THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Coley Pharmaceutical Group, Inc. (COLY)

4/27/2006 Proxy Information

Dr. Gert Caspritz, a member of our Board of Directors, is a managing limited partner, of certain entities within TVM Capital, one of our principal stockholders. These funds received 137,524 shares of our common stock at the time of our initial public offering pursuant to the payment of a guaranteed paid-in-kind dividend on the shares of our Series F Preferred Stock.

James Thomas, a member of our Board of Directors, is a managing partner of entities that control funds affiliated with Thomas, McNerney & Partners, L.P., one of our principal stockholders. These funds received 275,047 shares of our common stock at the time of our initial public offering pursuant to the payment of the guaranteed paid-in-kind Series F dividend.

Sales of Securities

Dr. Gert Caspritz, a member of our Board of Directors, is a managing limited partner, of certain entities within TVM Capital, one of our principal stockholders. These funds received 137,524 shares of our common stock at the time of our initial public offering pursuant to the payment of a guaranteed paid-in-kind dividend on the shares of our Series F Preferred Stock.

Dr. Manfred Karobath, a member of our Board of Directors, received 5,870 shares of our common stock at the time of our initial public offering pursuant to the payment of the guaranteed paid-in-kind Series F dividend.

James Thomas, a member of our Board of Directors, is a managing partner of entities that control funds affiliated with Thomas, McNerney & Partners, L.P., one of our principal stockholders. These funds received 275,047 shares of our common stock at the time of our initial public offering pursuant to the payment of the guaranteed paid-in-kind Series F dividend.

Dr. Anthony Evnin, a member of our Board of Directors, is a managing director of entities that control funds affiliated with Venrock Associates, one of our principal stockholders. These funds received 220,038 shares of our common stock at the time of our initial public offering pursuant to the payment of the guaranteed paid-in-kind Series F dividend.

Other Transactions

Under our license agreement with the University of Iowa, we were required to pay to the University a portion of the $50 million up-front payment that we received from Pfizer Inc. in connection with our license agreement with Pfizer. Under the patent policy of the University of Iowa, Dr. Krieg receives a portion of the payments we make to the University. In 2005, Dr. Krieg received approximately $1.3 million from the University in conjunction with the royalty payments we made to the University.

In May 2001, we loaned Dr. Krieg $500,000, evidenced by a promissory note in the amount of up to $750,000, bearing interest at an annual rate of 7% and payable in full on May 8, 2006. The loan was in connection with Dr. Krieg’s purchase of a home in Massachusetts and was made pursuant to an original Loan and Pledge Agreement dated as of May 8, 2001. On April 10, 2002, we entered into an Amended and Restated Loan and Pledge Agreement with Dr. Krieg. In 2005, Dr. Krieg remitted $310,000 to us as a partial pre-payment of his loan. As of December 31, 2005, the outstanding balance on this loan, including accrued interest, was approximately $348,000. The loan is secured by an amount of our stock held by Dr. Krieg equal to at least 150% of the outstanding balance of the loan, but in no case greater than 184,061 shares, and by a second mortgage on Dr. Krieg’s home. Dr. Krieg intends to settle the remaining balance, including interest, by surrendering shares of our common stock to us.

Indemnification Agreements

On April 11, 2005, our Board of Directors approved our entry into indemnification agreements with each of our directors and officers. Pursuant to the indemnification agreements, we have agreed to hold harmless and indemnify our directors and officers to the fullest extent authorized or permitted by the provisions of our certificate of incorporation, bylaws and the Delaware General Corporation Law, or the DGCL, including for any amounts that such director or officer becomes obligated to pay because of any claim to which such director or officer is made or threatened to be made a party, witness or participant, by reason of such director’s or officer’s service as a director, officer, employee or other agent of us.

There are certain exceptions from our obligation to indemnify our directors and officers, including for “short-swing” profit claims under Section 16(b) of the Securities Exchange Act of 1934, losses that are as a result of conduct that is established by a final judgment as knowingly fraudulent or deliberately dishonest or that constituted willful misconduct, or that constituted a breach of the duty of loyalty to the Company or resulted in any improper personal profit or advantage, or in connection with any proceeding initiated by such director or officer, or any proceeding by such director or officer against the Company or its directors, officers, employees or other agents, unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by our Board of Directors, (iii) such indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the DGCL, or (iv) the proceeding is initiated to enforce a claim for indemnification pursuant to the indemnification agreement.

All of our agreements and obligations contained in the indemnification agreements shall continue during the period when the director or officer, who is a party to an indemnification agreement, is a director, officer, employee or other agent of the Company (or is or is serving at our request as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and shall continue thereafter so long as such director or officer shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, arbitrational, administrative or investigative. In addition, the indemnification agreements provide for partial indemnification and advance of expenses.