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                                                                    Exhibit 10.1

                           IDERA PHARMACEUTICALS, INC.

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into by and between
Robert G. Andersen ("Executive") and Idera Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and is effective as of the 13th day of April 2006
(the "Effective Date"). Executive and the Company are referred to herein
individually as a "Party", and collectively as the "Parties".

     WHEREAS, the Company and Executive are a party to an Employment Agreement
dated April 1, 2002 (the "Original Employment Agreement");

     WHEREAS, the Company and Executive desire to enter into this Agreement, as
an amendment and restatement of the Original Employment Agreement and to
terminate the Original Employment Agreement, effective as of the Effective Date.

     NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, Executive and the Company have agreed and do hereby agree as follows:

     1.   Definitions. The capitalized terms in this Agreement shall have the
meanings set forth in this Agreement or Appendix A attached hereto.

     2.   Engagement. The Company hereby agrees to employ Executive as its Chief
Financial Officer and Vice President of Operations, and Executive hereby accepts
such employment on the terms and conditions hereinafter set forth.

     3.   Employment Period. Executive's employment with the Company under this
Agreement shall commence on the Effective Date and shall continue until the
second anniversary of the Effective Date (as such period may be extended as set
forth below, the "Employment Period"), unless such employment is sooner
terminated as hereinafter provided. The Employment Period shall automatically be
extended for an additional year on the second anniversary of the Effective Date
and on each anniversary of the Effective Date thereafter; provided however, that
the Employment Period shall not be extended if at least ninety (90) days prior
to the last day of the then-current Employment Period either Party provides
written notice to the other Party that the then-current Employment Period shall
not be extended (a "Non-Renewal Notice").
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     4.   Duties and Responsibilities.

          (a)  Responsibilities. During the Employment Period, Executive shall
perform his duties and responsibilities fully and faithfully as Chief Financial
Officer and Vice President of Operations, subject to the direction and
supervision of the Chief Executive Officer (the "CEO") and the terms and
conditions of this Agreement. During such period, Executive shall report solely
to the CEO. Executive shall have the duties and responsibilities customarily
assigned to the chief financial officer and vice president of operations of a
company with such other duties not inconsistent therewith as may from time to
time be assigned to Executive by the CEO. Such duties shall include, without
limitation, the management of the Company's financial affairs, operations and
human resources, provided that the CEO shall have discretion to re-assign the
human resources function. During the Employment Period, the Executive shall
perform all services and acts necessary or advisable to fulfill the duties and
responsibilities that are commensurate and consistent with the Executive's
position. Executive agrees he shall devote substantially his full business time
and attention to, and exert his best efforts in, the performance of his duties
hereunder, so as to promote the business and best interests of the Company and
to comply with the Company's policies as in effect from time to time.
Notwithstanding the foregoing, the Company agrees that Executive may participate
on the boards of directors of other companies, provided that the total number of
boards of directors of which he is a member does not exceed two and that the
Chief Executive Officer and the Chairman of the Board (or if the Chairman of the
Board is the Chief Executive Officer, the Chairman of the Compensation Committee
(as defined below)) mutually agree in advance.

          (b)  Location. Executive's principal place of business shall be in
Cambridge, Massachusetts, within 30 miles of Cambridge, Massachusetts or within
10 miles east of Worcester, Massachusetts (the "Permitted Area").
Notwithstanding the foregoing, Executive shall perform services for the Company
at such other locations where Executive's services might be required to be
performed from time to time, provided that Executive shall not be required to
perform services at a location other than in the Permitted Area for a period in
excess of 30 consecutive days without Executive's prior written consent, except
in the event of a change in location of the headquarters of the Company to a
site within the continental United States following a Change of Control.

     5.   Compensation. For all services rendered by Executive pursuant to this
Agreement, the Company shall pay Executive, and Executive agrees to accept, the
salary, bonuses and other benefits described below in this Section 5.

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          (a)  Base Salary. During the Employment Period, the Company shall pay
Executive an annual base salary of $313,500 ("Base Salary") and such Base Salary
shall be payable at periodic intervals in accordance with the Company's payroll
practices for salaried employees. In accordance with Section 5(c) below, the
amount of Base Salary shall be reviewed and approved, if applicable, by the
Board of Directors of the Company (the "Board") or the Compensation Committee of
the Board (the "Compensation Committee") (it being agreed that, for purposes of
this Agreement, any action that may be taken by the Board under this Agreement
may be taken by the Compensation Committee instead of the Board, whether or not
expressly provided in this Agreement) on at least an annual basis, and any
increases in the amount of Base Salary shall be effective as of the date
determined by the Board or the Compensation Committee. Executive's Base Salary
may be increased for any reason, including to reflect inflation or such other
adjustments as the Board or the Compensation Committee may deem appropriate;
provided, however, that Executive's Base Salary, as in effect on the date hereof
or as increased in accordance with the terms of this Agreement, may not be
subsequently decreased, except with the prior written consent of Executive.

          (b)  Bonus. In addition to Base Salary and stock options, and to the
extent a bonus program is established by the Board, Executive shall be eligible
to receive, for each fiscal year of the Company ending with or within the
Employment Period, an annual bonus ("Bonus"), whether pursuant to a formal bonus
or incentive plan or program of the Company or otherwise; provided, however,
that with respect to the fiscal year ending December 31, 2006, Executive shall
be eligible to receive a Bonus equal to between 10% and 50% of the Executive's
Base Salary on the last day of such fiscal year. Subject to this Section 5(b)
and Section 5(c) below, such Bonus shall be based on criteria, and subject to
the achievement of milestones, determined by the Board or the Compensation
Committee, in its discretion. Any Bonus earned by Executive for service or
performance rendered in any fiscal year within the Employment Period shall be
paid to Executive in accordance with the applicable plan or program, if any, and
the Company's policies governing such matters.

          (c)  Annual Compensation Review. Executive's compensation, consisting
of salary, equity incentive awards and bonuses, shall be reviewed annually by
the Board or the Compensation Committee.

          (d)  Medical, Dental and Other Healthcare Benefits. During the
Employment Period, Executive shall be eligible to participate in and receive
benefits under the Company's medical, dental or other healthcare plans, as in
effect from time to time, that are available to officers and employees of the
Company.

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          (e)  Retirement Plan Benefits. Executive shall be entitled to
participate in the Company's tax-qualified and nonqualified retirement plans, as
in effect from time to time, that are available to officers and employees of the
Company and shall be entitled to receive the benefit of contributions to be
made, if any, by the Company for the benefit of Executive under the terms of the
applicable tax-qualified or nonqualified retirement plan.

          (f)  Incentive Plans. During the Employment Period, Executive shall be
eligible to receive all benefits, including those under stock option, equity
participation or bonus programs, to which key employees are or become eligible
under such plans or programs as may be established by the Company from time to
time.

          (g)  Other Benefits. During the Employment Period, in addition to the
benefit plans contemplated by Sections 5(d), 5(e) and 5(f), Executive shall be
entitled to participate in the other benefit and fringe benefit programs
afforded by the Company to its executives from time to time. Executive shall be
entitled to paid vacation in accordance with the Company's standard vacation
policies in effect from time to time.

     6.   Termination of Employment. The remedies described in this Section 6
are the exclusive remedies of the Executive in connection with the termination
of Executive's employment under this Agreement.

          (a)  Death. If Executive's employment hereunder is terminated by
reason of Executive's death, the Company shall pay Executive's designated
beneficiary or beneficiaries any Unpaid Obligations; provided that such amounts
shall be paid in a lump sum cash payment within 30 days after the Company's
receipt of notification of Executive's death. Additionally, any stock options or
other equity incentive awards previously granted to Executive by the Company and
held by Executive on the date of his death shall vest as of such date to the
extent such options or equity incentive awards, as applicable, would have vested
had Executive continued to be an employee of the Company for a period ending on
the earlier of (i) the final day of the Employment Period in effect immediately
prior to Executive's death and (ii) the first anniversary of Executive's death.
Executive's designated beneficiary or beneficiaries shall be permitted to
exercise such stock options until the first anniversary of Executive's death;
provided that such provision shall not affect and shall be subject to (x) the
provisions of the applicable stock option agreement and/or equity incentive plan
relating to the termination of such stock options in connection with an
Acquisition Event, a Change of Control or a similar transaction involving the
Company or (y) the maximum term of any such stock option (the "Option Limitation
Provisions").

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          (b)  Disability. The Company may terminate Executive's employment at
any time upon at least 30 days' prior written notice due to the Disability of
Executive. If Executive's employment hereunder is terminated due to Disability,
the Company shall pay Executive any Unpaid Obligations; provided that such
amounts shall be paid in a lump sum cash payment within 30 days after the
termination date. Additionally, any stock options or other equity incentive
awards previously granted to Executive by the Company and held by Executive on
the termination date shall vest as of such date to the extent such options or
equity incentive awards, as applicable, would have vested had Executive
continued to be an employee of the Company for a period ending on the earlier of
(i) the final day of the Employment Period in effect immediately prior to the
termination date and (ii) the first anniversary of such termination date.
Executive shall be permitted to exercise such stock options until the first
anniversary of the termination date; provided that such provision shall not
affect and shall be subject to the Option Limitation Provisions.

          (c)  Termination by the Company for Cause. The Company may terminate
Executive's employment under this Agreement for Cause at any time. If
Executive's employment hereunder is terminated by the Company for Cause, the
Company shall pay Executive any Unpaid Obligations, provided that such amounts
shall be paid in a lump sum cash payment within 30 days after such termination
date. All options or other equity incentive awards, whether vested or unvested
on the termination date, shall expire and terminate on that date.

          (d)  Termination by the Company Other than for Death, Disability or
Cause. The Company may, at its option and upon 30 days' prior written notice,
terminate Executive's employment under this Agreement without Cause at any time.
If Executive's employment is terminated by the Company under this Section 6(d)
or is terminated by the Company upon the expiration of this Agreement following
a Non-Renewal Notice by the Company, then the Company shall pay Executive any
Unpaid Obligations; provided that such amounts shall be paid in a lump sum cash
payment within 30 days after the termination date. In addition, subject to
Section 6(h)(i) below, the Company shall pay Executive (i) on the date six
months and one day after the termination date a lump sum payment in cash equal
to six months of Executive's Base Salary as in effect immediately prior to such
termination and (ii) in accordance with the Company's payroll practices
applicable to salaried executives, Executive's Base Salary as in effect
immediately prior to such termination for a period commencing on the date six
months and one day after the termination date and ending on the first
anniversary of the termination date. Additionally, any stock options or other
equity incentive awards previously granted to Executive by the Company and held
by Executive on the termination date shall vest as of such date to the

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extent such options or equity incentive awards, as applicable, would have vested
had Executive continued to be an employee of the Company for a period ending on
the first anniversary of the termination date. Executive shall be permitted to
exercise such stock options until the first anniversary of the termination date;
provided that such provision shall not affect and shall be subject to the Option
Limitation Provisions.

          (e)  Termination by Executive for Good Reason. Executive may, for Good
Reason, terminate this Agreement upon 30 days' prior written notice to the
Company. If Executive's employment is terminated by Executive for Good Reason,
the Company shall pay Executive any Unpaid Obligations; provided that such
amounts shall be paid in a lump sum cash payment within 30 days after the
termination date. In addition, subject to Section 6(h)(i) below, the Company
shall pay Executive (i) on the date six months and one day after the termination
date a lump sum payment in cash equal to six months of Executive's Base Salary
as in effect immediately prior to such termination and (ii) in accordance with
the Company's payroll practices applicable to salaried executives, Executive's
Base Salary in effect immediately prior to such termination for a period
commencing on the date six months and one day after the termination date and
ending on the first anniversary of the termination date. Additionally, any stock
options or other equity incentive awards previously granted to Executive by the
Company and held by Executive on the termination date shall vest as of such date
to the extent such options or equity incentive awards, as applicable, would have
vested had Executive continued to be an employee of the Company for a period
ending on the first anniversary of the termination date. Executive shall be
permitted to exercise such stock options until the first anniversary of the
termination date; provided that such provision shall not affect and shall be
subject to the Option Limitation Provisions.

          (f)  Voluntary Termination by Executive. Executive may, without Good
Reason, terminate Executive's employment upon 30 days' prior written notice to
the Company. If Executive's employment is terminated by Executive without Good
Reason, the Company shall pay Executive any Unpaid Obligations, provided that
such amounts shall be paid in a lump sum cash payment within 30 days after such
termination date. All options that remain unvested on such termination date
shall expire and terminate as of that date. Executive shall be permitted to
exercise vested stock options until the first anniversary of the termination
date; provided that such provision shall not affect and shall be subject to the
Option Limitation Provisions.

          (g)  No Offset. Any compensation derived by Executive from any
subsequent employment or self-employment shall not be offset against or reduce
any amounts to which Executive is entitled under this Agreement.

          (h)  Change of Control.

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               (i)  Continuation of Salary. If Executive's employment with the
Company is terminated by Executive for Good Reason, by the Company under Section
6(d) or by the Company upon the expiration of this Agreement following a
Non-Renewal Notice by the Company, in each case in connection with, or within
one year after the effective date of, a Change of Control, then in lieu of the
severance payments provided for in the third sentence of Section 6(d) or the
third sentence of Section 6(e), as applicable, the Company shall pay Executive a
lump sum cash payment in an amount equal to Executive's Base Salary. Such
amounts shall be paid to Executive within 10 days after the termination date.

               (ii) Parachute Payments. If all or any portion of the amounts
payable to Executive under this Agreement or otherwise are subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended or
a similar state tax or assessment, the Company shall pay to Executive an amount
necessary to place Executive in the same after-tax position as Executive would
have been had no such excise tax or assessment been imposed. The amount payable
pursuant to the preceding sentence shall be increased to the extent necessary to
pay income and excise taxes on such amounts. The determination of any amounts
payable under this Section 6(h)(ii) shall be made by an independent accounting
firm employed by the Company and such determination shall be final, binding and
conclusive on the Parties.

               (iii) Acceleration of Vesting. Any provisions of this Agreement
regarding vesting of stock options notwithstanding, the vesting of all stock
options held by Executive shall be accelerated in full and such stock options
shall become fully exercisable upon the consummation of a Change of Control.

          (i)  Continuation of Benefits. If Executive's employment with the
Company is terminated pursuant to Section 6(d) or 6(e) (irrespective of whether
such termination follows a Change of Control), the Company shall provide, for
the period ending on the earlier of (i) the final day of the Employment Period
in effect immediately prior to such termination and (ii) the first anniversary
of the termination date, and at its sole cost and expense, Executive and his
eligible dependents (if any) with healthcare, disability, and life insurance
benefits substantially similar to those benefits Executive and his eligible
dependents (if any) were receiving immediately prior to the termination date;
provided, however, that

               (A)  the Company shall not be required to provide medical
coverage to the extent another employer of the Executive provides comparable
coverage,

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               (B)  with respect to death and disability coverage, the Company
shall not be required to provide coverage to the extent another employer of
Executive provides comparable coverage; and shall pay the cost of supplemental
coverage if a new employer provides less than comparable coverage, to allow
Executive to purchase coverage to make total coverage comparable, and

               (C)  the coverage provided by the Company pursuant to this
Section 6(i) shall be in lieu of any other continued coverage for which
Executive or his dependents, if any, would otherwise be eligible pursuant to
COBRA.

     7.   Proprietary Information; Company Documents and Materials.

          (a)  Proprietary Information. Executive acknowledges that during his
employment with the Company, Executive has occupied and will occupy a position
of trust and confidence with respect to Proprietary Information of the Company.
Executive understands that he possesses or will possess Proprietary Information
that is important to the Company's business and operation. Executive
acknowledges that such Proprietary Information is specialized, unique in nature
and of great value to the Company and its Affiliates, and that such information
gives the Company and its Affiliates a competitive advantage. Executive
acknowledges that all Proprietary Information is and shall remain the sole
property of the Company or any of its Affiliates. Executive shall not disclose
to others or use, whether directly or indirectly, any Proprietary Information,
or anything relating to such information, regarding the Company or any of its
Affiliates except in performing the duties of Executive's employment; provided,
however that Executive's obligations under this Section 7 shall not apply to any
information that (i) is or becomes known to the general public under
circumstances involving no breach by Executive of the terms of this Section 7,
(ii) is generally disclosed to third parties by the Company without restriction
on such third parties, (iii) is approved for release by written authorization of
the Board or an authorized employee of the Company, (iv) is communicated to
Executive by a third party under no duty of confidentiality with respect to such
information to the Company or another party, or (v) is required to be disclosed
by Executive to comply with applicable laws, governmental regulations, or court
order, provided that Executive provides prior written notice of such disclosure
to the Company and an opportunity for the Company to object to such disclosure
and further provided that Executive cooperates with the Company and takes
reasonable and lawful actions requested by the Company (the out-of-pocket costs
of which shall be paid by the Company) to avoid and/or minimize the extent of
such disclosure.

          (b)  Company Documents and Materials. Executive agrees that during
Executive's employment by the Company, Executive will not

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remove any Company documents or materials, including Proprietary Information,
from the business premises of the Company or deliver any such Company documents
or materials to any person or entity outside the Company, except as Executive is
required to do in connection with performing the duties of Executive's
employment. Executive agrees that, immediately upon the termination of
Executive's employment by Executive or by the Company for any reason, or during
Executive's employment if so requested by the Company, Executive will return all
Company documents and materials, computer tapes and disks, records, lists, data,
drawings, prints, notes and written information, apparatus, equipment and other
physical property, or any reproduction of such property, excepting only (i)
Executive's personal copies of records relating to Executive's compensation;
(ii) Executive's personal copies of any materials previously distributed
generally to stockholders of the Company; and (iii) Executive's copy of this
Agreement.

     8.   Non-solicitation and Non-competition.

          (a)  Non-solicitation. Executive agrees that during his employment
with the Company and for a period of one year following the termination of his
employment with the Company, Executive shall not hire, attempt to hire, or
assist in or facilitate in any way the hiring of any person who, at the time of
any such action by Executive, is an employee of the Company (or any of its
Affiliates).

          (b)  Non-competition. Executive agrees that if his employment with the
Company is terminated for any reason, including upon the expiration of the
Employment Period, for a period of one year from the date of such termination of
employment, Executive shall not, directly or indirectly, engage in any business
or enterprise (whether as owner, partner, officer, director, employee,
consultant, investor, lender or otherwise, except as the holder of not more than
1% of the outstanding stock of a publicly-held company) that develops,
manufactures, markets, licenses or sells any products developed using antisense
therapeutics or oligonucleotide-based immunostimulatory therapeutics or any
other technology or product developed, manufactured, marketed, licensed or sold
by the Company while the Executive is employed by the Company (the "Restricted
Business").

          (c)  Notwithstanding the foregoing, Section 8(b) shall not preclude
Executive from becoming an employee of, or from otherwise providing services to,
a separate division or operating unit of a multi-divisional pharmaceutical
business or enterprise (a "Division") if: (i) the Division by which Executive is
employed, or to which the Employee provides services, is not competitive with
the Restricted Business, (ii) Executive does not provide services, directly or
indirectly, to any other division or operating unit of such multi-divisional
pharmaceutical business or enterprise that is

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competitive with the Restricted Business (individually, a "Competitive Division"
and collectively, the "Competitive Divisions") and (iii) the Competitive
Divisions, in the aggregate, accounted for less than one-third of the
multi-divisional pharmaceutical business or enterprises' consolidated revenues
for the fiscal year, and each subsequent quarterly period, prior to the
Executive's commencement of employment with the Division.

     9.   Assignment of Rights. All inventions, discoveries, computer programs,
data, technology, designs, innovations and improvements (whether or not
patentable and whether or not copyrightable) related to the business of the
Company that are or have been made, conceived, reduced to practice, created,
written, designed or developed by Executive, solely or jointly with others and
whether during normal business hours or otherwise, during his employment by the
Company pursuant to this Agreement ("Inventions") shall be the sole property of
the Company. Executive hereby assigns to the Company all such Inventions and any
and all related patents, copyrights, trademarks, trade names, and other
industrial and intellectual property rights and applications therefor, in the
United States and elsewhere and appoints any officer of the Company as his duly
authorized attorney, but without any out-of-pocket expenses to Executive, to
execute, file, prosecute and protect the same before any government agency,
court or authority. Executive hereby waives all claims to moral rights in any
Invention. Upon the request of the Company and at the Company's expense,
Executive shall execute such further assignments, documents and other
instruments as may be necessary or desirable to fully and completely assign all
such Inventions to the Company and to assist the Company in applying for,
obtaining and enforcing patents or copyrights or other rights in the United
States and in any foreign country with respect to any such Invention. Executive
shall promptly disclose to the Company all such Inventions and will maintain
adequate and current written records (in the form of notes, sketches, drawings
and as may be reasonably specified by the Company) to document the conception
and/or first actual reduction to practice of any such Invention. Such written
records shall be available to and remain the sole property of the Company at all
times. Executive shall, upon the Company's request, whether during or after the
Employment Period, promptly execute and deliver to the Company all such
assignments, certificates and instruments, and shall promptly perform such other
acts, as the Company may from time to time in its discretion deem necessary or
desirable to evidence, establish, maintain, perfect, enforce or defend the
Company's rights in the inventions. These services (the "IP Services"), shall be
rendered by Executive without additional compensation during the Employment
Period, and at any time when the Company is paying Executive his Base Salary
pursuant to Section 6(b), 6(d), 6(e), 6(f) or 6(h). Executive shall otherwise
render the IP Services at the rate of compensation provided in the last sentence
of this paragraph. In addition, Executive agrees, from time to time, and for as
long as reasonably required,

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to make himself available on a consulting basis to assist the Company in the
prosecution of patent applications or other filings or proceedings before the
Office of Patents and Trademarks and to advise with respect to issues arising in
the licensing of the Company's patents and the pursuit or defense of
infringement claims. The Company's requests under the preceding sentence shall
be made upon reasonable notice to Executive, and the Company shall pay Executive
for such services at the rate of $300 per hour plus reasonable expenses.

     10.  Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, lease, merger, consolidation, liquidation or otherwise)
or to all or substantially all of the Company's business and/or assets shall
assume the obligations under this Agreement and shall perform the obligations
under this Agreement in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a succession.
The Company may assign this Agreement without Executive's consent to any company
that acquires all or substantially all of the Company's stock or assets.
Executive may not assign this Agreement and no person other than Executive (or
his estate) may assert Executive's rights under this Agreement.

     11.  Notice. All notices, requests, consents and other communications
hereunder to any Party shall be contained in a written instrument addressed to
such Party at the address set forth below or such other address as may hereafter
be designated in writing by the addressee to the addressor listing all Parties
and shall be deemed given (a) when delivered in person or duly sent by fax
showing confirmation of receipt, (b) three days after being duly sent by first
class mail postage prepaid, or (c) two days after being duly sent by DHL,
Federal Express or other recognized express courier service:

          (a)  if to the Company, to:

          Idera Pharmaceuticals, Inc.
          345 Vassar Street
          Cambridge, MA 02139
          fax: (617) 679-5582

          (b)  if to Executive, to:

          Robert G. Andersen
          29 Maplewood Circle
          Concord, MA 01742
          fax: (978) 369-5965

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     12.  Company Plans. To the extent any provision of this Agreement conflicts
with or is inconsistent with any awards made to Executive under any Company
compensation or benefit plan, program, or arrangement, including without
limitation any option agreement under the Company's stock incentive plans, the
provisions of this Agreement shall govern. Except to the extent otherwise
explicitly provided by this Agreement, any awards made to Executive under any
Company compensation or benefit plan, program, or arrangement shall be governed
by the terms of that plan, program, or arrangement and any applicable award
agreement thereunder, as in effect from time to time.

     13.  Miscellaneous Provisions.

          (a)  Entire Agreement. This Agreement constitutes the entire agreement
between the Parties and terminates and supersedes any and all prior agreements
and understandings (whether written or oral) between the Parties with respect to
the subject matter of this Agreement, including without limitation the Original
Employment Agreement; provided that (i) the Parties acknowledge that Executive
has served as an employee of the Company since 1996 and (ii) the Employee hereby
agrees that any Proprietary Information disclosed to him or of which he
otherwise became aware during the course of his employment with the Company
shall be deemed Proprietary Information for all purposes under this Agreement,
that any Inventions made, conceived, reduced to practice, created, written,
designed or developed by the Executive in the course of his employment with the
Company shall be deemed Inventions for all purposes under this Agreement and
that notwithstanding any prior agreements the provisions of this Agreement shall
govern such Proprietary Information and Inventions. Executive acknowledges and
agrees that neither the Company, nor anyone acting on its behalf has made, and
in executing this Agreement Executive has not relied upon, any representations,
promises, or inducements except to the extent the same is expressly set forth
herein.

          (b)  Waiver. No provision of this Agreement shall be modified, waived,
or discharged unless the modification, waiver, or discharge is agreed to in
writing and signed by Executive and by an authorized officer or representative
of the Company (other than Executive). No waiver by either Party of any breach
of, or of compliance with, any condition or provision of this Agreement by the
other Party shall be considered a waiver of any other condition or provision or
of the same condition or provision at a preceding or subsequent time.

          (c)  Capacity. Executive represents and warrants to the Company that
he is not now under any obligation, of a contractual nature or otherwise, to any
person, firm, corporation, association or other entity that is inconsistent, or
in conflict, with this Agreement or that would prevent, limit

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or impair in any way the performance by Executive of his obligations hereunder.

          (d)  Consulting. Executive and the Company may, but are not required
to, enter into an agreement pursuant to which Executive will provide consulting
services to the Company after the date of Executive's retirement or termination
of employment with the Company. Any consulting fees paid to Executive will be in
addition to any retirement or severance payments Executive is entitled to
receive from the Company or under any plans, programs, or arrangements
maintained by the Company.

          (e)  Severability. In the event that a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any law or
public policy, only the portion of this Agreement that violates such law or
public policy shall be stricken. All portions of this Agreement that do not
violate any statute or public policy shall continue in full force and effect.
Further, any court order striking any portion of this Agreement shall modify the
stricken terms as narrowly as possible to give effect to the intentions of the
Parties to this Agreement, as expressed herein.

          (f)  Survival of Provisions. The obligations contained in Sections 7,
8 and 9 above shall survive the termination or expiration of the Employment
Period or this Agreement, as applicable, and shall be fully enforceable
thereafter in accordance with the terms of this Agreement.

          (g)  Withholding. Executive acknowledges that salary and all other
compensation payable under this Agreement shall be subject to withholding for
income and other applicable taxes to the extent required by law, as determined
by the Company in its sole discretion.

          (h)  Headings. The headings or other captions contained in this
Agreement are for convenience of reference only and shall not be used in
interpreting, construing or enforcing any of the provisions of this Agreement.

          (i)  Governing Law. This Agreement shall be governed by the laws of
the Commonwealth of Massachusetts without giving effect to any conflict of law
rules that would require the application of the laws of any jurisdiction other
than the internal laws of the Commonwealth of Massachusetts to the rights and
duties of the Parties, except to the extent the laws of the Commonwealth of
Massachusetts are preempted by federal law.

          (j)  Legal Fees. The Company shall pay or reimburse to Executive an
amount equal to reasonable fees for legal representation incurred by Executive
in connection with the preparation of this Agreement; provided, however, that
the Company shall not be obligated and shall not pay or reimburse to Executive
an amount that exceeds $3,000 in the aggregate.

                                     - 13 -
<PAGE>

          (k)  Terms. Where appropriate in this Agreement, words used in the
singular shall include the plural, and words used in the masculine shall include
the feminine or neuter.

          (l)  Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one agreement binding on the Parties hereto.

                                     - 14 -
<PAGE>

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
effective as of the date first mentioned above.

IDERA PHARMACEUTICALS, INC.                   ROBERT G. ANDERSEN

BY: /s/ SUDHIR AGRAWAL                        /s/ ROBERT G. ANDERSEN
    -----------------------------------       ---------------------------------
    Sudhir Agrawal

TITLE: Chief Executive Officer

DATE: APRIL 13, 2006                          DATE: APRIL 13, 2006
      ----------------------------------            ---------------------------

                                     - 15 -
<PAGE>

                                   APPENDIX A

                                   DEFINITIONS

     ACQUISITION EVENT means

          (i)  any merger or consolidation that results in the voting securities
of the Company outstanding immediately prior thereto representing (either by
remaining outstanding or by being converted into voting securities of the
surviving or acquiring entity) less than 60% of the combined voting power of the
voting securities of the Company or such surviving or acquiring entity
outstanding immediately after such merger or consolidation;

          (ii) any sale of all or substantially all of the assets of the
Company;

          (iii) the complete liquidation of the Company; or

          (iv) the acquisition of "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act) of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities
(other than through a merger or consolidation or an acquisition of securities
directly from the Company) by any "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act, other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportion as their ownership of stock of the
Company.

     AFFILIATE. "Affiliate" shall mean any person or entity that directly or
indirectly controls, is controlled by or is under common control with the
Company, including any entity directly or indirectly controlled by the Company
through the Company's ownership of 50% or more of the voting interests of such
entity.

     CAUSE. "Cause" shall mean Executive's (i) material breach of any material
term of this Agreement, (ii) plea of guilty or nolo contendere to, or conviction
of, the commission of a felony offense, (iii) repeated unexplained or
unjustified absence, or refusals to carry out the lawful directions of the Board
or (iv) material breach of a fiduciary duty owed to the Company under this
Agreement, provided that any action or inaction described by (i), (iii) or (iv),
above, shall not be the basis of a termination of Executive's employment with
the Company for "Cause" unless the Company provided Executive with at least 20
days advance written notice specifying in reasonable detail the

<PAGE>

conduct in need of being cured and such conduct was not cured within the notice
period.

     CHANGE OF CONTROL. "Change of Control" shall mean the occurrence of any of
the following events:

     (i)  a change in the composition of the Board over a period of thirty-six
consecutive months or less such that a majority of the members of the Board
ceases to be comprised of individuals who are Continuing Members; for such
purpose, a "Continuing Member" shall mean an individual who is a member of the
Board on the date of this Agreement and any successor of a Continuing Member who
is elected to the Board or nominated for election by action of a majority of
Continuing Members then serving on the Board; or

     (ii) the consummation of an Acquisition Event.

     DISABILITY. "Disability" shall mean the inability of Executive to perform
all the material duties of Executive's position for a continuous period of at
least 90 days due to a permanent physical or mental impairment, as determined
and certified by a physician selected by Executive and with the concurrence of a
physician selected by the Company, provided that if the physician selected by
Executive and the physician selected by the Company do not agree regarding the
determination and certification, a determination and certification rendered by
an independent physician mutually agreed upon by Executive and the Company shall
be final and binding on the Parties with respect to this Agreement.

     GOOD REASON. "Good Reason" shall mean the occurrence of one or more of the
following: (i) any action by the Company that results in a material diminution
of Executive's position, title, annual base salary, authority, duties or
responsibilities or reporting structure; (ii) any material breach of this
Agreement by the Company that is not remedied by the Company within 30 days
after receipt by the Company of notice thereof given by Executive specifying in
reasonable detail the alleged breach; or (iii) relocation of the Company's
headquarters outside the Permitted Area, except in the event of a change in the
location of the headquarters of the Company to a site within the continental
United States following a Change of Control.

     PROPRIETARY INFORMATION. "Proprietary Information" shall mean information
that was developed, created, or discovered by or on behalf of the Company, or
that became or will become known by, or was or is conveyed to the Company;
including, but not limited to, trade secrets, designs, technology, know-how,
processes, data, ideas, techniques, inventions (whether patentable or not),
works of authorship, formulae, business and development plans, client or
customer lists, software programs and subroutines, source and object code,
algorithms, terms of compensation and performance levels of Company

                                     - 2 -
<PAGE>

employees, information about the Company or any of its Affiliates, and their
clients and customers that is not disclosed by the Company or any of its
Affiliates for financial reporting purposes and that was learned by Executive in
the course of employment by the Company or any of its Affiliates, other
information concerning the Company's actual or anticipated business, research or
development, or that is received in confidence by or for the Company from any
other person, and all papers, resumes, and records (including electronic or
computer-generated records) of the documents containing such Proprietary
Information. Proprietary Information shall not include information that is
publicly available or available through third party sources so long as it has
not become available through a breach of this Agreement by Executive.

     UNPAID OBLIGATIONS. "Unpaid Obligations" shall mean the sum of (i) any
salary earned but unpaid through the date of termination of employment, (ii) any
bonus earned (as determined by the Board) in respect of a fiscal year prior to
the fiscal year in which the date of termination occurs, which bonus is unpaid
as of the date of termination of employment, and (iii) reimbursement of any
reimbursable expense incurred by Executive through the date of termination of
employment.

                                      - 3 -<PAGE>

                                                                   Exhibit 10.01

                                                                  EXECUTION COPY

                              EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of
February 27, 2006 (the "EFFECTIVE DATE") between Mark S. Frey (the "EXECUTIVE")
and Fairchild Semiconductor Corporation (the "COMPANY"), a Delaware corporation.

            For ease of reference, this Agreement is divided into the following
parts:

PART 1 --         DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT
                  (Sections 1-4)

                        -     Position and Duties

                        -     Salary

                        -     EFIP Bonus

                        -     Equity Awards

                        -     Other

PART 2 --         COMPENSATION AND BENEFITS IN CASE OF ACTUAL OR CONSTRUCTIVE
                  TERMINATION (Sections 5-6)

                        -     Termination

PART 3 --         COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL
                  (Section 7)

PART 4 --         CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE, INTELLECTUAL
                  PROPERTY, NON-SOLICITATION, REMEDIES, SUCCESSORS,
                  MISCELLANEOUS PROVISIONS, SIGNATURE PAGE (Sections 8-14)

                        -     Confidentiality and Non-Disclosure

                        -     Forfeiture in Case of Certain Events

                        -     Non-Solicitation

                        -     Miscellaneous

<PAGE>

                                      TERMS

      For good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the Company and the Executive, intending to be legally
bound, agree as follows:

PART 1      DUTIES AND SCOPE, COMPENSATION AND BENEFITS DURING EMPLOYMENT

SECTION 1. TERM OF AGREEMENT; TERMINATION OF EMPLOYMENT

(a)   Unless sooner terminated as provided in this Agreement, the term of this
      Agreement will begin on the Effective Date and will end on the first
      anniversary of the Start Date defined in Section 2(a) below (the "INITIAL
      TERM"). At the end of the Initial Term or any Renewal Term, this Agreement
      shall be automatically renewed for additional, successive terms of one
      year (each a "RENEWAL TERM") unless either the Company or the Executive
      gives the other written notice of non-renewal at least 180 days before the
      end of the Initial Term or Renewal Term, as the case may be. Such notice
      of non-renewal given by the Company shall be treated as a termination
      without Cause hereunder effective as of the termination date specified by
      the Company in such notice (or, if no date is specified, the date notice
      is given), which date must be on or after the giving of such notice and on
      or before the last day of the Term. The Initial Term and any Renewal Terms
      are collectively referred to as the "TERM".

(b)   Subject to the other terms of this Agreement, including those in Part 2,
      on or following the Start Date either the Company or the Executive may
      terminate the Executive's employment with the Company at any time and for
      any reason or no reason upon written notice to the other party, with
      effect as of a subsequent date specified in such notice. Prior to the
      Start Date either the Company or the Executive may terminate this
      Agreement for any reason or no reason upon written notice to the other
      party, provided that any such termination shall be deemed a termination of
      employment for all purposes under this Agreement, and will be subject to
      the other terms of this Agreement, including those in Part 2.

SECTION 2. DUTIES AND SCOPE OF EMPLOYMENT

(a)   Position. Beginning on March 20, 2006, or such other date which is agreed
      in writing by the Executive and the Company and which falls within 30 days
      after the Effective Date (the "START DATE"), and for the remainder of the
      Term, the Company will employ the Executive in the position of Executive
      Vice President, Chief Financial Officer, based in the Company's San Jose,
      California, office, reporting directly to the President and Chief
      Executive Officer. For the avoidance of doubt, the parties agree that this
      Agreement shall be effective as of and following the Effective Date, but
      that the Executive will not become an employee of the Company until the
      Start Date.

(b)   Obligations. From and after the Start Date and while employed hereunder,
      the Executive shall have such duties, responsibilities and authority as
      customarily held or exercised by a chief financial officer of a public
      corporation, including but not limited to general supervision over all of
      the global finance organization of the Company. During the Term,

                                       2

<PAGE>

      the Executive shall devote the Executive's full business efforts and time
      to the business and affairs of the Company as needed to carry out his
      duties and responsibilities hereunder. The foregoing shall not preclude
      the Executive from engaging in appropriate civic, charitable, religious or
      other non-profit activities or from devoting a reasonable amount of time
      to private investments or from serving on the boards of directors of other
      entities, provided that those activities do not interfere or conflict with
      the Executive's duties or responsibilities to the Company.

SECTION 3. BASE COMPENSATION

From and after the Start Date and while employed hereunder, the Company shall
pay the Executive, as compensation for services, a base salary of at least
$325,000 per year. Salary increases will be considered after the first
anniversary of the Effective Date, or sooner in the discretion of President and
CEO and consistent with Company policies.

SECTION 4. OTHER COMPENSATION

(a)   EFIP. While employed hereunder, the Executive will be enrolled in the
      Enhanced Fairchild Incentive Plan (EFIP), at a participation level of at
      least 90%. By way of example only, if an EFIP bonus is paid at the 100%
      target level, the Executive would receive a bonus equal to 90% of his
      qualified earnings under EFIP during the measurement period. Payments are
      subject to the terms and conditions of the EFIP.

(b)   Equity Awards.

      (1)   Grants. The Executive shall receive a grant of 20,000 Fairchild
            Semiconductor International, Inc. ("FSII") restricted stock units
            ("RSUS"), a grant of 20,000 FSII performance units ("PERFORMANCE
            UNITS") and a grant of options to purchase 75,000 shares of FSII
            common stock ("OPTIONS"), subject to the following terms
            (collectively, the "EQUITY GRANTS"). The Equity Grants will not be
            made under any stock or option plan of the Company or FSII, but will
            be granted, administered and interpreted as if such grants had been
            made under, and subject to, the Fairchild Semiconductor Stock Plan
            and standard forms of executive agreements (the "EQUITY AWARD
            AGREEMENTS") as in effect on the date hereof and as such plan may be
            amended from time to time (the "PLAN"). The Plan and Equity Award
            Agreements are hereby incorporated in this Agreement as if fully set
            forth herein. The grant date for the Equity Grants will be the Start
            Date. The RSUs and Options will vest in 25% increments on each of
            the first four anniversaries of the grant date, if in each case the
            Executive remains employed by the Company on such anniversary. The
            actual number of shares of stock issued under the Performance Units,
            and the vesting provisions relating to those units and shares
            received thereunder, will be determined in accordance with the Plan
            and terms generally applicable to 2006 performance unit grants to
            executive officers of the Company. The Executive will be solely
            responsible for any taxes associated with the receipt, vesting,
            exercise or delivery of shares or cash under the Equity Grants, and
            the Company will make appropriate withholdings from any
            distributions of shares or cash thereunder.

                                       3

<PAGE>

      (2)   No Eligibility for Other Grants in 2006. The Equity Grants are made
            in lieu of any that would otherwise be made to the Executive as part
            of the Company's annual grant program for 2006, and, accordingly,
            the Executive shall not receive any grants of RSUs, performance
            units or options under such program in 2006, other than the Equity
            Grants. The Executive will be eligible to receive additional awards
            that the Company may undertake under any other program, with respect
            to the Executive or otherwise, in 2006.

      (3)   Additional Grants After 2006. So long as he is employed by the
            Company after 2006, the Executive shall receive grants of stock
            options, performance shares and other equity-based awards, subject
            to the applicable Company plans governing such awards, and covering
            a number of shares determined consistent with Company policies and
            practices for executive officers. Since the Equity Grants are made
            in connection with the Executive's recruitment, future annual awards
            may be smaller than the Equity Grants.

(c)   Recruitment Bonus. The Company will pay the Executive a one-time
      recruitment bonus of $80,000, on a tax-assisted or fully grossed-up basis,
      within 10 days after the Start Date. If the Executive terminates his
      employment with the Company for any reason other than Good Reason (or his
      death or disability) within one year after the Start Date, the Executive
      will repay the foregoing recruitment bonus to the Company on a prorated
      basis reflecting the portion of such one-year period that the Executive is
      not employed by the Company. Such repayment will include amounts paid by
      the Company in respect of tax assistance that are not recovered by the
      Company as a result of such repayment.

(d)   Tax and Financial Planning Assistance. The Executive will be entitled to
      receive up to $8,000 per year in personal tax and financial planning
      services at the Company's expense and on a tax-assisted (or "fully
      grossed-up") basis.

(e)   Other Benefits. While employed hereunder, the Executive will be entitled
      to participate in Company-paid executive long-term disability insurance,
      Company-paid executive long-term care insurance, and Company-paid basic
      life insurance programs, and to participate in the Company's health
      insurance, dental insurance, vision care, short-term disability and
      personal savings (including 401(k) and 401(k) benefit restoration) plans,
      as well as other benefit plans and fringe benefits and perquisites
      available to senior executives of the Company.

(f)   Paid Vacation. While employed hereunder, the Executive shall be entitled
      to a minimum of four weeks paid vacation per calendar year, such vacation
      to extend for such periods and to be taken at such intervals as shall be
      appropriate and consistent with Company policies and the proper
      performance of the Executive's duties hereunder.

(g)   Business Expenses and Travel. While employed hereunder, the Executive
      shall be authorized to incur and shall be reimbursed for all necessary and
      reasonable travel, entertainment and other business expenses in connection
      with the Executive's duties hereunder.

                                       4

<PAGE>

(h)   Legal Fee Reimbursement. The Company agrees to directly pay Executive's
      reasonable advisory and legal fees associated with entering into this
      Agreement, up to $5,000, upon receiving invoices for such services. Such
      amounts will be paid on a tax-assisted or "fully grossed-up" basis, to the
      extent such payments are taxable to the Executive for U.S. federal or
      state income tax purposes.

(i)   Indemnification. Executive shall receive indemnification as a corporate
      officer and director of the Company to the maximum extent extended to the
      other officers and directors of the Company. Following the termination of
      Executive's employment or directorship for any reason, the Company agrees
      to honor the indemnification agreement previously entered into with
      Executive.

PART 2  COMPENSATION AND BENEFITS IN CASE OF TERMINATION WITHOUT CAUSE OR FOR
        GOOD REASON OUTSIDE OF A CHANGE OF CONTROL

SECTION 5.        TERMINATIONS AND RELATED DEFINITIONS

Part 2 of the Agreement, consisting of Sections 5 and 6, describes the benefits
and compensation, if any, payable in case of certain terminations of employment
prior to six months before a Change in Control and more than twelve months after
a Change in Control.

In this Agreement,

(a)   "CAUSE" means (1) a willful failure by the Executive to substantially
      perform the Executive's duties under this Agreement, other than a failure
      resulting from the Executive's complete or partial incapacity due to
      physical or mental illness or impairment, (2) a willful act by the
      Executive that constitutes gross misconduct and that is materially
      injurious to the Company, (3) a willful breach by the Executive of a
      material provision of this Agreement (including Sections 8 or 10) or (4) a
      material and willful violation of a federal, state or foreign law or
      regulation applicable to the business of the Company that is materially
      and demonstrably injurious to the Company, provided that no act, or
      failure to act, by the Executive shall be considered "willful" unless
      committed without good faith and without a reasonable belief that the act
      or omission was in the Company's best interest; and provided, further,
      that, if the failure, act, breach or other basis for finding Cause under
      this Agreement is capable of being cured without material injury to the
      Company, then no finding of Cause shall be made unless the Executive has
      failed to cure such failure, act, breach or other basis within 30 days
      after receiving written notice thereof from the Company, and

(b)   "DISABILITY" means that the Executive, at the time the notice is given,
      has been unable to perform the Executive's duties under this Agreement for
      a period of not less than six consecutive months as a result of the
      Executive's incapacity due to physical or mental illness, and

                                       5

<PAGE>

(c)   "GOOD REASON" means any of the following or as otherwise provided in this
      Agreement: (1) a reduction in the Executive's base salary other than as
      part of a broader executive pay reduction, (2) a reduction in the
      Executive's incentive compensation (EFIP) participation level other than
      as part of a broader executive reduction, (3) a material change in the
      employment benefits available to the Executive, if such change does not
      similarly affect all employees of the Company eligible for such benefits,
      (4) a material reduction in Executive's duties, responsibilities or
      authority as then in effect or (5) a requirement to relocate, except for
      office relocations that would not increase the Executive's one-way
      commuting distance by more than 35 miles.

SECTION 6. TERMINATION BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON

(a)   Severance. If, during the Term, the Company terminates the Executive's
      employment for any reason other than Cause (including as a result of the
      Executive's death or Disability), or if the Executive terminates his
      employment for Good Reason, then, provided the Executive (or his legal
      representative, if applicable) executes the release of claims described in
      Section 6(b), and subject to Section 6(c), the Company will promptly pay
      the Executive, in a lump sum, an amount equal to the sum of (i) the
      Executive's base annual salary in effect on such termination date and (ii)
      the amount of the bonus the Executive would receive under the Company's
      Enhanced Fairchild Incentive Program (EFIP), assuming a 100% payout based
      on the Executive's base salary and EFIP incentive level in effect
      immediately prior to such termination (whether or not such a bonus has
      been or is expected to be paid to other executives or employees of the
      Company for the fiscal period in which such termination occurs). If EFIP
      bonuses are later paid to EFIP participants at a level higher than 100% in
      respect of the last fiscal period during which the Executive had been
      employed by the Company, then the Company shall pay the Executive the
      difference between the amount that would have been paid to the Executive
      had the Executive remained employed by the Company, and been entitled to
      receive such bonus, and the amount determined under clause (ii) above. If
      at the time of such a termination the EFIP program has been discontinued
      or replaced, then the amount payable under clause (ii) above shall be the
      target or actual amount that the Executive is entitled to receive under
      any incentive bonus program in which he is then participating. The
      Executive will be responsible for all taxes relating to such payments and
      the Company will make all required withholdings of all such taxes. At the
      time of such termination, the Company shall pay the Executive in cash for
      all accrued and unused vacation time.

(b)   Release of Claims. As a condition to the receipt of the payments described
      in Section 6(a), the Executive (or his legal representative, if
      applicable) shall be required to execute a release of all claims arising
      out of the Executive's employment or the termination thereof, including
      any claim of discrimination under U.S. state or federal law or any
      non-U.S. law, but excluding claims for indemnification from the Company
      under any indemnification agreement with the Company, its certificate of
      incorporation or bylaws, claims under applicable directors' and officers'
      insurance policies, or claims for indemnification under Section 2802 of
      the California Labor Code or similar statutes.

                                       6

<PAGE>

(c)   Conditions to Receipt of Payments. Without limiting the Company's other
      rights or remedies in the event of the Executive's breach of any provision
      of this Agreement, the obligation of the Company to provide the payments
      described in this Section 6 is subject to the Executive's continuing
      compliance with Sections 8 and 10 during and after the Term, and also is
      subject to the related provisions of Section 11.

(d)   No Mitigation. The Executive shall not be required to mitigate the amount
      of any payment or benefit contemplated by this Section 6, nor shall any
      such payment or benefit be reduced by any earnings or benefits that the
      Executive may receive from any other source.

PART 3 COMPENSATION AND BENEFITS IN CASE OF A CHANGE IN CONTROL

SECTION 7. CHANGE IN CONTROL

(a)   Payment; Vesting of Equity Awards. If the Executive's employment is
      terminated by the Company other than for Cause (including as a result of
      the Executive's death or Disability), or by the Executive for Good Reason,
      in either case within the time period beginning six months before the
      Change in Control and ending 12 months after the Change in Control, then

      (1)   the Company will promptly pay the Executive, in a lump sum, an
            amount equal to the sum of (i) the Executive's base salary in effect
            on such termination date and (ii) the amount of the bonus the
            Executive would receive under the Company's Enhanced Fairchild
            Incentive Program (EFIP), assuming a 100% payout based on the
            Executive's base salary and EFIP incentive level in effect
            immediately prior to such termination (whether or not such a bonus
            has been or is expected to be paid to other executives or employees
            of the Company for the fiscal period in which such termination
            occurs). If EFIP bonuses are later paid to EFIP participants at a
            level higher than 100% in respect of the last fiscal period during
            which the Executive had been employed by the Company, then the
            Company shall pay the Executive the difference between the amount
            that would have been paid to the Executive had the Executive
            remained employed by the Company, and been entitled to receive such
            bonus, and the amount determined under clause (ii) above. If at the
            time of such a termination the EFIP program has been discontinued or
            replaced, then the amounts payable under clause (ii) above and the
            preceding sentence shall be the maximum amounts that the Executive
            is entitled to receive under any incentive bonus program in which he
            is then participating; and

      (2)   any stock options and stock appreciation rights granted to the
            Executive that are outstanding as of the date of such termination,
            and which are not then vested, shall become fully vested, and all
            stock options of the Executive shall remain vested and exercisable
            for the full remaining term or terms thereof; and any restrictions
            and deferral limitations applicable to any performance shares or
            other restricted stock awards granted to the Executive that are
            outstanding as of the date of such termination shall lapse, and such
            awards shall become free of all

                                       7

<PAGE>

            restrictions and become fully vested and transferable; and all
            deferred stock units granted to the Executive that are outstanding
            as of the date such termination shall be considered to be earned and
            payable in full, and any deferral or other restrictions shall lapse
            and such deferred stock units shall be settled as promptly as is
            practicable following such termination. The Executive will be
            responsible for all taxes relating to such payments and vesting and
            the Company will make all required withholdings of all such taxes.

(b)   Definition. A "CHANGE IN CONTROL" means the happening of any of the
      following events (for purposes of this Section 7 only, the "COMPANY" means
      FSII, and not any of its subsidiaries) in one or a series of related
      transactions:

      (1)   An acquisition by any individual, entity or group (within the
            meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
            Act of 1934, as amended (the "EXCHANGE ACT")) (any of which, a
            "PERSON") resulting in such Person having beneficial ownership
            (within the meaning of Rule 13d-3 promulgated under the Exchange
            Act) of 20% or more of either (i) the then-outstanding shares of
            common stock of the Company (the "OUTSTANDING COMPANY COMMON STOCK")
            or (ii) the combined voting power of the then-outstanding voting
            securities of the Company entitled to vote generally in the election
            of directors (the "OUTSTANDING COMPANY VOTING SECURITIES");
            excluding, however, the following: (A) Any acquisition directly from
            the Company, other than an acquisition by virtue of the exercise of
            a conversion privilege unless the security being so converted was
            itself acquired directly from the Company, (B) Any acquisition by
            the Company, (C) Any acquisition by any employee benefit plan (or
            related trust) sponsored or maintained by the Company or any entity
            controlled by the Company, or (D) Any acquisition pursuant to a
            transaction which complies with clauses (i), (ii) and (ii) of
            Section 7(b)(3); or

      (2)   A change in the composition of the board of directors of the Company
            (the "BOARD") such that the individuals who, as of the Effective
            Date, constitute the Board (such Board shall be hereinafter referred
            to as the "INCUMBENT BOARD") cease for any reason to constitute at
            least a majority of the Board; provided, however, for purposes of
            this definition, that any individual who becomes a member of the
            Board subsequent to the Effective Date, whose election, or
            nomination for election by the Company's stockholders, was approved
            by a vote of at least a majority of those individuals who are
            members of the Board and who were also members of the Incumbent
            Board (or deemed to be such pursuant to this proviso) shall be
            considered as though such individual were a member of the Incumbent
            Board; but, provided further, that any such individual whose initial
            assumption of office occurs as a result of either an actual or
            threatened election contest (as such terms are used in Rule 14a-11
            of Regulation 14A promulgated under the Exchange Act) or other
            actual or threatened solicitation of proxies or consents by or on
            behalf of a Person other than the Board shall not be so considered
            as a member of the Incumbent Board; or

                                       8

<PAGE>

      (3)   Consummation of a reorganization, merger or consolidation or sale or
            other disposition of all or substantially all of the assets of the
            Company or the acquisition of shares or assets of another company
            ("CORPORATE TRANSACTION"); excluding, however, such a Corporate
            Transaction pursuant to which (i) all or substantially all of the
            individuals and entities who are the beneficial owners,
            respectively, of the Outstanding Company Common Stock and
            Outstanding Company Voting Securities immediately prior to such
            Corporate Transaction will beneficially own, directly or indirectly,
            more than 50% of, respectively, the outstanding shares of common
            stock (or equity interests), and the combined voting power of the
            then outstanding voting securities entitled to vote generally in the
            election of directors (or equivalent governing body, if applicable),
            as the case may be, of the entity resulting from such Corporate
            Transaction (including an entity which as a result of such
            transaction owns the Company or all or substantially all of the
            Company's assets either directly or through one or more
            subsidiaries) in substantially the same proportions as their
            ownership, immediately prior to such Corporate Transaction, of the
            Outstanding Company Common Stock and Outstanding Company Voting
            Securities, as the case may be, (ii) no Person (other than the
            Company, any employee benefit plan (or related trust) of the Company
            or such entity resulting from such Corporate Transaction) will
            beneficially own, directly or indirectly, 20% or more of,
            respectively, the outstanding shares of common stock (or equity
            interests) of the entity resulting from such Corporate Transaction
            or the combined voting power of the outstanding voting securities of
            such corporation entitled to vote generally in the election of
            directors (or equivalent governing body, if applicable) except to
            the extent that such ownership existed prior to the Corporate
            Transaction, and (iii) individuals who were members of the Incumbent
            Board will constitute at least a majority of the members of the
            board of directors (or equivalent governing body, if applicable) of
            the entity resulting from such Corporate Transaction; or

      (4)   The approval by the stockholders of the Company of a complete
            liquidation or dissolution of the Company.

(d)   Any obligation of the Company under this Section 7 will survive any
      termination of this Agreement.

PART 4   CONFIDENTIALITY AND NON-DISCLOSURE, FORFEITURE, INTELLECTUAL PROPERTY,
         NON-SOLICITATION, REMEDIES, SUCCESSORS, MISCELLANEOUS PROVISIONS,
         SIGNATURE PAGE

SECTION 8. CONFIDENTIAL INFORMATION

(a)   Acknowledgement. The Company and the Executive acknowledge that the
      services to be performed by the Executive under this Agreement are unique
      and extraordinary and that, as a result of the Executive's employment, the
      Executive will be in a relationship of

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<PAGE>

      confidence and trust with the Company and will come into possession of
      Confidential Information (as defined below) that is (1) owned or
      controlled by the Company, (2) in the possession of the Company and
      belonging to third parties or (3) conceived, originated, discovered or
      developed, in whole or in part, by the Executive. "CONFIDENTIAL
      INFORMATION" means trade secrets and other confidential or proprietary
      business, technical, personnel or financial information, whether or not
      the Executive's work product, in written, graphic, oral or other tangible
      or intangible forms, including specifications, samples, records, data,
      computer programs, drawings, diagrams, models, customer names, ID's or
      e-mail addresses, business or marketing plans, studies, analyses,
      projections and reports, communications by or to attorneys (including
      attorney-client privileged communications), memos and other materials
      prepared by attorneys or under their direction (including attorney work
      product), and software systems and processes. Any Confidential Information
      that is not readily available to the public shall be considered to be a
      trade secret and confidential and proprietary, even if it is not
      specifically marked as such, unless the Company advises the Executive
      otherwise in writing.

(b)   Nondisclosure. The Executive agrees that the Executive will not, without
      the prior written consent of the Company, directly or indirectly, use or
      disclose Confidential Information to any person, during or after the
      Executive's employment, except as may be necessary in the ordinary course
      of performing the Executive's duties under this Agreement. The Executive
      will keep the Confidential Information in strictest confidence and trust.
      This Section 8(b) shall apply indefinitely, both during and after the
      Term.

(c)   Surrender Upon Termination. The Executive agrees that in the event of the
      termination of the Executive's employment for any reason, at any time, the
      Executive will immediately deliver to the Company all property belonging
      to the Company, including documents and materials of any nature pertaining
      to the Executive's work with the Company, and will not take with the
      Executive any documents or materials of any description, or any
      reproduction thereof of any description, containing or pertaining to any
      Confidential Information. It is understood that the Executive is free to
      use information that is in the public domain, but not as a result of a
      breach of this Agreement

(d)   Forfeiture in Certain Events. The Company may, in its sole discretion, in
      the event of (i) any termination of employment of the Executive for Cause,
      (ii) any material breach by the Executive of Section 10 following his
      termination of employment for any reason or (iii) following a material
      breach of Section 10 and any finding of the invalidity or unenforceability
      of Section 10 as further provided in Section 11, (A) cancel any
      outstanding award of stock options, restricted stock, deferred stock units
      or other award granted to the Executive under a Company plan or otherwise
      (an "AWARD"), in whole or in part, whether or not vested or deferred, such
      cancellation to be effective as of a date specified in written notice to
      the Executive, which date shall be no earlier than the date such notice is
      given, or (B) following the exercise or payment of an Award, the Company
      may require the Executive to repay to the Company any gain realized or
      payment received upon the exercise or payment of such Award (with such
      gain or payment valued as of the date of exercise or payment). Such
      repayment obligation shall be effective upon notice of demand thereof to
      Executive, and repayment shall be due and payable to the

                                       10

<PAGE>

      Company as of a date which is at least 30 days after the Executive
      receives such notice, which notice may provide for an offset to any future
      payments owed by the Company or any subsidiary to the Executive if
      necessary to satisfy the repayment obligation. Any determinations under
      this paragraph will be made by the Company in good faith and in its sole
      discretion. This Section 8(d) shall apply during and following the Term of
      this Agreement, but shall have no application following a Change in
      Control.

SECTION 9. ASSIGNMENT OF RIGHTS OF INTELLECTUAL PROPERTY

The Executive will promptly and fully disclose all Intellectual Property to the
Company. The Executive hereby assigns and agrees to assign to the Company (or as
otherwise directed by the Company) the Executive's full right, title and
interest in and to all Intellectual Property. The Executive will execute any and
all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company and its affiliates to enforce any patents, copyrights or other
proprietary rights to the Intellectual Property. "INTELLECTUAL PROPERTY" means
inventions, discoveries, developments, methods, processes, compositions, works,
concepts and ideas (whether or not patentable or copyrightable or constituting
trade secrets) conceived, made, created, developed or reduced to practice by the
Executive (whether alone or with others, whether or not during normal businesses
hours or on or off Company premises) during the Executive's employment with the
Company that relate to any business, venture or activity being conducted or
proposed to be conducted by the Company or its subsidiaries at any time during
the term of the Executive's employment with the Company.

SECTION 10. RESTRICTIONS ON ACTIVITIES OF THE EXECUTIVE

(a)   Acknowledgments. The Executive agrees that he is being employed under this
      Agreement in a key management capacity with the Company, that the Company
      is engaged in a highly competitive business and that the success of the
      Company's business in the marketplace depends upon its goodwill and
      reputation for quality and dependability. The Executive further agrees
      that reasonable limits may be placed on his ability to compete against the
      Company and its affiliates as provided in this Agreement so as to protect
      and preserve their legitimate business interests and goodwill.

(b)   Agreement Not to Solicit.

      (1)   During the Non-Solicitation Period, the Executive will not, directly
            or indirectly, through any other entity, solicit for employment,
            hire or to provide services, any officer, director, consultant,
            executive or employee of the Company or any of its affiliates during
            his or her engagement with the Company or such affiliate.

      (2)   The "NON-SOLICITATION PERIOD" means the period during which
            Executive is employed by the Company and the following 12 months.

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<PAGE>

SECTION 11. REMEDIES

It is specifically understood and agreed that any breach of the provisions of
Section 8 or 10 of this Agreement would likely result in irreparable injury to
the Company and that the remedy at law alone would be an inadequate remedy for
such breach, and that in addition to any other remedy it may have, the Company
shall be entitled to enforce the specific performance of this Agreement by the
Executive and to obtain both temporary and permanent injunctive relief without
the necessity of proving actual damages. Without limiting the generality of the
foregoing provisions of this Section 11, it is understood and agreed that the
Equity Grants under Section 4(b) and the Company's promise to provide the
severance payments described in Section 6(a) are made subject to the condition
that (i) the Executive's obligations under Section 10 are and will remain
specifically enforceable against the Executive in accordance with those sections
and (ii) if, in an action by the Company against the Executive for the breach or
alleged breach of Section 10, a court of competent jurisdiction finds that all
or any part of that section is invalid or unenforceable for any reason, then the
Company may, without limiting its other remedies at law or equity, enforce all
of the remedies available to it under this Agreement, including without
limitation the remedies described in Section 8(d).

SECTION 12. SEVERABLE PROVISIONS

The provisions of this Agreement are severable and the invalidity of any one or
more provisions shall not affect the validity of any other provision. In the
event that a court of competent jurisdiction shall determine that any provision
of this Agreement or the application thereof is unenforceable in whole or in
part because of the duration of scope thereof, the parties hereby agree that
such court, in making such determination, shall have the power to reduce the
duration and scope of such provision to the extent necessary to make it
enforceable and that this Agreement in its reduced form shall be valid and
enforceable to the fullest extent permitted by law.

SECTION 13. SUCCESSORS

(a)   Company's Successors. The Company will require any successor (whether
      direct or indirect and whether by purchase, lease, merger, consolidation,
      liquidation or otherwise) to all or substantially all of the Company's
      business or assets, by an agreement in substance and form satisfactory to
      the Executive, to assume this Agreement and to agree expressly to perform
      this Agreement in the same manner and to the same extent as the Company
      would be required to perform it in the absence of a succession. The
      Company's failure to obtain such agreement prior to the effectiveness of a
      succession shall be a breach of this Agreement and shall entitle the
      Executive to all of the compensation and benefits to which the Executive
      would have been entitled under this Agreement if the Company had
      terminated the Executive's employment for any reason other than Cause, on
      the date when such succession becomes effective. For all purposes under
      this Agreement, except as otherwise provided in this Agreement, the term
      "Company" shall include any successor to the Company's business or assets
      that executes and delivers the assumption agreement described in this
      Section 13(a), or that becomes bound by this Agreement by operation of
      law.

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<PAGE>

(b)   Executive's Successors. This Agreement and all rights of the Executive
      under this Agreement shall inure to the benefit of, and be enforceable by,
      the Executive's personal or legal representatives, executors,
      administrators, successors, heirs, distributees, devisees and legatees.

SECTION 14. GENERAL PROVISIONS

(a)   Amendment; Waiver. No provision of this Agreement shall be modified,
      waived or discharged unless the modification, waiver or discharge is
      agreed to in writing and signed by the Executive and by an authorized
      officer of the Company (other than the Executive). No waiver by either
      party of any breach of, or of compliance with, any condition or provision
      of this Agreement by the other party shall be considered a waiver of any
      other condition or provision or of the same condition or provision at
      another time.

(b)   Whole Agreement; Interpretation. No agreements, representations or
      understandings (whether oral or written and whether express or implied)
      that are not expressly set forth in this Agreement have been made or
      entered into by either party with respect to the subject matter hereof.
      The reference table on the first page and the headings in this Agreement
      are for convenience of reference only and will not affect the construction
      or interpretation of this Agreement. The word "or" is used in its
      non-exclusive sense. Unless otherwise stated, the word "including" should
      be read to mean "including without limitation" and does not limit the
      preceding words or terms. All references to "Sections" or other provisions
      in this Agreement are to the corresponding Sections or provisions in this
      Agreement. All words in this Agreement will be construed to be of such
      gender or number as the circumstances require.

(c)   Notice. Notices and all other communications contemplated by this
      Agreement shall be in writing and shall be deemed to have been duly given
      when personally delivered, mailed by U.S. registered or certified mail,
      return receipt requested, or sent by a documented overnight courier
      service. In the case of the Executive, mailed notices shall be addressed
      to the Executive at the home address maintained in the Company's records.
      In the case of the Company, mailed notices shall be addressed to its
      corporate headquarters, and all notices shall be directed to the attention
      of the President and Chief Executive Officer, with a required copy to the
      attention of the Corporate Secretary.

(d)   Setoff. The Company may set off against any payments owed to the Executive
      under this Agreement any debt or obligation of the Executive owed to the
      Company.

(e)   Choice of Law. The validity, interpretation, construction and performance
      of this Agreement shall be governed by the laws of the State of Maine,
      irrespective of Maine's choice-of-law principles.

(f)   Arbitration. Except as otherwise provided with respect to the enforcement
      of Sections 8 and 10, any dispute or controversy arising out of the
      Executive's employment or the termination thereof, including any claim of
      discrimination under U.S. (state or federal) or non-U.S. law, shall be
      settled exclusively by arbitration in Santa Clara County, California, in
      accordance with the rules of the American Arbitration Association then in

                                       13

<PAGE>

      effect. Judgment may be entered on the arbitrator's award in any court
      having jurisdiction.

(g)   No Assignment of Benefits. The rights of any person to payments or
      benefits under this Agreement shall not be made subject to option or
      assignment, either by voluntary or involuntary assignment or by operation
      of law, including bankruptcy, garnishment, attachment or other creditor's
      process, and any action in violation of this Section 14(g) shall be void.

(h)   Limitation of Remedies. If the Executive's employment terminates for any
      reason, the Executive shall not be entitled to any payments, benefits,
      damages, awards or compensation other than as provided by this Agreement,
      including under the severance policies of the Company or any subsidiary.

(i)   Taxes. Except where specified in this Agreement as "tax protected" or
      subject to tax assistance or "gross-up", all payments made pursuant to
      this Agreement shall be subject to withholding of applicable taxes. The
      Company shall have the authority to delay the payment of any amount
      payable under this Agreement to the extent it deems necessary or
      appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating
      to payments made to certain "key employees" of certain publicly-traded
      companies) ("CODE SECTION 409A") or regulations promulgated thereunder and
      in such event, any such amounts to which Executive would otherwise be
      entitled during the six (6) month period immediately following Executive's
      separation from service will be paid on the first business day following
      the expiration of such six (6) month period. In the event that any
      additional taxes or interest are due and payable from Executive to the
      Internal Revenue Service under Code Section 409A as a result of any
      payments or benefits payable hereunder, the Company shall provide
      Executive with additional payments so that Executive is fully grossed-up
      with the respect to the Code Section 409A payments.

(j)   Discharge of Responsibility. The payments and other benefits under this
      Agreement, when made in accordance with the terms of this Agreement, shall
      fully discharge all responsibilities of the Company to the Executive that
      existed at the time of termination of the Executive's employment.

                                       14

<PAGE>

      IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company, by its duly authorized officer, as of the day and year
first above written. The Executive has consulted, or has had the opportunity to
consult, with counsel (who is other than the Company's counsel) prior to
execution of this Agreement.

                                 EXECUTIVE

                                  /s/ Mark S. Frey
                                  --------------------------------------------
                                  Mark S. Frey

                                  FAIRCHILD SEMICONDUCTOR CORPORATION

                                  /s/ Mark S. Thompson
                                  --------------------------------------------
                                  By: Mark S. Thompson
                                      President and Chief Executive Officer

                                       15

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