**]
                                    [**]                 [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION       COUNTY        TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]            [**]             [**]          [**]
   [**]                                                  [**]            [**]             [**]
                                    [**]                 [**]                             [**]
                                    [**]                 [**]
                                    [**]                 [**]            [**]             [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION       COUNTY        TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]            [**]             [**]          [**]
   [**]                                                  [**]            [**]             [**]          [**]
</TABLE>

                                       vi

<PAGE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]            [**]             [**]          [**]
   [**]                                                  [**]            [**]             [**]
                   [**]                                  [**]
                   [**]                                  [**]            [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]            [**]             [**]          [**]
                   [**]                                  [**]            [**]             [**]          [**]
                   [**]                                  [**]            [**]             [**]          [**]
                   [**]                                  [**]            [**]             [**]          [**]
                   [**]                                  [**]            [**]             [**]          [**]
                   [**]                                  [**]            [**]             [**]
   [**]                                                  [**]            [**]             [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]            [**]             [**]
   [**]                                                  [**]            [**]             [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]            [**]             [**]
   [**]                                                  [**]            [**]             [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]            [**]             [**]
   [**]                                                  [**]            [**]             [**]
</TABLE>

                                       vii

<PAGE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]           [**]              [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]           [**]              [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]           [**]              [**]
</TABLE>

<TABLE>
<CAPTION>
                                    PCT                                                               PATENT /
                              NATIONALIZATION                                         APPLICATION   PUBLICATION   GRANT
IDERA NUMBER   CONTINUATION        COUNTY       TITLE   STATUS   APPLICATION NUMBER       DATE         NUMBER      DATE
------------   ------------   ---------------   -----   ------   ------------------   -----------   -----------   -----
<S>            <C>            <C>               <C>     <C>      <C>                  <C>           <C>           <C>
   [**]                                          [**]    [**]           [**]              [**]
   [**]                                          [**]    [**]           [**]              [**]
   [**]                                          [**]    [**]                             [**]
</TABLE>

                                      viii

<PAGE>

                                                                   SCHEDULE 1.29

                                 IDERA MATERIALS

(A)

     [**]

(B)

          Any other IMO to be provided by Idera to Merck pursuant to Schedule
1.18 or Schedule 2.1.

                                       ix

<PAGE>

                                                                   SCHEDULE 1.50

                                 MERCK MATERIALS

To be provided within thirty (30) days of the Execution Date.

                                        x

<PAGE>

                                                                   SCHEDULE 1.73

                               SELECTION CRITERIA

The criteria set forth in this Schedule 1.73 is subject to the sole discretion
of Merck and is listed here as a guideline only.

     I.   ONCOLOGY FIELD

          [**]

     II.  INFECTIOUS DISEASE FIELD

          Formulation

          [**]

     III. ALZHEIMER'S DISEASE FIELD

          Formulation

          [**]

                                       xi
<PAGE>

                                                                    SCHEDULE 2.1

                                RESEARCH PROGRAM

BACKGROUND

Toll like receptor (TLR) agonists have been shown to be potent adjuvants to
vaccines for a variety of indications in a number of experimental systems as
well as in the clinic. In particular, agonists to TLR7, TLR8 and TLR9 have
elicited a great deal of attention in view of the key role played by these
receptors in modulating the immune response and in determining the amplitude and
efficacy of immunization regimens. Idera structure-activity relationship studies
have identified a portfolio of oligodeoxynucleotides as agonists of TLR9 that
induce potent Th-1 immune responses. These studies have provided the insights of
design and development of nucleic acid-based TLR agonists.

Single-stranded viral RNA and certain endogenous RNAs are natural ligands for
TLRs7 and 8. Delivery of RNA or oligoribonucleotides as agonists of TLR7/8 are
limited due to their instability against nucleases and RNases. Idera has
identified novel RNA structures that [**]. These oligoribonucleotides contain
[**]. These RNA compounds are referred to as SIMRA (Stabilized Immune Modulatory
RNA). Idera studies have shown that these SIMRA compounds activate TLR8 or TLR7
and 8 depending on the [**]. SIMRA compounds have [**]. Specific recognition of
SIMRA compounds by TLR7 and 8 is modulated by the [**].

Based on these initial designs, [**]. These novel [**] may be provided by either
MRL or Idera. A key objective of the Research Plan is to determine the impact of
Idera's proprietary TLR agonists, as well as TLR agonists derived jointly under
the research collaboration, on the immunogenicity and efficacy of Merck's
proprietary vaccines for Cancer, Infectious Disease (ID) and Alzheimer (AD)
[**]. Another objective of the Research Plan is to [**].

PROPOSAL

[**] under the Research Plan. Idera will [**]. Merck will [**]. Additionally
[**].

                                       xii

<PAGE>

SPECIFIC EXPERIMENTAL PLAN

1.   [**] SIMRA COMPOUNDS WILL BE [**] UNDER THE RESEARCH PLAN.

     (a)  Merck will [**] Idera.

          i.   MRL (RY and IRBM) will [**].

          ii.  Following [**], MRL and Idera will [**].

     (b)  SIMRA compounds will be [**].

          [**] involves the following steps

          -    Synthesis of nucleoside phosphoramidites

          -    Synthesis of oligos on automated RNA/DNA synthesizers,

          -    Purification using HPLC techniques,

          -    Desalting/Lyophilization,

          -    Analysis and characterization by:

               -    Capillary gel electrophoresis,

               -    Ion-exchange HPLC,

               -    PAGE,

               -    MALDI-TOF Mass spectrometry.

2.   IDERA WILL [**].

     (a)  [**] SIMRA Compounds synthesized will be [**].

          -    [**] against [**]

          -    [**] cytokine profiles [**] using luminex multiplex assay

     (b)  Depending on the [**] compounds [**] of the compounds will be
          synthesized [**] and [**]

     Based on the [**] Idera and Merck [**] will be [**] by Idera to [**] with
     [**] in [**] will be [**] at Merck.

     -    [**], in order to conduct the experiments indicated in the Research
          Program.

     -    Additionally, [**] including chemical structure.

     It is projected that [**] by Idera, from which [**]. The [**] at Merck's
     discretion.

                                      xiii

<PAGE>

3.   MERCK WILL TEST THE TLR7, TLR8, TLR7/8 AND TLR9 AGONISTS PROVIDED BY IDERA
     IN COMBINATION WITH MERCK PROPRIETARY CANCER, ID, AND AD VACCINES IN
     APPROPRIATE [**] MODELS.

     (a)  Perform evaluation studies [**]. Merck expects to [**] depending on
          the Field.

     (b)  Evaluation experiments will [**] as follows:

     Cancer Vaccines

     Synergy between [**]. If appropriate, [**] will also be [**].

     [**] vaccination will take place by i.m. (DNA-EP/Ad) or i.d. (peptides)
     immunization. [**] according to [**] procedures to [**].

     ID Vaccines

     Selected Idera's TLR agonists will be [**] (based on, but not restricted
     to, [**]) and/or in [**].

                                       xiv

<PAGE>

     AD Vaccines

     Selected Idera's TLR agonists will be [**] and/or [**].

     If appropriate, [**].

     ENDPOINT:

     The [**] will be judged on the basis of [**].

     ID Vaccines

     Immunogenicity markers will include, but will not be restricted to: [**].
     The nature of a chosen marker(s) will depend on [**]. Whenever possible,
     [**] will be assessed for [**].

     Cancer Vaccines

     Immunogenicity markers will include, but will not be restricted to: [**].

     AD Vaccines

     The markers will primarily include: [**].

     Other factors that will [**].

4.   MERCK WILL MONITOR THE [**].

     (a)  The [**] will be assessed [**] for their ability to induce [**] as
          measured by ELISA, MesoScale, Multiplex or qPCR analyses, or to [**].
          If appropriate, [**].

     (b)  At [**] may similarly be evaluated [**].

     (c)  [**] will be evaluated for the ability to [**].

     (d)  If appropriate, [**] to verify whether [**] effects can be obtained.

                                       xv

<PAGE>

                                                                  SCHEDULE 2.3.2

                               DEPLOYMENT OF FTES

          Confidential Materials omitted and filed separately with the

                       Securities and Exchange Commission.

                                      [**]

                                       xvi

<PAGE>

                                                                   SCHEDULE 2.12

                                IDERA OBLIGATIONS

                 UNDER THE IMMUNE RESPONSE CORPORATION AGREEMENT

Idera has granted a non-exclusive license under Idera's intellectual property
rights to The Immune Response Corporation to research, develop and commercialize
IMO-2055 for use as an adjuvant in vaccine products for the treatment and
prevention of HIV. [**].

                                      xvii
<PAGE>

                                                                    SCHEDULE 4.4

                              FORM OF PRESS RELEASE

                                                                    (MERCK LOGO)

IDERA PHARMACEUTICALS                                     MERCK & CO., INC.
Media: Kari Watson                                        Media: Janet Skidmore
(508) 647-0209                                            (267) 305-7715

Investors: Kelly Luethje                                  Investors: Graeme Bell
(617) 679-5519                                            (908) 423-5185

    MERCK & CO., INC. AND IDERA PHARMACEUTICALS SIGN COLLABORATION AGREEMENT
  INCORPORATING IDERA'S TOLL-LIKE RECEPTOR AGONISTS IN MERCK'S VACCINE PROGRAMS

CAMBRIDGE, MASS. AND WHITEHOUSE STATION, N.J., DEC. 11, 2006 - Merck & Co., Inc.
(NYSE: MRK) and Idera Pharmaceuticals (AMEX: IDP) announced today that they have
formed a broad collaboration to research, develop and commercialize Idera's
Toll-like Receptor (TLR) agonists by incorporating them in therapeutic and
prophylactic vaccines being developed by Merck for oncology, infectious diseases
and Alzheimer's disease.

"Our collaboration with Idera is part of Merck's long-standing commitment to
research and develop novel vaccines and medicines that can improve human
health," said Peter S. Kim, Ph.D., president, Merck Research Laboratories. "We
believe that vaccines combined with TLR-targeted compounds offer great promise
in treating and preventing serious diseases, and look forward to integrating
Idera's TLR agonists into our vaccine development programs."

Under the terms of the agreement, Merck will receive worldwide exclusive rights
to a number of Idera's agonist compounds targeting TLR 7, 8 and 9 for use in
combination with Merck's therapeutic and prophylactic vaccines under development
for oncology, infectious diseases and Alzheimer's disease. Merck and Idera will
engage in a two-year research and development collaboration to generate novel
agonists targeting TLR 7 and TLR 8 and incorporating both

                                    - more -

                                      xviii

<PAGE>

Merck and Idera chemistry for use in the licensed fields.

Merck has agreed to pay an upfront license fee of $20 million to Idera and to
purchase $10 million of its common stock at $5.50 per share. In addition, Merck
will fund the research and development collaboration. Idera is eligible to
receive milestone payments of up to $165 million if vaccines are successfully
developed in each of the three fields. Additional milestones of up to $260
million would be payable for follow-on indications in the oncology field and the
successful development of additional vaccines containing Idera's TLR agonists.
There is no limit to the number of vaccines to which Merck can apply Idera's
agonists within the licensed fields. In addition, Idera will receive royalties
on products commercialized under the collaboration.

"We are extremely pleased to collaborate with Merck, a global pharmaceutical
leader with a reputation for innovative research," said Sudhir Agrawal, D.
Phil., chief executive officer and chief scientific officer of Idera. "This
agreement enables Idera to increase the potential of our TLR 7, 8 and 9 targeted
compounds in the field of therapeutic and prophylactic vaccines. Furthermore, we
look forward to working closely with Merck's world-class chemists to expand our
portfolio of novel TLR 7 and TLR 8 agonist compounds."

"TLRs are critical mediators of the human immune response. We believe a
chemistry-based approach may be an efficient way to harness the activity of TLRs
to train the immune system to recognize antigens, thereby potentially enhancing
the effect of vaccines," said Stephen H. Friend, M.D., Ph.D., executive vice
president of Advanced Technologies and Oncology at Merck. "We are pleased to
collaborate with Idera, which has established a robust TLR-based discovery
platform that is synergistic with our internal chemistry programs and has
yielded an extensive portfolio of TLR agonist compounds that can be applied
across our multiple areas of interest for new vaccine development."

ABOUT TLRS

Toll-like Receptors (TLR) function in human immune cells as the sensors of
pathogens. They recognize different microbial products present in pathogens such
as bacteria, viruses and parasites, and mount an appropriate immune response
against the foreign invaders. TLRs have become attractive targets for developing
immune modulators to treat a number of diseases,

                                    - more -

                                       xix

<PAGE>

including cancer, asthma, allergies, and infectious diseases.

ABOUT IDERA PHARMACEUTICALS, INC.

Idera Pharmaceuticals, Inc. is a drug discovery and development company that is
developing drug candidates to treat cancer and infectious, respiratory, and
autoimmune diseases, and for use in combination with therapeutic and
prophylactic vaccines. Idera's proprietary drug candidates are designed to
modulate Toll-like Receptors, the body's first line of immune defense. Idera's
pioneering DNA chemistry expertise enables it to identify drug candidates for
internal development and creates opportunities for multiple collaborative
alliances. For more information, visit www.iderapharma.com.

IDERA FORWARD LOOKING STATEMENT

This press release contains forward-looking statements concerning Idera
Pharmaceuticals, Inc. that involve a number of risks and uncertainties. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "estimates,"
"intends," "should," "could," "will," "may," and similar expressions are
intended to identify forward-looking statements. There are a number of important
factors that could cause Idera's actual results to differ materially from those
indicated by such forward-looking statements, including whether the
collaboration with Merck will be successful and whether the Company will receive
any of the milestones provided for under the collaboration; whether products
based on Idera's technology will advance into or through the clinical trial
process on a timely basis or at all and receive approval from the United States
Food and Drug Administration or equivalent foreign regulatory agencies; whether,
if the Company's products receive approval, they will be successfully
distributed and marketed; whether Idera's cash resources will be sufficient to
fund product development and clinical trials; and such other important factors
as are set forth under the caption "Risk Factors" in Idera's Quarterly Report on
Form 10-Q filed on November 13, 2006, which important factors are incorporated
herein by reference. Idera disclaims any intention or obligation to update any
forward-looking statements.

                                    - more -

                                       xx

<PAGE>

ABOUT MERCK & CO., INC.

Merck & Co., Inc. is a global research-driven pharmaceutical company dedicated
to putting patients first. Established in 1891, Merck currently discovers,
develops, manufactures and markets vaccines and medicines to address unmet
medical needs. The Company devotes extensive efforts to increase access to
medicines through far-reaching programs that not only donate Merck medicines but
help deliver them to the people who need them. Merck also publishes unbiased
health information as a not-for-profit service. For more information, visit:
www.merck.com.

MERCK FORWARD-LOOKING STATEMENT

This press release contains "forward-looking statements" as that term is defined
in the Private Securities Litigation Reform Act of 1995. These statements are
based on management's current expectations and involve risks and uncertainties,
which may cause results to differ materially from those set forth in the
statements. The forward-looking statements may include statements regarding
product development, product potential or financial performance. No
forward-looking statement can be guaranteed, and actual results may differ
materially from those projected. Merck undertakes no obligation to publicly
update any forward-looking statement, whether as a result of new information,
future events, or otherwise. Forward-looking statements in this press release
should be evaluated together with the many uncertainties that affect Merck's
business, particularly those mentioned in the cautionary statements in Item 1 of
Merck's Form 10-K for the year ended Dec. 31, 2005, and in its periodic reports
on Form 10-Q and Form 8-K, which the company incorporates by reference.

                                      # # #

                                       xxi

<PAGE>

                                                                  SCHEDULE 5.4.4

                                ROYALTY REDUCTION

Total aggregate royalty rate   *  [**]%  =  Amount of royalty rate reduction
obligation exceeding [**]%

                                      xxii

<PAGE>

                                                                 SCHEDULE 6.1(D)

                             SCHEDULE OF EXCEPTIONS

The following patent applications are jointly owned by Idera and The Immune
Response Corporation:

          Application Number 11/078,654 (Publication Number 20050266015

      Application Number PCT/US04/16298 (Publication Number WO 05/089231A2

                                      xxiiiVOTING AGREEMENT

      This VOTING AGREEMENT (this "AGREEMENT"), dated as of the Effective Date,
by and among Tornante-MDP Joe Holding LLC, a Delaware limited liability company
("PARENT"), and the stockholder ("STOCKHOLDER") of The Topps Company, Inc., a
Delaware corporation (the "COMPANY"), identified on the signature page hereto.
All references to the "Effective Date" shall mean the Effective Date as defined
in the Merger Agreement, and similarly, all references to the "date hereof"
shall mean the Effective Date.

                                R E C I T A L S:

      WHEREAS, the Company, Parent and Tornante-MDP Joe Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of Parent ("MERGER SUB"), are
entering into an Agreement and Plan of Merger (as amended from time to time, the
"MERGER AGREEMENT"), dated as of the Effective Date (as defined in the Merger
Agreement), providing for, among other things, the merger of Merger Sub with and
into the Company, with the Company continuing as the surviving corporation and
wholly owned subsidiary of Parent (the "MERGER");

      WHEREAS, as of the date hereof, Stockholder is the Beneficial Owner (as
defined below) of, and has the sole right to vote and dispose of, that number of
shares of common stock (the "COMPANY SHARES") of the Company set forth beside
Stockholder's name on Schedule A hereto; and

      WHEREAS, concurrently with the effectiveness of the Merger Agreement, and
as a condition and inducement to the willingness of Parent and Merger Sub to
enter into the Merger Agreement and incur the obligations set forth therein,
Parent has required that Stockholder enter into this Agreement;

      NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

      Capitalized terms used but not defined in this Agreement are used in this
Agreement with the meanings given to such terms in the Merger Agreement. In
addition, for purposes of this Agreement:

      "AFFILIATE" means, with respect to any specified Person, any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this Agreement, with respect to Stockholder, "AFFILIATE" shall not
include the Company and the Persons that directly, or indirectly through one or
more intermediaries, are controlled by the Company. For the

avoidance of doubt, no officer or director of the Company shall be deemed an
Affiliate of another officer or director of the Company by virtue of his or her
status as an officer or director of the Company.

      "ALTERNATIVE TRANSACTION" means (i) any transaction of the type described
in the definition of Acquisition Proposal contained in the Merger Agreement
other than the transactions contemplated by the Merger Agreement and (ii) any
other action, agreement or transaction that would reasonably be expected to
hinder, delay, impede, interfere, postpone, discourage, adversely affect or
frustrate the consummation of the transaction contemplated by the Merger
Agreement.

      "BENEFICIALLY OWNED" or "BENEFICIAL OWNERSHIP" with respect to any
securities means having beneficial ownership of such securities (as determined
pursuant to Rule 13d-3 under the Exchange Act, disregarding the phrase "within
60 days" in paragraph (d)(1)(i) thereof), including pursuant to any agreement,
arrangement or understanding, whether or not in writing. Without duplicative
counting of the same securities, securities Beneficially Owned by a Person shall
include securities Beneficially Owned by (i) all controlled Affiliates of such
Person, and (ii) all other Persons with whom such Person would constitute a
"group" within the meaning of Section 13(d) of the Exchange Act and the rules
promulgated thereunder.

      "BENEFICIAL OWNER" with respect to any securities means a Person that has
Beneficial Ownership of such securities.

      "PERSON" means an individual, corporation, limited liability company,
partnership, association, trust or any other entity or organization, including
any Governmental Entity.

      "SUBJECT SHARES" means, with respect to Stockholder, without duplication,
(i) the Company Shares owned by Stockholder on the date hereof as described on
Schedule A, and (ii) any additional Company Shares acquired by Stockholder or
over which the Stockholder acquires Beneficial Ownership from and after the date
hereof, whether pursuant to existing stock option agreements or otherwise.

      "TRANSFER" means, with respect to a security, the sale, transfer, pledge,
hypothecation, encumbrance, assignment or disposition of such security or the
Beneficial Ownership thereof, the offer to make such sale, transfer or other
disposition, and each option, agreement, arrangement or understanding, whether
or not in writing, to effect any of the foregoing. As a verb, "TRANSFER" shall
have a correlative meaning.

                                   ARTICLE II

                            COVENANTS OF SHAREHOLDER

      Section 2.1      Irrevocable Proxy. Concurrently with the execution of
this Agreement, Stockholder agrees to deliver to Parent a proxy in the form
attached hereto as Exhibit A (the "PROXY"), which shall be irrevocable to the
extent provided in Section 212

                                        2

of the Delaware General Corporation Law (the "DGCL"), with respect to the
Subject Shares referred to therein.

      Section 2.2      Agreement to Vote.

      (a)   At any meeting of the stockholders of the Company held prior to the
            Expiration Date (as defined in Section 5.13), however called, and at
            every adjournment or postponement thereof prior to the Expiration
            Date, or in connection with any written consent of, or any other
            action by, the stockholders of the Company given or solicited prior
            to the Expiration Date, Stockholder shall vote, or provide a consent
            with respect to, all of the Subject Shares entitled to vote or to
            consent thereon (i) in favor of adoption and approval of the Merger
            Agreement and the transactions contemplated thereby, and any actions
            required in furtherance thereof and (ii) against any Alternative
            Transaction and against any other action or agreement that would
            result in a breach in any material respect of any covenant,
            representation or warranty or any other obligation or agreement of
            the Company under the Merger Agreement or that is intended.

      (b)   Stockholder shall not enter into any agreement with any Person
            (other than Parent) prior to the Expiration Date (with respect to
            periods prior to or after the Expiration Date) directly or
            indirectly to vote, grant any proxy or give instructions with
            respect to the voting of, the Subject Shares in respect of the
            matters described in Section 2.2 hereof.

      Section 2.3      Revocation of Proxies; Cooperation. Stockholder agrees as
follows:

      (a)   Stockholder hereby represents and warrants that any proxies
            heretofore given in respect of the Subject Shares with respect to
            the matters described in Section 2.2(a) hereof are not irrevocable,
            and Stockholder hereby revokes any and all prior proxies with
            respect to such Subject Shares as they relate to such matters. Prior
            to the Expiration Date, Stockholder shall not directly or indirectly
            grant any proxies or powers of attorney with respect to the matters
            set forth in Section 2.2(a) hereof (other than to Parent), deposit
            any of the Subject Shares or enter into a voting agreement (other
            than this Agreement) with respect to any of the Subject Shares
            relating to any matter described in Section 2.2(a).

      (b)   Stockholder will (i) use all reasonable efforts to cooperate with
            the Company, Parent and Merger Sub in connection with the
            transactions contemplated by the Merger Agreement, (ii) promptly
            take such actions as are necessary to consummate such transactions,
            and (iii) provide any information reasonably requested by the
            Company, Parent or Merger Sub for any regulatory application or
            filing sought for such transactions.

                                        3

      Section 2.4      No Solicitation. Stockholder agrees that:

      (a)   Stockholder shall not, and shall cause its Affiliates and its and
            their Representatives not to, directly or indirectly, (i) solicit,
            initiate or knowingly encourage any proposal that constitutes, or
            could reasonably be expected to lead to, an Alternative Transaction,
            (ii) participate or engage in discussions or negotiations with, or
            disclose or provide any non-public information relating to
            Stockholder, the Company, the Company's Subsidiaries, Parent or
            Merger Sub or this Agreement or the Merger Agreement and the
            transactions contemplated hereby and thereby to, or afford access to
            any of the properties, books or records of Stockholder, the Company
            or the Company's Subsidiaries to, any Person with respect to any
            Alternative Transaction, (iii) approve, endorse, recommend or vote
            for (or consent to) any Alternative Transaction or (iv) enter into
            any agreement or agreement in principle with any Person with respect
            to an Alternative Transaction.

      (b)   Notwithstanding anything to the contrary contained in this
            Agreement, (i) the provisions of this Agreement apply solely to
            Stockholder when acting in his or its capacity as a stockholder of
            the Company and not when acting or purporting to act as a
            representative or an officer or director of the Company (it being
            understood that the Company has separate and independent obligations
            to Parent and Merger Sub under the Merger Agreement, including,
            without limitation, Section 6.2 thereof); and (ii) none of the
            provisions of this Agreement shall be construed to prohibit, limit
            or restrict Stockholder from exercising Stockholder's fiduciary
            duties to the Company and/or its stockholders by voting or taking
            any other action whatsoever in Stockholder's capacity as a director
            or officer of the Company.

      Section 2.5      No Transfer of Subject Shares; Publicity.  Stockholder
agrees that:

      (a)   Stockholder (i) shall not subject any of the Subject Shares to, or
            suffer to exist on any of the Subject Shares, any Lien, (ii) shall
            not Transfer or agree or offer to Transfer any of the Subject Shares
            or, with respect to any matter described in Section 2.2(a), grant
            any proxy or power-of-attorney with respect to any of the Subject
            Shares and (iii) shall take all action reasonably necessary to
            prevent creditors in respect of any pledge of the Subject Shares
            from exercising their rights under such pledge.

      (b)   Unless required by applicable law, neither Stockholder nor any of
            its Affiliates or Representatives shall make any press release or
            public announcement with respect to the business or affairs of the
            Company, Parent or Merger Sub, including this Agreement and the
            Merger

                                        4

            Agreement and the transactions contemplated hereby and thereby,
            without the prior written consent of Parent in each instance.

      2.6   No Appraisal. Stockholder agrees not to make a demand for appraisal
in respect of the Subject Shares pursuant to Section 262 of the DGCL, and hereby
irrevocably and unconditionally waives any rights of appraisal or any
dissenters' rights pursuant to Section 262 of the DGCL and any similar rights,
in each case to the extent relating to the Merger or any related transaction,
that Stockholder may have by virtue of the Subject Shares.

                                   ARTICLE III

              REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
                                 OF SHAREHOLDER

      Stockholder represents, warrants and covenants to Parent and Merger Sub
that:

      Section 3.1      Ownership. Stockholder is the sole Beneficial Owner and
the record and legal owner of the Subject Shares identified on Schedule A and
such shares constitute all of the capital stock of the Company Beneficially
Owned by Stockholder. Stockholder has good and valid title to all of such
shares, free and clear of all Liens, claims, options, proxies, voting agreements
and security interests and has the sole right to such Subject Shares and there
are no restrictions on rights of disposition or other Liens pertaining to such
Subject Shares. None of the Subject Shares is subject to any voting trust or
other contract with respect to the voting thereof, and no proxy, power of
attorney or other authorization has been granted with respect to any of such
Subject Shares.

      Section 3.2      Authority and Non-Contravention.

      (a)   The Stockholder is an individual, and not a corporation, limited
            liability company, partnership, trust or other such entity.

      (b)   Assuming due authorization, execution and delivery of this Agreement
            by Parent, this Agreement has been duly and validly executed and
            delivered by Stockholder and constitutes the legal, valid and
            binding obligation of Stockholder, enforceable against Stockholder
            in accordance with its terms except (i) to the extent limited by
            applicable bankruptcy, insolvency or similar laws affecting
            creditors' rights and (ii) the remedy of specific performance and
            injunctive and other forms of equitable relief may be subject to
            equitable defenses and to the discretion of the court before which
            any proceeding therefor may be brought. Stockholder has all
            necessary power, authority and legal capacity to execute and deliver
            this Agreement and to perform its obligations under this Agreement,
            and no other proceedings or actions on the part of Stockholder are
            necessary to

                                        5

            authorize the execution, delivery or performance of this Agreement
            or the consummation of the transactions contemplated hereby.

      (c)   Stockholder is not nor will it be required to make any filing with
            or give any notice to, or to obtain any consent from, any Person in
            connection with the execution, delivery or performance of this
            Agreement or obtain any permit or approval from any Governmental
            Entity for any of the transactions contemplated hereby, except to
            the extent required by Section 13 or Section 16 of the Exchange Act
            and the rules promulgated thereunder.

      (d)   Neither the execution and delivery of this Agreement by Stockholder
            nor the consummation of the transactions contemplated hereby will
            directly or indirectly (whether with notice or lapse of time or
            both) (i) conflict with, result in any violation of, require any
            consent under or constitute a default by Stockholder under any
            mortgage, bond, indenture, agreement, instrument or obligation to
            which Stockholder is a party or by which it or any of Stockholder's
            assets (including the Subject Shares) are bound, or violate any
            permit of any Governmental Entity, or any Law or order to which such
            Stockholder, or any of its assets (including the Subject Shares),
            may be subject, or (ii) result in the imposition or creation of any
            Lien upon or with respect to any of the assets owned or used by
            Stockholder (including the Subject Shares).

      Section 3.3      Total Shares. Except as set forth on Schedule A,
Stockholder is not the Beneficial Owner of, and does not have (whether
currently, upon lapse of time, following the satisfaction of any conditions,
upon the occurrence of any event or any combination of the foregoing) any right
to acquire, and has no other interest in or voting rights with respect to, any
Company Shares or any securities convertible into or exchangeable or exercisable
for Company Shares.

      Section 3.4.     Reliance. Stockholder understands and acknowledges that
Parent is entering into the Merger Agreement in reliance upon Stockholder's
execution, delivery and performance of this Agreement.

                                   ARTICLE IV

               REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT

      Parent represents, warrants and covenants to Stockholder that, assuming
due authorization, execution and delivery of this Agreement by Stockholder, this
Agreement constitutes the legal, valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except (i) to the
extent limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor

                                        6

may be brought. Parent has the corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery by Parent of this Agreement and the consummation by Parent of the
transactions contemplated hereby have been duly and validly authorized by Parent
and no other corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent.

                                    ARTICLE V

                               GENERAL PROVISIONS

      Section 5.1      No Ownership Interest. Nothing contained in this
Agreement shall be deemed to vest in Parent or any of its Affiliates any direct
or indirect ownership or incidents of ownership of or with respect to the
Subject Shares. All rights, ownership and economic benefits of and relating to
the Subject Shares shall remain and belong to Stockholder, and neither Parent
nor any of its Affiliates shall have any authority to manage, direct,
superintend, restrict, regulate, govern or administer any of the policies or
operations of the Company or exercise any power or authority to direct
Stockholder in the voting of any of the Subject Shares, except as otherwise
expressly provided herein or in the Merger Agreement.

      Section 5.2      Notices. All notices, consents, waivers and other
communications under this Agreement shall be in writing (including facsimile or
similar writing) and shall be given:

      (a)   If to Parent, to:

      Tornante-MDP Joe Holding LLC
      c/o The Tornante Company
      233 South Beverly Drive, 2nd Floor
      Beverly Hills, CA  90212

      and

      Tornante-MDP Joe Holding LLC
      c/o Madison Dearborn Partners, L.L.C.
      Three First National Plaza
      Suite 3800
      70 West Madison Street
      Chicago, IL  60602

      With a copy (which will not constitute notice) to:

      Munger, Tolles & Olson LLP
      355 South Grand Ave. #3400
      Los Angeles, CA  90071

                                        7

      Attention:  Robert B. Knauss
      Facsimile No.: 213-683-5137

      and

      Paul, Hastings, Janofsky & Walker LLP
      191 N. Wacker Drive, Twenty Ninth Floor
      Chicago, IL 60606
      Attention:  William S. Kirsch
      Facsimile No.: 312-499-7026

      (b)   If to a Stockholder, to Stockholder's address set forth on Schedule
            A.

or such other address or facsimile number as a party may hereafter specify for
the purpose by notice to the other parties hereto. Each notice, consent, waiver
or other communication under this Agreement shall be effective only (a) if given
by facsimile, when the facsimile is transmitted to the facsimile number
specified in this Section and the appropriate facsimile confirmation is received
or (b) if given by overnight courier or personal delivery when delivered at the
address specified in this Section.

      Section 5.3      Further Actions. Upon the request of any party to this
Agreement, the other party will (a) furnish to the requesting party any
additional information, (b) execute and deliver, at their own expense, any other
documents and (c) take any other actions as the requesting party may reasonably
require to more effectively carry out the intent of this Agreement.

      Section 5.4      Entire Agreement and Modification. This Agreement, the
Proxy and any other documents delivered by the parties in connection herewith
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to its subject matter and
constitute (along with the documents delivered pursuant to this Agreement) a
complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement shall not be amended,
supplemented or otherwise modified except by a written document executed by the
party against whose interest the modification will operate. The parties shall
not enter into any other agreement inconsistent with the terms and conditions of
this Agreement and the Proxy, or that addresses any of the subject matters
addressed in this Agreement and the Proxy.

      Section 5.5      Drafting and Representation. The parties agree that the
terms and language of this Agreement were the result of negotiations between the
parties and, as a result, there shall be no presumption that any ambiguities in
this Agreement shall be resolved against any party. Any controversy over
construction of this Agreement shall be decided without regard to events of
authorship or negotiation.

                                        8

      Section 5.6      Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
affecting the validity or enforceability of the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. If any provision
of this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.

      Section 5.7      No Third-Party Rights. Stockholder may not assign any of
its rights or delegate any of its obligations under this Agreement without the
prior written consent of Parent. Parent and Merger Sub may not assign any of
their rights or delegate any of their obligations under this Agreement with
respect to Stockholder without the prior written consent of Stockholder. This
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of each of the respective successors, personal or legal representatives,
heirs, distributes, devisees, legatees, executors, administrators and permitted
assigns of Stockholder and the successors and permitted assigns of Parent.
Nothing expressed or referred to in this Agreement will be construed to give any
Person, other than the parties to this Agreement, any legal or equitable right,
remedy or claim under or with respect to this Agreement or any provision of this
Agreement except such rights as may inure to a successor or permitted assignee
under this Section.

      Section 5.8      Enforcement of Agreement. Stockholder acknowledges and
agrees that Parent could be damaged irreparably if any of the provisions of this
Agreement are not performed in accordance with their specific terms and that any
breach of this Agreement by Stockholder could not be adequately compensated by
monetary damages. Accordingly, Stockholder agrees that, (a) it will waive, in
any action for specific performance, the defense of adequacy of a remedy at Law,
and (b) in addition to any other right or remedy to which Parent may be
entitled, at Law or in equity, Parent will be entitled to enforce any provision
of this Agreement by a decree of specific performance and to temporary,
preliminary and permanent injunctive relief to prevent breaches or threatened
breaches of any of the provisions of this Agreement, without posting any bond or
other undertaking.

      Section 5.9      Waiver. The rights and remedies of the parties to this
agreement are cumulative and not alternative. Neither any failure nor any delay
by a party in exercising any right, power or privilege under this Agreement, the
Proxy or any of the documents referred to in this Agreement will operate as a
waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by Law, (a) no claim or right arising
out of this Agreement, the Proxy or any of the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in a written document signed by the
other party, (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given, and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of that
party or of the right of the party giving such

                                        9

notice or demand to take further action without notice or demand as provided in
this Agreement, the Proxy or the documents referred to in this Agreement.

      Section 5.10     Governing Law. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto will be governed by, construed under and interpreted in accordance with
the Laws of the State of Delaware, without giving effect to principles of
conflicts or choice of law.

      Section 5.11     Consent to Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement, the Proxy or the transactions contemplated
hereby or thereby shall be brought exclusively in the United States District
Court for the District of Delaware or, if such court does not have jurisdiction
over the subject matter of such proceeding or if such jurisdiction is not
available, in the Court of Chancery of the State of Delaware, County of New
Castle, and each of the parties hereby consents to the exclusive jurisdiction of
those courts (and of the appropriate appellate courts therefrom) in any suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
Law, any objection which it may now or hereafter have to the laying of the venue
of any suit, action or proceeding in any of those courts or that any suit,
action or proceeding which is brought in any of those courts has been brought in
an inconvenient forum. Process in any suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any of the named courts. Without limiting the foregoing, each party agrees
that service of process on it by notice as provided in Section 5.2 shall be
deemed effective service of process. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

      Section 5.12     Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which, taken together, shall constitute one and the same instrument.

      Section 5.13     Termination. This Agreement shall terminate upon the
earliest of (a) the Effective Time (as defined in the Merger Agreement), (b) the
termination of the Merger Agreement in accordance with Section 8.1 thereof, or
(c) written notice by Parent to Stockholder of the termination of this Agreement
(the date of the earliest of the events described in clauses (a), (b) and (c),
the "Expiration Date").

      Section 5.14     Expenses. Except as otherwise provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses. Nothing in this Agreement shall be deemed to limit the obligations of
the Company pursuant to Section 8.2(e) of the Merger Agreement.

                                       10

      Section 5.15     Headings; Construction. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement (a) words
denoting the singular include the plural and vice versa, (b) "it" or "its" or
words denoting any gender include all genders and (c) the word "including" shall
mean "including without limitation," whether or not expressed.

                            [SIGNATURE PAGE FOLLOWS]

                                       11

      IN WITNESS WHEREOF, the parties hereto have caused this Voting Agreement
to be duly executed as of the day and year first above written.

PARENT:

                                     TORNANTE-MDP JOE HOLDING LLC,

                                     By: _______________________________________
                                         Name:
                                         Title:

STOCKHOLDER:

                                         _______________________________________
                                         Name:

                                   SCHEDULE A

                 NAME AND                       COMPANY SHARES
          ADDRESS OF STOCKHOLDER              BENEFICIALLY OWNED

                                    EXHIBIT A

                                IRREVOCABLE PROXY

      From and after the date hereof and until the Expiration Date (as defined
below), the undersigned stockholder ("STOCKHOLDER") of The Topps Company, Inc.,
a Delaware corporation (the "COMPANY"), hereby irrevocably (to the full extent
permitted by Section 212 of the Delaware General Corporation Law) appoints
Tornante-MDP Joe Holding LLC, a Delaware limited liability company ("Parent"),
as the sole and exclusive attorney and proxy of the undersigned, with full power
of substitution and resubstitution, to vote and exercise all voting rights
expressly provided herein (to the full extent that the undersigned is entitled
to do so) with respect to (i) the outstanding shares of common stock of the
Company owned of record by Stockholder as of the date of this Proxy, which
shares are specified on the final page of this Proxy, and (ii) any and all other
shares of common stock of the Company which Stockholder may own of record after
the date hereof. (The shares of the common stock of the Company referred to in
clauses "(i)" and "(ii)" of the immediately preceding sentence are collectively
referred to as the "Shares".) Upon the undersigned's execution of this Proxy,
any and all prior proxies given by the undersigned with respect to any Shares
relating to the voting rights expressly provided herein are hereby revoked and
the undersigned agrees not to grant any subsequent proxies with respect to the
Shares relating to such voting rights at any time prior to the Expiration Date.

      This Proxy is irrevocable (to the extent permitted by Section 212 of the
Delaware General Corporation Law), is coupled with an interest and is granted
pursuant to that certain Voting Agreement (as amended from time to time, the
"VOTING AGREEMENT") of even date herewith, by and among Parent and Stockholder,
and is granted in consideration of Parent and Tornante-MDP Joe Acquisition
Corp., a Delaware corporation and a wholly owned subsidiary of Parent, entering
into the Merger Agreement (as defined in the Voting Agreement). As used herein,
the term "EXPIRATION DATE" shall have the meaning set forth in the Voting
Agreement.

      The attorneys and proxies named above, and each of them, are hereby
authorized and empowered by the undersigned, at any time prior to the Expiration
Date, to act as the undersigned's attorney and proxy to vote the Shares, and to
exercise all voting and other rights of the undersigned with respect to the
Shares (including, without limitation, the power to execute and deliver written
consents pursuant to Section 228 of the Delaware General Corporation Law), at
every annual, special or adjourned meeting of the stockholders of the Company
and in every written consent in lieu of such meeting (i) in favor of adoption
and approval of the Merger Agreement and the transactions contemplated thereby,
and any actions required in furtherance thereof and (ii) against any Alternative
Transaction and against any other action or agreement that would result in a
breach in any material respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
that is intended, or would reasonably be expected, to impede, interfere with,
delay, postpone, discourage

or adversely affect the consummation of the Merger or the other transactions
contemplated by the Merger Agreement.

      This Proxy shall be binding upon the heirs, estate, executors, personal
representatives, successors and assigns of Stockholder (including any transferee
of any of the Shares).

      If any provision of this Proxy or any part of any such provision is held
under any circumstances to be invalid or unenforceable in any jurisdiction, then
(a) such provision or part thereof shall, with respect to such circumstances and
in such jurisdiction, be deemed amended to conform to applicable laws so as to
be valid and enforceable to the fullest possible extent, (b) the invalidity or
unenforceability of such provision or part thereof under such circumstances and
in such jurisdiction shall not affect the validity or enforceability of such
provision or part thereof under any other circumstances or in any other
jurisdiction, and (c) the invalidity or unenforceability of such provision or
part thereof shall not affect the validity or enforceability of the remainder of
such provision or the validity or enforceability of any other provision of this
Proxy. Each provision of this Proxy is separable from every other provision of
this Proxy, and each part of each provision of this Proxy is separable from
every other part of such provision.

Dated:

                                         _______________________________________
                                               (Signature of Stockholder)

                                         _______________________________________
                                               (Print Name of Stockholder)

                                         Number of Shares owned of record as of
                                         the date of this Proxy:

                                         _______________________________________

                                        2

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