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                                                                    Exhibit 10.1

                           IDERA PHARMACEUTICALS, INC.

                         COMMON STOCK PURCHASE AGREEMENT

                                 March 24, 2006

     This Common Stock Purchase Agreement (this "AGREEMENT") is entered into as
of the date set forth above by and among Idera Pharmaceuticals, Inc., a Delaware
corporation (the "COMPANY"), and the undersigned purchasers (each a "PURCHASER"
and collectively, the "PURCHASERS") set forth on the Schedule of Purchasers
attached hereto as Exhibit A (the "SCHEDULE OF PURCHASERS"). The parties hereby
agree as follows:

                                   ARTICLE 1

                      AUTHORIZATION AND SALE OF SECURITIES

     1.1 Authorization. The Company has duly authorized the sale and issuance to
the Purchasers pursuant to the terms and conditions hereof of (i) up to
22,159,092 shares (the "SHARES") of its common stock, par value $0.001 per share
(the "COMMON STOCK"), and (ii) warrants to purchase up to 16,619,319 shares of
Common Stock in the form attached hereto as Exhibit B (the "WARRANTS").

     1.2 Sale of Securities. Subject to the terms and conditions hereof, at the
Closing (as defined in Section 2.1 below) the Company will issue and sell to
each Purchaser, and each Purchaser agrees, severally and not jointly, to
purchase from the Company, the number of Shares, at a purchase price of $0.44
per share, set forth opposite such Purchaser's name on the Schedule of
Purchasers and for the aggregate purchase price set forth thereon. Payment of
the purchase price for the Shares will be made by the Purchasers by wire
transfer in same day funds. Concurrently with the closing of the purchase and
sale of the Shares, the Company shall issue to each Purchaser a Warrant to
purchase that number of shares of Common Stock equal to 75% of the number of
shares of Common Stock purchased by such Purchaser as reflected on the Schedule
of Purchasers.

                                   ARTICLE 2

                                CLOSING; DELIVERY

     2.1 Closing. The closing of the purchase by the Purchasers and the sale by
the Company of the Shares (the "CLOSING") shall be held at the offices of Wilmer
Cutler Pickering Hale and Dorr LLP, 60 State Street, Boston, Massachusetts
02109, as soon as practicable and as agreed to by the parties hereto but in no
event later than three business days following the date of this Agreement, or at
such other time and place as the Company and a majority in interest of the
Purchasers may agree either in writing or orally (the "CLOSING DATE").
Concurrent with the Closing, each Purchaser and the Company shall execute and
deliver the Registration Rights Agreement attached hereto as Exhibit C (the
"RIGHTS AGREEMENT" and, together with this Agreement and the Warrants, the
"TRANSACTION DOCUMENTS").

                                       1.

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     2.2 Delivery. At the Closing, the Company will issue to each Purchaser: (i)
a certificate in such Purchaser's name representing the Shares purchased by such
Purchaser, against payment of the purchase price therefor and (ii) a Warrant.

                                    ARTICLE 3

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to each Purchaser that except as
set forth in the Exchange Act Reports (as defined in Section 3.16):

     3.1 Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and the Company is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where failure to so qualify would not reasonably be expected to have a Material
Adverse Effect (as defined herein). For purposes of this Agreement, the term
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect upon the
business, financial condition, properties, or results of operations of the
Company. The Company does not have any subsidiaries.

     3.2 Authorized Capital Stock. Immediately prior to Closing, the Company
will have (i) authorized 200,000,000 and outstanding 111,566,993 shares of
Common Stock and (ii) authorized 5,000,000 shares of Preferred Stock, $0.01 par
value per share ("PREFERRED STOCK"), of which 1,500,000 shares have been
designated Series A Convertible Preferred Stock, 655 shares of which are
outstanding, and of which 200,000 shares have been designated Series C Junior
Participating Preferred Stock, none of which are outstanding; the issued and
outstanding shares of the Common Stock and Preferred Stock have been duly
authorized and validly issued, are fully paid and nonassessable, have been
issued in compliance in material respects with all federal and state securities
laws, were not issued in violation of and are not subject to any preemptive
rights or other rights to subscribe for or purchase securities granted by the
Company, and conform (except with respect to the number of authorized, issued
and outstanding shares) in all material respects to the description thereof
contained in the Exchange Act Reports with the Securities and Exchange
Commission (the "COMMISSION" or the "SEC") under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), or in any Registration Statement on Form
8-A filed with the SEC by the Company. Except as disclosed in the Exchange Act
Reports, the Company does not have outstanding any options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments
requiring the Company to issue or sell, shares of its capital stock or any such
options, rights, convertible securities or obligations, other than options
granted under plans described in the Exchange Act Reports, securities issued
under the common stock purchase agreement dated March 24, 2006 between the
Company and Biotech Shares Ltd. (the "BIOTECH SHARES AGREEMENT") and warrants
issued to Youssef El-Zein as agent of the Company in connection with the Biotech
Shares Agreement. The description of the Company's stock, stock bonus and other
stock plans or arrangements and the options or other rights granted and
exercised thereunder, set forth in the Exchange Act Reports accurately and
fairly presents in all material respects all material information with respect
to such plans, arrangements, options and rights, as of the dates for which such
information is given, that is required by the Exchange Act and the rules and
regulations promulgated thereunder to be so described.

                                       2.

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     3.3 Issuance, Sale and Delivery of the Shares. The Shares, Warrants and
shares of Common Stock issuable upon exercise of the Warrants (the "WARRANT
SHARES" and collectively with the Shares and the Warrants, the "SECURITIES")
have been duly authorized and, when issued, delivered and paid for in the manner
set forth in this Agreement and the Warrants, will be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all pledges, liens,
and encumbrances imposed by the Company (other than restrictions on transfer
under state and/or federal securities laws). No preemptive rights or other
rights to subscribe for or purchase from the Company exist with respect to the
issuance and sale of the Securities by the Company pursuant to this Agreement
and the Warrants. Except as disclosed in the Exchange Act Reports, no
stockholder of the Company has any right (which has not been waived or has not
expired by reason of lapse of time following notification of the Company's
intent to file the registration statement to be filed by it pursuant to the
Rights Agreement (the "REGISTRATION STATEMENT")) to require the Company to
register the sale of any shares owned by such stockholder under the Securities
Act of 1933, as amended (the "SECURITIES ACT") in the Registration Statement. No
further approval or authority of the stockholders or the Board of Directors of
the Company will be required for the issuance and sale of the Securities to be
sold by the Company as contemplated herein.

     3.4 Due Execution, Delivery and Performance of this Agreement. The Company
has full legal right, corporate power and authority to enter into the
Transaction Documents and consummate the transactions contemplated hereby and
thereby. The Transaction Documents have been duly authorized, executed and
delivered by the Company. The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated herein and therein: (i) will not violate any provision of the
certificate of incorporation or bylaws of the Company, (ii) will not result in
the creation of any lien, charge, security interest or encumbrance upon any
assets of the Company pursuant to the terms or provisions of, and will not
conflict with, result in the breach or violation of, or constitute, either by
itself or upon notice or the passage of time or both, a default under any
agreement, lease, franchise, license, permit or other instrument to which the
Company is a party or by which the Company or any of its properties are bound,
except, in each case, for any lien, charge, security interest, encumbrance,
conflict, breach, violation or default which would not reasonably be expected to
have a Material Adverse Effect, or (iii) conflict with or result in the
violation of any statute or any judgment, decree, order, rule or regulation of
any court or any regulatory body, administrative agency or other governmental
body applicable to the Company or any of its properties except for any such
conflict or violation which would not reasonably be expected to have a Material
Adverse Effect. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the execution and delivery by the Company of the Transaction Documents or
the consummation by the Company of the transactions contemplated by the
Transaction Documents, except for compliance with the blue sky laws and federal
securities laws, the listing of the Shares and the Warrant Shares on the
American Stock Exchange and the filing of the Registration Statement. Upon the
execution and delivery of the Transaction Documents, and assuming the valid
execution thereof by the Purchasers, each Transaction Document will constitute a
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in

                                       3.

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a proceeding in equity or at law) and except to the extent enforcement of the
indemnification obligations of the Company set forth in the Rights Agreement may
be limited by federal or state securities laws or the public policy underlying
such laws.

     3.5 Accountants. The firm of Ernst & Young LLP, which has expressed its
opinion with respect to the financial statements to be included or incorporated
by reference in the Registration Statement and the prospectus which forms a part
thereof (the "PROSPECTUS"), is an independent accountant as required by the
Securities Act and the rules and regulations promulgated thereunder (the "RULES
AND REGULATIONS").

     3.6 No Defaults. The Company is not in violation or default of any
provision of its certificate of incorporation or bylaws, or in breach of or
default with respect to any provision of any agreement, judgment, decree, order,
lease, franchise, license, permit or other instrument to which it is a party or
by which it or any of its properties are bound except for any violation or
default that would not reasonably be expected to have a Material Adverse Effect.

     3.7 Contracts. There is no material contract or agreement required by the
Exchange Act and the rules and regulations promulgated thereunder to be
described in or filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 2004 or any other document that the Company was
required to file with the Commission since December 31, 2004 pursuant to the
reporting requirements of the Exchange Act which is not described or filed
therein as required. Any contracts filed as exhibits to the Exchange Act Reports
that are material to the Company are in full force and effect on the date
hereof.

     3.8 No Actions. Except as disclosed in the Exchange Act Reports, (1) there
are no legal or governmental actions, suits or proceedings pending and (2) to
the Company's knowledge, there are no inquiries or investigations pending, or
any legal or governmental actions, suits, or proceedings threatened, against the
Company or of which property owned or leased by the Company is or may be the
subject (it being understood that the interaction between the Company and the
United States Food and Drug Administration and such comparable governmental
bodies relating solely to the clinical development and product approval process
shall not be deemed proceedings for purposes of this representation), or related
to environmental or discrimination matters, which actions, suits or proceedings,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect; and no labor disturbance by the employees of the
Company exists or, to the Company's knowledge, is imminent which would
reasonably be expected to have a Material Adverse Effect. The Company is not
party to or subject to the provisions of any injunction, judgment, decree or
order of any court, regulatory body, administrative agency or other governmental
body specifically naming the Company that would reasonably be expected to have a
Material Adverse Effect.

     3.9 Properties. The Company has good and marketable title to all properties
and assets that are material to the business and reflected as owned as of
September 30, 2005 in the financial statements included in the Exchange Act
Reports or notes thereto, except those properties and assets that have been
assigned or disposed of in the normal course of business. None of such
properties or assets are subject to any lien, mortgage, pledge, charge or
encumbrance of any kind, except for (i) those, if any, reflected in the
financial statements included in the Exchange Act Reports, (ii) licenses of the
Company's intellectual property

                                       4.

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entered into in the ordinary course of business or (iii) those which are not
material in amount and do not materially adversely affect the use of such
property or assets by the Company. The Company holds its leased properties under
valid and binding leases, with such exceptions as would not reasonably be
expected to have a Material Adverse Effect.

     3.10 No Material Change. Since December 31, 2005, and except as described
in the Exchange Act Reports:

          (A) the Company has not incurred any material liabilities or
obligations, indirect, or contingent, or entered into any material oral or
written agreement or other transaction, which was not incurred or entered into
in the ordinary course of business other than the Biotech Shares Agreement and
the placement agent agreement with Youssef El-Zein;

          (B) the Company has not sustained any material loss or interference
with its business or properties from fire, flood, windstorm, accident or other
calamity not covered by insurance;

          (C) the Company has not paid or declared any dividends or other
distributions with respect to its capital stock and the Company is not in
default in the payment of principal or interest on any outstanding debt
obligations;

          (D) there has not been any material change or amendment to a contract
filed as an exhibit to an Exchange Act Report that is material to the Company;

          (E) there has not been any sale, assignment or transfer of all or
substantially all of the Company's rights in any patents, trademarks,
copyrights, trade secrets or other intangible assets or other material assets,
except a sale, assignment or transfer made in the ordinary course of business
that is not material to the assets, properties, financial condition, operating
results or business of the Company;

          (F) there has not been any resignation or termination of any officer,
key employee or group of employees of the Company other than the Vice President
of Clinical of the Company; and the Company, to its knowledge, does not know of
the impending resignation or termination of employment of any such officer, key
employee or group of employees;

          (G) there has not been any waiver by the Company of a material debt
owed to it;

          (H) there has not been any material change in any compensation
arrangement or agreement with any officer or director;

          (I) there has not been any agreement or commitment by the Company to
do any of the acts described in subsections (a) through (h) above; and

          (J) there has not been any event which has caused a Material Adverse
Effect other than continued incurrence of operating losses incurred in the
ordinary course of the Company's business at a rate consistent with the
Company's rate of operating losses for the

                                       5.

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quarter ended December 31, 2005 as reflected in the Company's Financial
Statements (as defined below).

     3.11 Intellectual Property. Except as disclosed in the Exchange Act
Reports, (i) the Company owns or has the right to use the inventions, patent
applications, patents, trademarks (both registered and unregistered), trade
names, copyrights and trade secrets used by it in or, to its knowledge,
necessary for the conduct of the Company's business, including the development
and commercialization of products currently under development in the Company's
IMO-2055 program, including IMOxine and any follow compounds, IMO-2125 program
(and any follow-on compounds to 2125) and toll-like receptor antagonist program
(collectively, the "COMPANY INTELLECTUAL PROPERTY"), except where such failure
to own or have the right to use the intellectual property would not reasonably
be expected to have a Material Adverse Effect; and (ii) (a) to the Company's
knowledge, there are no third parties who have any ownership rights to any
Company Intellectual Property that would preclude the Company from conducting
its business as currently conducted and have a Material Adverse Effect, except
for the ownership rights of the owners of the Company Intellectual Property
licensed by the Company; (b) to the Company's knowledge, there are currently no
sales of any products or any other uses that would constitute an infringement by
third parties of any Company Intellectual Property, which infringement would
reasonably be expected to have a Material Adverse Effect; (c) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the rights of the Company in or to any Company
Intellectual Property, which action, suit, proceeding or claim would reasonably
be expected to have a Material Adverse Effect; (d) there is no pending or, to
the Company's knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any Company Intellectual Property, which
action, suit, proceeding or claim would reasonably be expected to have a
Material Adverse Effect; and (e) there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary right (an "INTELLECTUAL PROPERTY RIGHT") of others,
which action, suit, proceeding or claim would reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Company, the Company does not
infringe nor is it in conflict with any Intellectual Property Rights of any
other person. The termination of the Company's ownership of, or right to use,
any single patent of Company Intellectual Property would not result in a
Material Adverse Effect. The Company has not entered into any consent
agreements, forbearance to sue or settlement agreements with respect to the
validity of the Company's ownership or right to use Company Intellectual
Property. To the Company's knowledge, the Company Intellectual Property is valid
and enforceable. No registration relating to Company Intellectual Property has
lapsed, expired or been abandoned or canceled or is the subject of cancellation
or other adversarial proceedings, and all applications therefor are pending and
in good standing. The Company has complied, in all material respects, with its
contractual obligations relating to the protection of the Company Intellectual
Property used pursuant to licenses. All former or current employees, officers
and consultants of the Company have entered into agreements with the Company
providing for the assignment of inventions to the Company, except where the
failure to have entered into an agreement with an employee, officer or
consultant would not reasonably be expected to have a Material Adverse Effect.

     3.12 Compliance. The Company is conducting its business in compliance with
all applicable laws, rules and regulations of the jurisdictions in which it is
conducting its business,

                                       6.

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including, without limitation, all applicable local, state and federal
environmental laws and regulations; except where failure to be so in compliance
would not reasonably be expected to have a Material Adverse Effect.

     3.13 Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
issuance and sale of the Shares to be sold to the Purchasers hereunder will be,
or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been complied with.

     3.14 Investment Company. The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.

     3.15 Insurance. The Company carries, or is covered by, insurance of the
types and in the amounts that the Company reasonably believes are adequate for
its business as currently conducted and as is customary for similarly sized
companies engaged in similar businesses in similar industries.

     3.16 Disclosure. Neither this Agreement nor any exhibit hereto nor any
certificates, instruments or other documents delivered by the Company to the
Purchasers in connection with the purchase and sale of the Securities (other
than any documents delivered by the Company describing the Company's clinical
development plans and associated budget), when read together, contains any
untrue statement of a material fact. The information contained in the following
documents did not, as of the date of the applicable document, include any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading, as of their respective
dates:

          (A) the Company's Annual Report on Form 10-K for the year ended
December 31, 2004;

          (B) the Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2005, June 30, 2005 and September 30, 2005; and

          (C) all other documents, if any, filed by the Company with the
Commission since March 25, 2005 pursuant to the reporting requirements of the
Exchange Act (together with paragraphs (a) and (b), the "EXCHANGE ACT REPORTS").

     3.17 Price of Common Stock. The Company has not taken, and will not take,
directly or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of the Common Stock to
facilitate the sale or resale of the Securities.

     3.18 Reporting Company; Form S-3. The Company is subject to the reporting
requirements of the Exchange Act and since December 31, 2004 has timely filed
all reports required thereby. As of their respective filing dates, all Exchange
Act Reports complied in all material respects with the requirements of the
Exchange Act. The Company is eligible to register the Shares and the Warrant
Shares for resale by the Purchaser on a registration statement

                                       7.

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on Form S-3 under the Securities Act. To the Company's knowledge, there exist no
facts or circumstances that would prohibit or delay the preparation and filing
of a registration statement on Form S-3 with respect to the Registrable
Securities (as defined in the Rights Agreement). The Company does not know of
any basis to believe that its present independent public auditors will withhold
their consent to the inclusion, or incorporation by reference, of their audit
opinion concerning the Company's financial statements that will be included in
the Registration Statement.

     3.19 Use of Proceeds. The Company intends to use the proceeds from the sale
of the Securities for research and clinical development activities,
manufacturing and commercialization of its product candidates, working capital
and general corporate purposes, including for potential acquisitions of
additional technologies and intellectual property rights.

     3.20 Use of Purchaser Name. Except as may be required by applicable law or
regulation and as may be required in the Registration Statement, the Company
shall not use any Purchaser's name or the name of any of its affiliates in any
advertisement, announcement, press release or other similar public communication
in connection with the offering of the Securities contemplated hereby unless it
has received the prior written consent of such Purchaser for the specific use
contemplated or as otherwise required by applicable law or regulation.

     3.21 Related Party Transactions. No transaction has occurred between or
among the Company and its affiliates, officers or directors or any affiliate or
affiliates of any such officer or director that is required to have been
described in the Exchange Act Reports under Item 404 of Regulation S-K as
required by the Exchange Act or otherwise and is not so described in the
Exchange Act Reports.

     3.22 Governmental Permits, Etc. The Company has all franchises, licenses,
certificates and other authorizations from such federal, state or local
government or governmental agency, department or body that are currently
required for the operation of the business of the Company as currently
conducted, except where the failure to posses currently such franchises,
licenses, certificates and other authorizations would not reasonably be expected
to have a Material Adverse Effect. The Company has not received any notice of
proceedings relating to the revocation or modification of any such permit.

     3.23 Financial Statements. The consolidated financial statements of the
Company and the related notes contained in the Exchange Act Reports and the
consolidated financial statements of the Company and the related notes for the
period ended December 31, 2005, which have been delivered to the Purchasers,
(collectively, the "FINANCIAL STATEMENTS") present fairly, in accordance with
United States generally accepted accounting principles ("GAAP"), the
consolidated financial position of the Company as of the dates indicated, and
the results of operations and cash flows for the periods therein specified,
subject, in the case of unaudited financial statements for interim periods, to
normal year-end audit adjustments. The Financial Statements (including the
related notes) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods therein specified, except that unaudited
financial statements are subject to normal year-end audit adjustments and may
not contain all footnotes required by GAAP. Since December 31, 2005, the Company
has not incurred liabilities,

                                       8.

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contingent or otherwise in the ordinary course of business which individually or
in the aggregate, are material to the financial condition or operating results
of the Company.

     3.24 Listing. The Common Stock is presently listed on the American Stock
Exchange. The Company has not, in the two years preceding the date hereof,
received any written notice from the American Stock Exchange to the effect that
the Company is not in compliance with the maintenance requirements of such
exchange. The Company has secured or prior to closing will secure the listing of
the Shares and the Warrant Shares upon each national securities exchange or
automated quotation system upon which shares of Common Stock are currently
listed (subject to official notice of issuance).

     3.25 Sarbanes-Oxley Act; Accounting Controls. The Company is in compliance
in all material respects with all provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it. The Company maintains a system of internal
accounting controls that the Company reasonably believes is sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

     3.26 ERISA Compliance. Each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is maintained, administered or contributed to by the Company or
any entity that is considered a "single employer" with the Company in accordance
with Section 414 of the Internal Revenue Code of 1986, as amended (the "CODE"),
for employees or former employees of the Company has been maintained in all
material respects in compliance with its terms (except that in any case in which
any plan is currently required to comply with a provision of ERISA or of the
Code, but is not yet required to be amended to reflect such provision, it has
been maintained, operated and administered in accordance with such provision)
and the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code; no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred which would result in a material liability to the Company with respect
to any such plan excluding transactions effected pursuant to a statutory or
administrative exemption; and for each such plan that is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA, no "accumulated
funding deficiency" as defined in Section 412 of the Code has been incurred,
whether or not waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions) exceeds the
present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions.

     3.27 Foreign Corrupt Practices. Neither the Company, nor, to the knowledge
of the Company, any director, officer, agent, employee or other Person acting on
behalf of the Company has, in the course of its actions for, or on behalf of,
the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation

                                       9.

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of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended;
or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee.

     3.28 Employee Relations. The Company is not a party to any collective
bargaining agreement and does not employ any member of a union. No executive
officer of the Company (as defined in Rule 501(f) of the Securities Act) has
notified the Company that such officer intends to leave the Company or otherwise
terminate such officer's employment with the Company. No executive officer of
the Company, to the knowledge of the Company, is in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant with the Company, and, to the knowledge of
the Company, the continued employment of each such executive officer does not
subject the Company to any liability with respect to any of the foregoing
matters. To the Company's knowledge, no employee, officer or consultant of the
Company is in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant. Except as set forth in the Exchange Act Reports, no employee of the
Company has been granted the right to any severance following termination of
employment with the Company in excess of $200,000.

     3.29 Securities Law Exemptions. Assuming the accuracy of the
representations and warranties of the Purchasers contained in Section 4 hereof,
the offer, sale and issuance of the Securities are exempt from the registration
requirements of the Securities Act, and the registration, permit or
qualification requirements of any applicable state securities laws. Neither the
Company nor any person acting on its behalf has taken any action to sell, offer
for sale or solicit offers to buy any securities of the Company that would
reasonably be expected to subject the offer, issuance or sale of the Securities,
as contemplated by this Agreement, to the registration requirements of Section 5
of the Securities Act.

     3.30 No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause this offering of
Securities to be integrated with any prior or contemporaneous offering of
securities of the Company for purposes of the Securities Act or any applicable
state securities law or any applicable stockholder approval provisions.

     3.31 No Brokers. The Company has taken no action which would give rise to
any claim by any person for brokerage commissions, finder's fees or similar
payments by any Purchaser relating to this Agreement or the transactions
contemplated hereby other than fees owed to ThinkEquity.

                                   ARTICLE 4

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Each Purchaser hereby represents and warrants as follows:

                                       10.

<PAGE>

     4.1 This Agreement and the Rights Agreement have been duly and validly
authorized, executed and delivered on behalf of such Purchaser and are valid and
binding agreements of such Purchaser enforceable against such Purchaser in
accordance with their terms except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except to the extent enforcement of the Purchaser's indemnification
obligations set forth in the Rights Agreement may be limited by federal or state
securities laws or the public policy underlying such laws.

     4.2 The Purchaser represents and warrants to, and covenants with, the
Company that: (i) the Purchaser is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
securities representing an investment decision like that involved in the
purchase of the Securities, including investments in securities issued by the
Company and comparable entities, and has had the opportunity to request,
receive, review and consider all information it deems relevant in making an
informed decision to purchase the Securities; (ii) the Purchaser is acquiring
the Securities set forth in Section 1 above in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of such Securities or any arrangement or
understanding with any other persons regarding the distribution of such
Securities (this representation and warranty not limiting the Purchaser's right
to sell pursuant to the Registration Statement or in compliance with the
Securities Act and the Rules and Regulations, or the Purchaser's right to
indemnification under the Rights Agreement); (iii) the Purchaser has not been
organized, reorganized or recapitalized specifically for the purpose of
investing in the Securities; (iv) the Purchaser has completed or caused to be
completed the Registration Statement Questionnaire attached hereto as part of
Exhibit D, for use in preparation of the Registration Statement, and the answers
thereto are true and correct as of the date hereof and will be true and correct
as of the effective date of the Registration Statement and the Purchaser will
notify the Company promptly of any material change in any such information
provided in the Registration Statement Questionnaire until such time as the
Purchaser has sold all of its Securities or until the Company is no longer
required to keep the Registration Statement effective; (v) the Purchaser has had
an opportunity to discuss this investment with representatives of the Company
and ask questions of them; (vi) the Purchaser is an "accredited investor" within
the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act;
(vii) the Purchaser agrees to notify the Company promptly of any change in any
of the foregoing information until such time as the Purchaser has sold all of
its Securities or the Company is no longer required to keep the Registration
Statement effective; and (viii) the Purchaser will not, directly or indirectly,
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire to take a pledge of) any of the Shares except
in compliance with the Securities Act, the Rules and Regulations, and applicable
state securities laws.

     4.3 The Purchaser understands that the Securities are being offered and
sold to it in reliance upon specific exemptions from the registration
requirements of the Securities Act, the Rules and Regulations and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Purchaser set forth herein
in order to

                                       11.

<PAGE>

determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Securities.

     4.4 The Purchaser understands that its investment in the Securities
involves a significant degree of risk, including a risk of total loss of the
Purchaser's investment, and the Purchaser has full cognizance of and understands
all of the risk factors related to the Purchaser's purchase of the Securities.
The Purchaser understands that the market price of the Common Stock has been
volatile and that no representation is being made as to the future value of the
Common Stock. The Purchaser has the knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities and has the ability to bear the economic risks of
an investment in the Securities.

     4.5 The Purchaser understands that no United States federal or state agency
or any other government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.

     4.6 The Purchaser's principal executive offices are at the address set
forth below the Purchaser's name on the Schedule of Purchasers.

     4.7 The Purchaser further represents and warrants to, and covenants with,
the Company that (i) the Purchaser is in compliance with Executive Order 13224
and the regulations administered by the U.S. Department of the Treasury
("TREASURY") Office of Foreign Assets Control, (ii) the Purchaser, its parents,
subsidiaries, affiliated companies, officers, directors and partners, and to the
Purchaser's knowledge, its shareholders, owners, employees, and agents, are not
on the List of Specially Designated Nationals and Blocked Persons maintained by
Treasury and have not been designated by Treasury as a financial institution of
primary money laundering concern, (iii) to the Purchaser's knowledge after
reasonable investigation, all of the funds to be used to acquire the Securities
are derived from legitimate sources and are not the product of illegal
activities, and (iv) the Purchaser is in compliance with all other applicable
U.S. anti-money laundering laws and regulations and has implemented, if
applicable, an anti-money laundering compliance program in accordance with the
requirements of the Bank Secrecy Act, as amended by the USA PATRIOT Act, Pub. L.
107-56.

     4.8 Except for Section 3.29, nothing in this Section 4 shall lessen or
obviate the representations and warranties of the Company set forth in this
Agreement.

                                    ARTICLE 5

                                    COVENANTS

     5.1 Form D: Blue Sky Laws. The Company shall file with the SEC a Form D
with respect to the Securities as required under Regulation D and provide a copy
thereof to each Purchaser promptly after such filing. The Company shall, on or
before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for sale to each Purchaser
pursuant to this Agreement under applicable securities or "blue sky" laws of the
states of the United States or obtain exemption therefrom, and shall provide
evidence of any such action so taken to each Purchaser promptly after taking
such action. Within two (2)

                                       12.

<PAGE>

trading days after the Closing Date, the Company shall file a Form 8-K
concerning this Agreement and the transactions contemplated hereby, which Form
8-K shall attach this Agreement, the Rights Agreement and the form of Warrant as
exhibits to such Form 8-K.

     5.2 Reporting Status. So long as any Purchaser beneficially owns any of the
Securities and so long as the Company is subject to the periodic reporting
obligations of the Exchange Act, the Company shall timely file (within
applicable extension periods) all reports required to be filed with the SEC
pursuant to the Exchange Act.

     5.3 Participation Right.

          (A) In the event that prior to the earlier of (i) March 23, 2008 and
(ii) the date that the Purchasers collectively own fewer than 11,079,545 shares
of Common Stock (such number of shares being subject to adjustment for stock
splits, dividends, combinations, recapitalizations, reclassifications and other
similar events), the Company proposes to sell and issue securities of the
Company (an "ADDITIONAL FINANCING") each Purchaser shall have the option to
purchase, on the same terms and conditions offered by the Company to the other
purchasers of such securities in such Additional Financing, up to that
percentage of the securities sold in such Additional Financing equal to (x) the
proportion that the number of Shares then held by such Purchaser bears to the
total number of Shares then held by all Purchasers, multiplied by (y) the
aggregate percentage set forth in Section 5.3(e) hereof with respect to such
Additional Financing (such percentage being a Purchaser's "PRO RATA AMOUNT").

          (B) No later than 10 business days prior to the anticipated closing of
any such proposed Additional Financing, the Company shall deliver a written
notice (the "OFFER NOTICE") to the Purchasers stating (i) its bona fide
intention to offer securities in an Additional Financing, (ii) the number of
such securities to be offered, (iii) the price and terms, to the extent known,
upon which it proposes to offer such securities, and (iv) the anticipated
closing date of the sale of such securities. The Company shall promptly notify
each Purchaser of (i) the determination of the price and terms upon which it
proposes to offer such securities, to the extent not set forth in the Offer
Notice, and (ii) any material change in any of the information set forth in the
Offer Notice or in the price or other terms previously communicated to such
Purchaser (it being understood that any change in the offering price, the number
of shares to be offered and the warrant coverage and warrant exercise price of
any warrants issued in such Additional Financing, shall be deemed to be
material, regardless of magnitude).

          (C) In order to participate in the Additional Financing, in whole or
in part, a Purchaser must deliver to the Company, on or prior to the latest of
(i) the date 10 business days after the date of delivery of the Offer Notice
(the "Offer Notice Expiration Date"), (ii) the date one business day following
the date on which the final price and terms, to the extent not set forth in the
Offer Notice, are communicated to such Purchaser and (iii) the date one business
day following the date on which any change in any of the information set forth
in the Offer Notice or in the price or any other term of the Additional
Financing is communicated to such Purchaser, a written notice of acceptance
providing a representation letter certifying that such Purchaser is an
accredited investor within the meaning of Rule 501 under the Securities Act and
indicating the portion of the Purchaser's Pro Rata Amount that such Purchaser
elects to purchase and, if such Purchaser shall elect to purchase all of its Pro
Rata Amount, indicating the amount of securities

                                       13.

<PAGE>

not subscribed for by the other Purchasers hereunder (the "UNDERSUBSCRIPTION
AMOUNT") that such Purchaser elects to purchase. If the Pro Rata Amounts
subscribed for by all Purchasers are less than the total of all of the Pro Rata
Amounts available for purchase, then each Purchaser who has set forth an
Undersubscription Amount in its notice of acceptance shall be entitled to
purchase, in addition to the Pro Rata Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for by the Purchasers exceed the available
Undersubscription Amount, each Purchaser who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
available Undersubscription Amount as the Undersubscription Amount subscribed
for by such Purchaser bears to the total Undersubscription Amounts subscribed
for by all Purchasers, subject to rounding by the Board of Directors to the
extent it deems reasonably necessary.

          (D) The Company may conduct the Additional Financing, and in the event
that all of the securities offered to the Purchasers in the Offer Notice are not
purchased hereunder by the Purchasers include such unpurchased securities in the
securities being sold in the Additional Financing, within 60 days of the Offer
Notice Expiration Date on terms and conditions not more favorable to the
purchasers in such Additional Financing than the terms and conditions offered to
the Purchasers hereunder without first offering such securities to the
Purchasers in the manner provided in this Section 5.3.

          (E) The aggregate percentage of any Additional Financing that the
Purchasers shall have the right to purchase under this Section 5.3 shall be
determined as follows:

               (I) if the price at which the securities are sold in the
Additional Financing is equal to or less than $0.88 (as adjusted for any stock
splits, stock dividends, recapitalization, reclassifications or otherwise), the
Purchasers shall collectively be entitled to purchase up to 50% of the
securities to be issued in such Additional Financing;

               (II) if the price at which the securities are sold in the
Additional Financing is greater than $0.88 (as adjusted for any stock splits,
stock dividends, combinations, recapitalization, reclassifications or otherwise)
and equal to or less than $1.32 (as adjusted for any stock splits,
recapitalization, reclassifications or otherwise), the Purchasers shall
collectively be entitled to purchase up to 40% of the securities to be issued in
such Additional Financing;

               (III) if the price at which the securities are sold in the
Additional Financing is greater than $1.32 (as adjusted for any stock splits,
stock dividends, combinations, recapitalization, reclassifications or otherwise)
and equal to or less than $1.76 (as adjusted for any stock splits,
recapitalization, reclassifications or otherwise), the Purchasers shall
collectively be entitled to purchase up to 30% of the securities to be issued in
such Additional Financing; and

               (IV) if the price at which the securities are sold in the
Additional Financing is greater than $1.76 (as adjusted for any stock splits,
stock dividends, combinations, recapitalization, reclassifications or
otherwise), the Purchasers shall collectively be entitled to purchase up to 20%
of the securities to be issued in such Additional Financing.

     For purposes of this clause (e), the price at which the securities are sold
is intended to reflect the price at which a share of Common Stock is sold in the
Additional Financing or the

                                       14.

<PAGE>

price of which a unit of securities that includes one share of Common Stock is
sold. In the event that the Additional Financing is of securities convertible
into or exercisable for Common Stock or of a unit of securities that includes
securities convertible into or exercisable for Common Stock, then the price at
which the securities shall be deemed to be sold for purposes of this clause (e)
shall be determined on a fully-exercised, as-converted to Common Stock basis. In
the event that the Additional Financing is of securities not convertible into or
exercisable for Common Stock, the Purchasers shall collectively be entitled to
purchaser up to 50% of the securities to be issued in such Additional Financing.

          (F) In the event that the Company proposes an Additional Financing
that is a public offering made pursuant to a registration statement filed with
the Commission pursuant to the Securities Act, the offering of securities to the
Purchasers pursuant to this Section 5.3 shall be made by the Company in a
concurrent private placement and not in such public offering. In any such
private placement: (i) the offer of the securities in such private placement
shall be made on the same terms and conditions as the offer of the securities in
the public offering, (ii) the closing of the private placement shall occur
concurrently with the closing of the Additional Financing, (iii) the securities
offered to the Purchasers in the private placement shall be deemed to have been
issued in such Additional Financing for the purpose of calculating the
percentages set forth in Section 5.3(e), and (iv) the Company shall provide
registration rights substantially identical to those provided in the Rights
Agreement with respect to the securities purchased in the private placement.

          (G) The following issuances shall not be Additional Financings for
purposes of this Section 5.3 and the Purchasers shall have no rights hereunder
with respect to such issuances of securities: (i) the issuance or sale of shares
of Common Stock (or options therefor) to employees, officers, directors,
consultants or advisers of the Company pursuant to any plan, agreement or
arrangement approved by the Company's Board of Directors (the primary purpose of
which, in the reasonable judgment of the Company's Board of Directors, is not to
raise additional capital); (ii) the issuance of securities in connection with
mergers, acquisitions, strategic business partnerships, joint ventures or
research and development, licensing or similar collaborations or arrangements;
(iii) securities issued upon exercise or conversion of outstanding securities of
the Company; (iv) securities issued to placement agents; (v) securities issued
as payments of interest on notes of the Company; (vi) securities issued as a
stock dividend to holders of Common Stock or upon any subdivision or combination
of shares of Common Stock; and (vii) shares of Common Stock, or the grant of
options or warrants therefor, in connection with any present or future
borrowing, leasing or similar debt financing arrangement (including any line of
credit extended by any commercial lending institution and evidenced by the
issuance of notes by the Company) approved by the Board of Directors of the
Company.

          (H) The participation right in this Section 5.3 shall terminate upon
the earlier of (i) the closing of any Additional Financing in which the Company
issues securities in a single closing for aggregate consideration exceeding $50
million and (ii) the closing of any Additional Financing in which the Company
issues securities for aggregate consideration that, when added together with the
consideration received by the Company for all Additional Financings prior to
such Additional Financing, exceeds $75 million.

                                      15.
<PAGE>

          (I) The participation right in this Section 5.3 may not be assigned or
transferred, except that such right is assignable by each Purchaser to any
wholly owned subsidiary or parent of, or to any corporation or entity that is,
within the meaning of the Securities Act, controlling, controlled by or under
common control with, any such Purchaser.

          (J) No Purchaser shall have any right to purchase securities of the
Company hereunder, and the Company shall have no obligation to a Purchaser
hereunder, if (1) the Company has used its reasonable best efforts to ensure
that the sale of such securities to such Purchaser will not violate any Rule or
Regulation and, despite such efforts, the Company reasonably determines in good
faith (based on the written advice of its counsel) that the sale of such
securities to such Purchaser cannot be made without the violation of any Rule or
Regulation or (2) (A) the Company reasonably determines in good faith (based on
the written advice of its counsel) that the sale of such securities to such
Purchaser cannot be made without requiring the approval of the Company's
stockholders for a reason that is related to such Purchaser (or to the
Purchasers as a group) and is not related to the participation of other
participants in the Additional Financing and (B) the Company has used
commercially reasonable efforts (which shall include consulting in good faith
with the participants in the Additional Financing other than the Purchasers) to
structure the Additional Transaction such that that the sale of such securities
to such Purchaser can be made without requiring the approval of the Company's
stockholders; provided, however, the Company shall negotiate in good faith with
such Purchaser to implement a mutually-agreeable alternative to such Purchaser's
participation in such Additional Financing on the same terms as the other
participants with the goal of providing such Purchaser with the opportunity to
purchase securities of the Company on or about the time of the Additional
Financing on terms that are economically equivalent to the terms offered to the
participants in the Additional Financing.

     5.4 Expenses. The Company shall pay to Baker Brothers Investments ("BBI")
at the Closing upon delivery to the Company of an invoice, reimbursement for the
out-of-pocket expenses reasonably incurred by BBI or its advisors in connection
with the negotiation, preparation, execution and delivery of the Transaction
Documents and the other agreements to be executed in connection herewith, and
therewith, including, without limitation, reasonable due diligence and
attorneys' fees and expenses (the "EXPENSES"); provided, however, that BBI shall
be permitted to deduct all Expenses from the purchase price payable by BBI and
purchasers affiliated with BBI hereunder. In addition, from time to time
following the Closing, upon BBI's written request and delivery to the Company of
an invoice, the Company shall pay to BBI such additional Expenses, if any, not
covered by any payments made at Closing. The maximum amount of Expenses for
which the Company shall be responsible pursuant to this section shall be $50,000
and the balance of the expenses of BBI and the other Purchasers shall be borne
by BBI and the other Purchasers.

     5.5 Information. The Company shall send the following to each Purchaser
until such Purchaser transfers, assigns or sells all of its Securities: (i)
unless otherwise available on the SEC's EDGAR system, within ten (10) days after
the filing with the SEC, a copy of its Annual Report on Form 10-K, its Quarterly
Reports on Form 10-Q, its proxy statements and any Current Reports on Form 8-K;
and (ii) within one day of the release, copies of all press releases issued by
the Company.

                                      16.

<PAGE>

     5.6 Listing. The Company will use its best efforts to continue the listing
and trading of its Common Stock, including the Shares and Warrant Shares, on the
American Stock Exchange ("AMEX"), the New York Stock Exchange, the Nasdaq
National Market, the Nasdaq Capital Market or other equivalent U.S. national
exchange or automated trading market (a "PERMITTED EXCHANGE") and to comply with
the reporting, filing and other obligations under the bylaws or rules thereof.

     5.7 Corporate Existence. So long as a Purchaser owns any Securities, in the
event of a merger, consolidation or sale of all or substantially all of the
Company's assets, the Company shall ensure that the surviving or successor
entity in such transaction assumes the Company's obligations hereunder and under
the Warrants and the agreements and instruments entered into in connection
herewith regardless of whether or not the Company would have had a sufficient
number of shares of Common Stock authorized and available for issuance upon
exercise of all Warrants outstanding as of the date of such transaction. The
Company covenants and agrees that it will not engage in any liquidation,
dissolution, merger, consolidation or sale of all or substantially all of its
assets at any time prior to the effectiveness of the Registration Statement
required to be filed pursuant to the Rights Agreement without (A) providing each
Purchaser with written notice of such transaction at least 15 days prior to the
consummation of such transaction and (B) obtaining the written consent (such
consent not to be unreasonably withheld) of the Purchasers holding a
majority-in-interest of the then outstanding Shares held by the Purchasers;
provided, however, that the Company shall not have any obligation hereunder to
obtain such consent if the Board of Directors of the Company determines in good
faith (based on the written advice of counsel) that requiring such consent would
be inconsistent with its fiduciary duties under applicable law.

     5.8 Securities Laws; No Integrated Offerings. The Company shall not make
any offers or sales of any security under circumstances that would cause the
offer and sale of the Securities hereunder to violate the Securities Act or the
Rules or Regulations or cause the offer and sale of the Securities to be subject
to any stockholder approval provision applicable to the Company or its
securities.

     5.9 Legal Compliance. So long as any Purchaser beneficially owns at least
5% of the Company's common stock (determined in accordance with Rule 13(d) under
the Exchange Act), the Company shall conduct its business and the business of
its subsidiaries in compliance with all laws, ordinances or regulations of
governmental entities applicable to such businesses, except where the failure to
do so would not have a Material Adverse Effect.

     5.10 Inspection of Properties and Books. So long as BBI beneficially owns
at least 10% of the Company's common stock (determined in accordance with Rule
13(d) under the Exchange Act), BBI and its representatives and agents
(collectively, the "INSPECTORS") shall have the right, at BBI's expense, and
following reasonable notice to visit and inspect any of the properties of the
Company, to examine the books of account and records of the Company and, to
discuss the affairs, finances and accounts of the Company with, and to be
advised as to the same by, its officers, all at such reasonable times and
intervals and to such reasonable extent as BBI may desire. The Company shall not
disclose material nonpublic information to Inspectors, unless prior to
disclosure of such information the Company and BBI agree otherwise and the

                                      17.

<PAGE>

Inspectors enter into an appropriate confidentiality agreement with the Company
with respect thereto.

     5.11 Board of Directors. At any time and from time to time until March 23,
2007 (the "EXPIRATION DATE"), BBI will have the right to recommend one
representative or appointee of BBI (the "BBI CANDIDATE") for election to the
Company's Board of Directors. If the BBI Candidate is determined to be a
suitable candidate to serve as a director of the Company by the Company's
nominating committee acting in good faith in accordance with the guidelines
publicly disclosed by the Company and the charter of the nominating committee,
the Company will cause such BBI Candidate to be elected or appointed as a member
of the Company's Board of Directors. If the BBI Candidate's term will expire
prior to the Expiration Date, the Company will evaluate the BBI Candidate in the
same manner as its other directors whose terms are expiring and, if the BBI
Candidate is determined to be a suitable candidate to serve as a director of the
Company by the Company's nominating committee acting in good faith in accordance
with the guidelines publicly disclosed by the Company and the charter of the
nominating committee, will nominate the BBI Candidate for re-election to the
Board upon the expiration of such BBI Candidate's term. The right set forth in
this Section 5.11 is not assignable.

     5.12 Observation Rights. During any period when a BBI Candidate is serving
as a member of the Board, the Company shall allow the BBI Candidate to attend,
in a nonvoting capacity, all meetings of each committee of the Company's Board
of Directors on which the BBI Candidate is not serving, and in connection
therewith, the Company shall give such BBI Candidate copies of all notices,
minutes, consents and other materials, financial or otherwise, which the Company
provides to the members of such committee; provided, however, that the Company
reserves the right to exclude such BBI Candidate from access to any material or
meeting or portion thereof if the Company believes upon advice of counsel that
such exclusion is reasonably necessary to preserve the attorney-client
privilege, to protect highly confidential information or for other similar
reasons, or if such committee believes in good faith (based on the advice of
counsel) that the BBI Candidate has a conflict of interest. The right set forth
in this Section 5.12 is not assignable.

     5.13 Future Financings. On or prior to the earlier of (i) March 23, 2008,
and (ii) the date on which the Purchasers no longer hold at least 50% of the
Shares issued at the Closing (subject to adjustment for stock splits, dividends,
combinations, recapitalizations, reclassifications and other similar events),
the Company shall not sell any shares of preferred stock or consummate any debt
financing without the prior written consent of Purchasers holding at least a
majority of the Shares then held by all Purchasers; provided that no such
approval shall be necessary for the Company to enter into an equipment lease
transaction.

     5.14 Use of Proceeds. The Company shall use the proceeds from the sale of
the Securities for research and clinical development activities, manufacturing
and commercialization of its product candidates, working capital and general
corporate purposes, including for potential acquisitions of additional
technologies and intellectual property rights.

     5.15 No Short Sales. Each Purchaser agrees that beginning on the date
hereof until the earlier to occur of (a) the date 90 days from the Closing Date
and (b) the effective date of the Registration Statement, it will not enter into
any Short Sales. For purposes of this Section 5.15, a

                                      18.

<PAGE>

"Short Sale" by a Purchaser means a sale of Common Stock that is marked as a
short sale and that is executed at a time when such Purchaser has no equivalent
offsetting long position in the Common Stock. For purposes of determining
whether a Purchaser has an equivalent offsetting long position in the Common
Stock, all Common Stock that would be issuable upon exercise in full of all
options then held by such Purchaser (assuming that such options were then fully
exercisable, notwithstanding any provisions to the contrary, and giving effect
to any exercise price adjustments scheduled to take effect in the future) shall
be deemed to be held long by such Purchaser.

                                   ARTICLE 6

                CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING

     The obligations of each Purchaser under Section 2 of this Agreement are
subject to the fulfillment or waiver by such Purchaser, on or before the
Closing, of each of the following conditions:

     6.1 Representations and Warranties True. Each of the representations and
warranties of the Company contained in Section 3 shall have been true and
correct when made and shall be true and correct on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of the Closing Date (except for representations and warranties that
speak as of a specific date, which representations and warranties shall be true
and correct in all material respects as of such date).

     6.2 Performance of Obligations; Consents and Waivers. The Company shall
have performed and complied in all material respects with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing Date and shall have
obtained all approvals, consents and qualifications necessary to complete the
purchase and sale described herein.

     6.3 Transaction Documents. The Company shall have executed and delivered
this Agreement, the Warrants and the Rights Agreement.

     6.4 Delivery of Certificates and Warrants. The Company shall have delivered
to such Purchaser duly executed stock certificates and Warrants (each in such
denominations as such Purchaser shall request) representing the Shares and
Warrants being so purchased by such Purchaser at the Closing in accordance with
Section 2.1 above.

     6.5 Authorization of Common Stock. The Common Stock shall be authorized for
quotation and listed on the AMEX and trading in the Common Stock (or the AMEX
generally) shall not have been suspended by the SEC or the AMEX.

     6.6 Legal Opinion. Such Purchaser shall have received an opinion of the
Company's counsel, dated as of the Closing Date, in form, scope and substance
satisfactory to the Purchaser.

     6.7 Compliance Certificate. The Company shall have delivered to the
Purchaser a certificate dated as of the Closing Date, signed by the Company's
Chief Executive or Chief

                                      19.

<PAGE>

Financial Officer, certifying that the conditions set forth in Sections 6.1,
6.2, 6.5 and 6.7 have been satisfied.

     6.8 Officer's Certificate. The Purchaser shall have received from an
officer of the Company, a certificate having attached thereto (i) the
Certificate of Incorporation as in effect at the time of the Closing, (ii) the
Company's Bylaws as in effect at the time of the Closing, (iii) resolutions
approved by the Board of Directors authorizing the transactions contemplated
hereby, and (iv) good standing certificates (including tax good standing) with
respect to the Company from the applicable authority(ies) in Delaware and any
other jurisdiction in which the Company is qualified to do business, dated a
recent date before the Closing.

                                   ARTICLE 7

                 CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING

     The Company's obligation to sell and issue the Shares is subject to the
fulfillment of the following conditions, any of which may be waived by the
Company:

     7.1 Representations and Warranties. The representations and warranties made
by the Purchaser in Section 4 hereof shall have been true and correct when made
and shall be true and correct on such Closing Date as if made on and as of such
Closing Date.

     7.2 Securities Exemptions. The offer and sale of the Securities to the
Purchaser pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act, and the registration and/or qualification
requirements of all other applicable securities laws.

                                   ARTICLE 8

                  RESTRICTIONS ON TRANSFERABILITY OF SECURITIES

     8.1 Restrictions on Transferability. The Securities shall not be sold,
transferred, assigned or hypothecated unless (i) there is an effective
registration statement under the Securities Act covering such Securities, (ii)
the sale is made in accordance with Rule 144 under the Securities Act, or (iii)
the Company receives an opinion of counsel for the holder of the Securities
reasonably satisfactory to the Company stating that such sale, transfer,
assignment or hypothecation is exempt from the registration requirements of the
Securities Act, and each such case upon all other conditions specified in this
Section 8. Notwithstanding the provisions of the preceding sentence, no such
registration statement or opinion of counsel shall be required for any transfer
of any Securities by a Purchaser that is a partnership, a limited liability
company or a corporation to (A) a partner of such partnership, a member of such
limited liability company or a stockholder of such corporation, (B) an entity
that controls, or is controlled by, or is under common control with such
partnership, limited liability company or corporation, (C) a retired partner of
such partnership or member of such limited liability company or (D) the estate
of any such partner, member or stockholder; provided that in each of the
foregoing cases the proposed transferee of the Securities held by the Purchaser
agrees in writing to take and hold such Securities subject to the provisions and
upon the conditions specified in this Section 8.

                                      20.

<PAGE>

     8.2 Restrictive Legends. Each certificate representing the Securities, and
any other securities issued in respect of the Securities upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event (except
as otherwise permitted by the provisions of this Section 8), shall be stamped or
otherwise imprinted with a legend in substantially the following form:

     "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
     STATE OF THE UNITED STATES OR IN ANY OTHER JURISDICTION. THE SECURITIES
     REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE
     OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
     SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN
     AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS."

     8.3 Removal of Legend and Transfer Restrictions. Any legend endorsed on a
certificate pursuant to subsection 8.2 and any stop transfer instructions with
respect to such legended Securities shall be removed and the Company shall issue
a certificate without such legend to the holder of such Securities, or the
Company shall issue a certificate without any legend representing Securities
issued upon the exercise of a Warrant, as the case may be, if (i) the resale of
such Securities are registered under the Securities Act and a prospectus meeting
the requirements of Section 10 of the Securities Act is available with respect
to such Securities and (a) the Purchaser delivers to the Company an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement
under the Securities Act is at that time in effect with respect to the resale of
the legended security or that such security can be freely transferred in a
public sale without such a registration statement being in effect and that such
transfer will not eliminate the exemption or exemptions from registration
pursuant to which the Company issued the Securities, or (b) in connection with a
proposed transfer of the Securities, the Purchaser delivers to the Company a
certificate executed by an officer of, or other person duly authorized by such
Purchaser, in the form attached hereto as EXHIBIT E, (ii) if such holder sells
the Security in accordance with the requirements of Rule 144 under the
Securities Act, or (iii) the Security is eligible to be sold pursuant to Rule
144(k) under the Securities Act. If the Company is required to issue unlegended
certificates pursuant to this Section 8.3 following the sale of some or all of
the Securities evidenced by such certificates, the Company shall use its best
efforts to deliver or cause to be delivered to such Purchaser such unlegended
certificates within four (4) business days of submission by that Purchaser of
legended certificate(s) to the Company's transfer agent, together with any other
documents required by the transfer agent to consummate such transaction;
provided, however, that if such certificates are not delivered within five (5)
business days of the date of submission of such certificates and other
documents, the Company shall pay, as liquidated damages and not as a penalty for
the delay in issuance of the certificates (which remedy shall constitute the
Purchasers exclusive monetary remedy), an amount equal to 1.0% of the aggregate
purchase price of the Securities sold by the Purchaser and evidenced by such
certificate(s) for each thirty (30) day period (or portion thereof) beyond such
four (4) business day period that the unlegended certificates have not been so
delivered.

                                      21.

<PAGE>

                                   ARTICLE 9

                                  MISCELLANEOUS

     9.1 Survival of Representations, Warranties and Agreements. Notwithstanding
any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and the
Purchasers herein shall survive the execution of this Agreement, the delivery to
the Purchasers of the Shares being purchased and the payment therefor; provided,
however, that the representations and warranties made by the Company and the
Purchasers herein shall expire upon the second anniversary of the Closing Date.

     9.2 Broker's Fee. The Company represents that it neither is nor will be
obligated for any finder's or broker's fee or commission in connection with this
transaction, except for the fee payable to ThinkEquity Partners LLC. The Company
agrees to indemnify and hold harmless the Purchaser from any liability for any
commission or compensation in the nature of a finder's or broker's fee (and any
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.

     9.3 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon delivery to the party to
be notified, (ii) when received by confirmed facsimile, or (iii) one (1)
business day after deposit with a nationally recognized overnight carrier,
specifying next business day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Purchasers as follows or at
such other addresses as the Company or the Purchasers may designate upon ten
(10) days' advance written notice to the other party:

          (A) if to the Company, to:

              Idera Pharmaceuticals, Inc.
              345 Vassar Street
              Cambridge, Massachusetts 02139
              Attention: Chief Executive Officer
              Facsimile: (617) 679-5542

              with a copy to:

              Wilmer Cutler Pickering Hale and Dorr LLP
              60 State Street
              Boston, Massachusetts 02109
              Attention: Stuart Falber
              Facsimile: (617) 526-5000

          (B) if to a Purchaser, at its address as set forth on the Schedule of
Purchasers to this Agreement.

     9.4 Changes. This Agreement may not be modified or amended except pursuant
to an instrument in writing signed by the Company and the Purchasers holding a
majority of the

                                      22.

<PAGE>

Shares then outstanding. No provision hereunder may be waived other than in a
written instrument executed by the waiving party.

     9.5 Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.

     9.6 Severability. In case any provision contained in this Agreement should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.

     9.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The Company and the
Purchasers irrevocably consent to the jurisdiction of the United States federal
courts and the state courts located in the State of New York, Borough of
Manhattan, in any suit or proceeding based on or arising under this Agreement
and irrevocably agree that all claims in respect of such suit or proceeding may
be determined in such courts. The Company and the Purchasers irrevocably waive
the defense of an inconvenient forum to the maintenance of such suit or
proceeding. Each party further agrees that service of process upon such party,
mailed by first class mail, shall be deemed in every respect effective service
of process upon such party in any such suit or proceeding. Nothing herein shall
affect a party's right to serve process in any other manner permitted by law.

     9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered (including by facsimile) to the other parties.

     9.9 Entire Agreement. This Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Purchasers make any representation,
warranty, covenant or undertaking with respect to such matters.

     9.10 Assignment. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
parties hereto and their respective permitted successors, assigns, heirs,
executors and administrators. This Agreement and the rights of a Purchaser
hereunder may not be assigned by the Purchaser without the prior written consent
of the Company, except such consent shall not be required in cases of
assignments by a Purchaser as permitted under Section 8.1, provided that such
assignee agrees in writing to be bound by the terms of this Agreement.
Notwithstanding the foregoing, the rights set forth in Sections 5.3, 5.10 and
5.11 may not be assigned or transferred.

     9.11 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurance as may be reasonably requested by any
other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.

                                      23.

<PAGE>

     9.12 Publicity. The Company and BBI shall have the right to approve before
issuance any press releases, SEC or other filings, or any other public
statements with respect to the transactions contemplated hereby; provided,
however, that the Company and any Purchaser shall be entitled, without the prior
approval of any other party hereto, to make any press release or SEC or other
filings with respect to such transactions as is required by applicable law and
regulations (although a reasonable time prior to the release or filing of any
such press release or filing the other parties hereto (i) shall be consulted by
the party making such press release or filing in connection with such release or
filing and (ii) shall be provided with a copy of and a reasonable opportunity to
comment on such release or filing); and provided further, however, that neither
the Company nor BBI shall be required to obtain the consent of any other party
hereto in connection with any release or filing to the extent that such other
party has previously approved the disclosure to be provided in such release or
filing in accordance with this Section 9.12.

     9.13 Confidentiality. Each Purchaser agrees that it will keep confidential
and will not disclose or divulge any confidential, proprietary or secret
information which such Purchaser may obtain from the Company pursuant to
reports, notices and other materials submitted by the Company to such Purchaser
pursuant to this Agreement, pursuant to the rights granted under Section 5.10 or
otherwise pursuant to the Rights Agreement, unless (a) such information is
known, or until such information becomes known, to the public or (b) such
information is required to be disclosed in legal proceedings (such as by
deposition, interrogatory, request for documents, subpoena, civil investigation
demand, filing with any governmental authority or similar process), provided,
however, that before making any use or disclosure in reliance on this clause (b)
the Purchaser shall give the Company at least fifteen (15) days prior written
notice (or such shorter period as required by law) specifying the circumstances
giving rise thereto and will furnish only that portion of the non-public
information which is legally required and will exercise its best efforts to
obtain reliable assurance that confidential treatment will be accorded any
non-public information so furnished.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                      24.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first set forth above.

                                        IDERA PHARMACEUTICALS, INC.

                                        By: /s/ Sudhir Agrawal
                                            ------------------------------------
                                            Sudhir Agrawal
                                            Chief Executive Officer

<PAGE>

                                        PURCHASER:

                                        BAKER BROS. INVESTMENTS, L.P.

                                        By: Baker Bros. Capital, L.P.,
                                            its general partner

                                        By: Baker Bros. Capital (GP), LLC,
                                            its general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        BAKER BROS. INVESTMENTS II, L.P.

                                        By: Baker Bros. Capital, L.P.,
                                            its general partner

                                        By: Baker Bros. Capital (GP), LLC,
                                            its general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

<PAGE>

                                        PURCHASER:

                                        BAKER BIOTECH FUND I, L.P.

                                        By: Baker Biotech Capital, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital (GP), LLC,
                                            its general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        BAKER BIOTECH FUND II, L.P.

                                        By: Baker Biotech Capital II, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital II (GP), LLC,
                                            is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        BAKER BIOTECH FUND II (Z), L.P.

                                        By: Baker Biotech Capital II (Z), L.P.,
                                            its general partner

                                        By: Baker Biotech Capital II (Z) (GP),
                                            LLC, is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        BAKER BIOTECH FUND III, L.P.

                                        By: Baker Biotech Capital III, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital III (GP), LLC,
                                            is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

<PAGE>

                                        PURCHASER:

                                        BAKER BIOTECH FUND III (Z), L.P.

                                        By: Baker Biotech Capital III (Z), L.P.,
                                            its general partner

                                        By: Baker Biotech Capital III (Z) (GP),
                                            LLC, is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        14159, L.P.

                                        By: 14159 Capital, L.P.,
                                            its general partner

                                        By: 14159 Capital (GP), LLC,
                                            is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

<PAGE>

                                        PURCHASER:

                                        TANG CAPITAL PARTNERS, LP

                                        By: Tang Capital Management, LLC, its
                                            General Partner

                                        By: /s/ Kevin C. Tang
                                            ------------------------------------
                                            Kevin C. Tang, Manager

<PAGE>

                                        PURCHASER:

                                        FINSBURY EMERGING BIOTECHNOLOGY TRUST
                                        PLC

                                        By: /s/ Samuel D. Isaly
                                            ------------------------------------
                                        Name: Samuel D. Isaly
                                        Title: Managing Partner of Investment
                                               Advisor<PAGE>

                                                                    Exhibit 10.2

                           IDERA PHARMACEUTICALS, INC.

                          REGISTRATION RIGHTS AGREEMENT

     REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of March 24,
2006, by and among IDERA PHARMACEUTICALS, INC., a corporation organized under
the laws of the State of Delaware (the "COMPANY"), and the undersigned the
"PURCHASERS".

                                    WHEREAS:

     In connection with the Common Stock Purchase Agreement, dated as of March
24, 2006, by and among the Company and the Purchasers (the "STOCK PURCHASE
AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Purchasers (i) shares
(the "SHARES") of the Company's common stock, par value $0.001 per share (the
"COMMON STOCK"), and (ii) warrants (the "WARRANTS") to acquire shares of Common
Stock. The shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants are referred to herein as the "WARRANT SHARES."

     To induce the Purchasers to execute and deliver the Stock Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the "SECURITIES
ACT"), and applicable state securities laws.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Purchasers
hereby agree as follows:

     1. DEFINITIONS.

          (A) As used in this Agreement, the following terms shall have the
following meanings:

               (I) "PURCHASERS" means the Purchasers and any transferees or
assignees who agree to become bound by the provisions of this Agreement in
accordance with Section 10 hereof.

               (II) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").

               (III) "REGISTRABLE SECURITIES" means (a) the Shares, (b) the
Warrant Shares and (c) any shares of capital stock issued or issuable, from time
to time (with any adjustments), in respect of the Shares or the Warrant Shares
by virtue of any stock split, stock dividend, recapitalization or similar event;
provided, however, that shares of Common Stock that are Registrable Securities
shall cease to be Registrable Securities upon the earliest of (A) the date

                                       1.

<PAGE>

that such shares are eligible to be sold under Rule 144(k) of the Securities
Act, (B) the date that such shares are sold (I) pursuant to a registration
statement, (II) to or through a broker, dealer or underwriter in a public
securities transaction and/or (III) in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act such
that all transfer restrictions and restrictive legends with respect thereto, if
any, are removed upon the consummation of such sale, or (C) any sale or transfer
to any Person which by virtue of Section 10 of this Agreement is not entitled to
the rights provided by this Agreement. Wherever reference is made in this
Agreement to a request or consent of holders of a certain percentage of
Registrable Securities, the determination of such percentage shall include
shares of Common Stock issuable upon exercise of the Warrants to the extent any
such Warrants are outstanding, even if such exercise has not been effected.

               (IV) "REGISTRATION STATEMENT" means a registration statement of
the Company under the Securities Act.

          (B) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.

     2. REGISTRATION.

          (A) MANDATORY REGISTRATION. The Company shall prepare promptly and
file with the SEC as soon as practicable, but in no event later than the
thirtieth (30th) day following the date hereof (the "FILING DATE"), a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, covering the resale of the
Registrable Securities. The Registration Statement filed hereunder, to the
extent allowable under the Securities Act and the Rules promulgated thereunder
(including Rule 416), shall state that such Registration Statement also covers
such indeterminate number of additional shares of Common Stock as may become
issuable upon exercise of the Warrants to prevent dilution resulting from stock
splits, stock dividends or similar transactions.

          (B) PAYMENTS BY THE COMPANY. The Company shall use its best efforts to
cause the Registration Statement required to be filed pursuant to Section 2(a)
hereof to become effective as soon as practicable after the Filing Date. At the
time of effectiveness, the Company shall ensure that such Registration Statement
covers all of the Registrable Securities (including, if necessary, by filing an
amendment prior to the effective date of the Registration Statement to increase
the number of shares covered thereby). If (i) the Registration Statement
required to be filed by the Company pursuant to Section 2(a) hereof is not filed
with the SEC prior to the Filing Date or declared effective by the SEC on or
before the one hundred twentieth (120th) day after the date hereof (the
"REGISTRATION DEADLINE") or, (ii) if, after any such Registration Statement has
been declared effective by the SEC, sales of any of the Registrable Securities
required to be covered by such Registration Statement cannot be made pursuant to
such Registration Statement because such Registration Statement has been
suspended (by reason of a stop order or the Company's failure to update the
Registration Statement or otherwise) except as a result of a permitted
Suspension under Section 9, then the Company will make payments to the
Purchasers in such amounts and at such times as shall be determined pursuant to
this Section 2(b) as liquidated damages and not as a penalty for such delay in
or reduction of their ability to sell the

                                       2.

<PAGE>

Registrable Securities (which remedy shall constitute the Purchasers exclusive
monetary remedy). The Company shall pay to each Purchaser an amount equal to the
product of (i) the aggregate purchase price of the Shares and Warrant Shares
then held by such Purchaser (the "AGGREGATE SHARE PRICE"), multiplied by (ii)
one hundredths (.01), for each thirty (30) day period (or portion thereof) (A)
after the Filing Date and prior to the date the Registration Statement is filed
with the SEC pursuant to Section 2(a), (B) after the Registration Deadline and
prior to the date the Registration Statement filed pursuant to Section 2(a) is
declared effective by the SEC, and (C) during which sales of any Registrable
Securities cannot be made pursuant to any such Registration Statement after the
Registration Statement has been declared effective; provided, however, that
there shall be excluded from each such period any delays which are solely
attributable to changes (other than corrections of Company mistakes with respect
to information previously provided by the Purchasers) required by the Purchasers
in the Registration Statement with respect to information relating to the
Purchasers, including, without limitation, changes to the plan of distribution.
Such amounts shall be paid in cash within five (5) days after the end of each
period that gives rise to such obligation, provided that, if any such period
extends for more than thirty (30) days, interim payments shall be made for each
such thirty (30) day period. Notwithstanding the foregoing, in no event shall
the Company be obligated to pay liquidated damages (a) to more than one
Purchaser in respect of the same Securities for the same period of time or (b)
in an aggregate amount that exceeds 10% of the purchase price paid by such
Purchaser for such Shares and Warrant Shares.

     3. OBLIGATIONS OF THE COMPANY.

     In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:

          (A) The Company shall respond promptly to any and all comments made by
the staff of the SEC to the Registration Statement required by Section 2(a), and
shall submit to the SEC before the close of business on a business day within
five business days after the business day on which the Company learns (either by
telephone or in writing) that no review of such Registration Statement will be
made by the SEC or that the staff of the SEC has no further comments on such
Registration Statement, as the case may be, a request for acceleration of the
effectiveness of such Registration Statement to a time and date as soon as
practicable. The Company shall use its best efforts to keep such Registration
Statement effective pursuant to Rule 415 at all times until no Registrable
Securities remain outstanding (the "REGISTRATION PERIOD"). The Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein and all documents incorporated by reference therein) (i) shall
comply in all material respects with the requirements of the Securities Act and
the rules and regulations of the SEC promulgated thereunder and (ii) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading.

          (B) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all

                                       3.

<PAGE>

Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement.

          (C) The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement (i) promptly after the
same is prepared and publicly distributed or filed with the SEC, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, (ii) to the extent not
publicly available on the SEC's EDGAR system, promptly after the same is filed
with the SEC or received by the Company, one copy of each letter written by or
on behalf of the Company to the SEC or the staff of the SEC (including, without
limitation, any request to accelerate the effectiveness of the Registration
Statement or amendment thereto) and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to the Registration Statement (other
than any portion, if any, thereof which contains information for which the
Company has sought or intends to seek confidential treatment); (iii) within 24
hours of the date of effectiveness of the Registration Statement or any
amendment thereto, a notice stating that the Registration Statement or amendment
has been declared effective; and (iv) such number of copies of a prospectus,
including a preliminary prospectus, and all amendments and supplements thereto
and such other documents as such Purchaser may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Purchaser. Notwithstanding the foregoing, the Company shall not send to any
Purchaser any document pursuant to clause (ii) above that the Company determines
contains material nonpublic information unless prior to transmittal of such
document the Company and such Purchaser agree otherwise and such Purchaser
enters into an appropriate confidentiality agreement with the Company with
respect thereto.

          (D) The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statement under such
other securities or "blue sky" laws of such jurisdictions in the United States
as each Purchaser who holds Registrable Securities being offered reasonably
requests, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (b) subject itself to general taxation in any such jurisdiction,
(c) file a general consent to service of process in any such jurisdiction, (d)
provide any undertakings that cause the Company undue expense or burden, or (e)
make any change in its charter or by-laws, which in each case the Board of
Directors of the Company determines to be contrary to the best interests of the
Company and its stockholders.

          (E) As promptly as practicable after becoming aware of such event, the
Company shall notify each Purchaser by telephone and facsimile of the happening
of any event, of which the Company has knowledge, as a result of which the
prospectus included in the Registration Statement, as then in effect, includes
an untrue statement of a material fact or

                                       4.

<PAGE>

omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, shall use its best efforts promptly
to prepare a supplement or amendment to the Registration Statement to correct
such untrue statement or omission, and, following such filing and, if
applicable, the effectiveness of such filing, shall deliver such number of
copies of such supplement or amendment to each Purchaser as such Purchaser may
reasonably request. In no event shall the Company disclose to any Purchaser any
material-non-public information, including without limitation the event, the
untrue statement or the omission.

          (F) The Company shall use its best efforts (i) to prevent the issuance
of any stop order or other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest practicable moment (including in each case by amending or
supplementing such Registration Statement) and (ii) to notify each Purchaser who
holds Registrable Securities being sold (or, in the event of an underwritten
offering, the managing underwriters) of the issuance of such order and the
resolution thereof (and if such Registration Statement is supplemented or
amended, deliver such number of copies of such supplement or amendment to each
Purchaser as such Purchaser may reasonably request).

          (G) The Company shall permit a single firm of counsel designated by
the Purchasers to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to its filing with the SEC
and shall consider in good faith and consult with such counsel regarding any
comment such counsel may reasonably make.

          (H) The Company shall make generally available to its security holders
as soon as practical, but not later than ninety (90) days after the first
anniversary of the close of the fiscal quarter during which the Registration
Statement was declared effective, an earnings statement (in form complying with
the provisions of Rule 158 under the Securities Act) covering a twelve-month
period beginning not later than the first day of the Company's fiscal quarter
next following the effective date of the Registration Statement.

          (I) At the request of any Purchaser in the case of an underwritten
public offering, the Company shall furnish, on the date of effectiveness of the
Registration Statement (i) an opinion, dated as of such date, from counsel
representing the Company addressed to the underwriters and in form, scope and
substance as is customarily given in an underwritten public offering and (ii) a
letter, dated such date, from the Company's independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any.

          (J) For the sole purpose of enabling the Purchasers to conduct an
investigation as to the accuracy of the Registration Statement for the purpose
of reducing or eliminating the Purchasers' liability under the Securities Act,
the Company shall make available for inspection by one firm of attorneys and one
firm of accountants or other agents retained by the Purchasers (collectively,
the "INSPECTORS") following reasonable notice all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the "RECORDS"), as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause the Company's officers to supply such information which any Inspector
may reasonably request for purposes of

                                       5.

<PAGE>

such due diligence. Nothing herein shall be deemed to limit the Purchasers'
ability to sell Registrable Securities in a manner which is otherwise consistent
with applicable laws and regulations. The Company shall not disclose material
nonpublic information to the Inspectors unless the Company and the Purchasers
agree and the Purchasers and the Inspectors enter into an appropriate
confidentiality agreement with the Company with respect thereto.

          (K) The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.

          (L) The Company shall cooperate with the Purchasers who hold
Registrable Securities being to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be offered pursuant to
the Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as Purchasers may reasonably
request and registered in such names as the Purchasers may request.

          (M) At the reasonable request of the Purchasers holding a majority in
interest of the Registrable Securities, the Company shall prepare and file with
the SEC such amendments (including post-effective amendments) and supplements to
a Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.

          (N) From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company to
include any of their securities which are not Registrable Securities in the
Registration Statement under Section 2(a) hereof or any amendment or supplement
thereto under Section 3(b) hereof without the consent of the holders of a
majority in interest of the Registrable Securities.

          (O) Prior to the effectiveness of the Registration Statement, the
Company shall take all actions necessary to meet the "registrant eligibility"
requirements set forth in the general instructions to Form S-3 or any successor
form thereto, to continue to be eligible to register the resale of its Common
Stock on a registration statement on Form S-3 under the Securities Act.

     4. OBLIGATIONS OF THE PURCHASERS. In connection with the registration of
the Registrable Securities, the Purchasers shall have the following obligations:

          (A) It shall be a condition precedent to the obligations of the
Company under Sections 2 and 3 with respect to the Registrable Securities of a
particular Purchaser that such Purchaser shall furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request. At least five trading days prior to the first
anticipated filing date of the Registration Statement, the Company shall notify
each Purchaser of the information the Company requires from each such Purchaser.

          (B) Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in

                                       6.

<PAGE>

connection with the preparation and filing of the Registration Statement
hereunder, unless such Purchaser has notified the Company in writing of such
Purchaser's election to exclude all of such Purchaser's Registrable Securities
from such Registration Statement.

          (C) Each Purchaser agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Sections 3(e),
3(f) or 9, such Purchaser will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Purchaser's receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 3(e), 3(f) or 9.

     5. EXPENSES OF REGISTRATION. All reasonable expenses incurred by the
Company or the Purchasers in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 above, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, the fees and disbursements of counsel for the Company, the fees
and disbursements of one counsel selected by the Purchasers, and the
underwriting discounts and commissions shall be borne by the Company. In the
event that one party breaches this Agreement, such party shall pay all of the
other party's costs and expenses (including reasonable legal fees) incurred by
such other party in connection with the enforcement of such other party's rights
hereunder.

     6. INDEMNIFICATION. In the event any Registrable Securities are included in
a Registration Statement under this Agreement:

          (A) To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Purchaser who holds such Registrable Securities,
and (ii) the directors, officers, partners, members, employees and agents of
such Purchaser and each person who controls any Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), if any, (each, an "INDEMNIFIED PERSON"),
against any joint or several losses, claims, damages, liabilities or expenses
(collectively, together with actions, proceedings or inquiries by any regulatory
or self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii),
collectively, "VIOLATIONS"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company shall reimburse
the Purchasers and each other Indemnified Person, promptly as such expenses are
incurred and are due and payable, for any reasonable legal fees or other
reasonable expenses

                                       7.

<PAGE>

incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon (A) a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by such
Indemnified Person expressly for use in the Registration Statement or any such
amendment thereof or supplement thereto, (B) the failure of a Purchaser to
comply with Section 4(c) or (C) the use by a Purchaser in connection with any
sale or sales of Registrable Securities of a prospectus containing any untrue
statement or omission of a material fact following notification by the Company
that such prospectus contains an untrue statement or omission of a material fact
and receipt by the Purchaser of a corrected prospectus; and (ii) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified Person
and shall survive the transfer of the Registrable Securities by the Purchasers
pursuant to Section 10 hereof.

          (B) Each Purchaser who holds such Registrable Securities agrees
severally and not jointly to indemnify, hold harmless and defend, to the same
extent and in the same manner set forth in Section 6(a), the Company, each of
its directors, each of its officers who signs the Registration Statement, its
employees, agents and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
and any other stockholder selling securities pursuant to the Registration
Statement or any of its directors or officers or any person who controls such
stockholder within the meaning of the Securities Act or the Exchange Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED PARTY"),
against any Claim to which any of them may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by such Purchaser expressly for use in
connection with such Registration Statement; and subject to Section 6(c) such
Purchaser will reimburse any legal or other expenses (promptly as such expenses
are incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that (I) the
indemnity agreement contained in this Section 6(b) shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior
written consent of such Purchaser, which consent shall not be unreasonably
withheld, and (II) the Purchaser shall be liable under this Agreement (including
this Section 6(b) and Section 7) for only that amount as does not exceed the net
proceeds actually received by such Purchaser as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Purchasers pursuant to Section 10 hereof.

          (C) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the threat or commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly

                                       8.

<PAGE>

with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall not be entitled to assume such
defense and an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and the
indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines, based upon the reasonable opinion of counsel, that there
may be legal defenses available to such Indemnified Person or Indemnified Party
which are in conflict with those available to such indemnifying party. The
indemnifying party shall pay for only one separate legal counsel for the
Indemnified Persons or the Indemnified Parties, as applicable, and such legal
counsel shall be selected by Purchasers holding a majority-in-interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates (with the approval of the Purchasers if it holds Registrable Securities
included in such Registration Statement), if the Purchasers are entitled to
indemnification hereunder, or by the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action.

          (D) The Indemnified Party shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Party which relates to such
action or claim.

          (E) No indemnifying party shall, except with the consent of each
Indemnified Party (which consent shall not be unreasonably withheld), consent to
entry of any judgment or enter into any settlement which does not include the
giving by the claimant to such Indemnified Party a release from all liability in
respect to such claim or litigation.

     7. CONTRIBUTION. To the extent any indemnification by an indemnifying party
required by the terms of this Agreement is prohibited or limited by law, the
indemnifying party, in lieu of indemnifying the Indemnified Party, agrees to
contribute with respect to any amounts for which it would otherwise be liable
under Section 6 up to the amount paid or payable by the indemnifying party as a
result of the Claims in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and the Indemnified
Person or Indemnified Party, as the case may be, on the other hand, with respect
to the Violation giving rise to the applicable Claim; provided, however, that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in
Section 6, (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (iii)

                                       9.

<PAGE>

contribution (together with any indemnification or other obligations under this
Agreement) by any seller of Registrable Securities shall be limited in amount to
the net amount of proceeds received by such seller from the sale of such
Registrable Securities. The relative fault of the Company and the Purchasers
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of material fact related to information supplied by the
Company or the Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

     8. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to the
Purchasers the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit each
Purchaser to sell securities of the Company to the public, so long as the
Registration Statement is effective and such Purchaser holds Registrable
Securities, without registration ("RULE 144"), the Company agrees to:

               (I) file with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements (it being understood that nothing herein shall limit the
Company's obligations under Section 5.2 of the Common Stock Purchase Agreement)
and the filing and availability of such reports and other documents is required
for the applicable provisions of Rule 144; and

               (II) furnish to each Purchaser so long as such Purchaser owns
shares of Warrants or Registrable Securities, promptly upon request, (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other information
as may be reasonably requested to permit the Purchasers to sell such securities
under Rule 144 without registration.

     9. SUSPENSION OF USE OF PROSPECTUS. Subject to Section 2(b), the Company
may, by written notice to the Purchasers, for a period not to exceed thirty (30)
days thereafter, (i) delay the filing of, or effectiveness of, the Registration
Statement; or (ii) suspend the Registration Statement after effectiveness and
require that the Purchasers immediately cease sales of Registrable Securities
pursuant to the Registration Statement, if (a) the Company reasonably believes
that there is or may be in existence material nonpublic information or events
involving the Company, the failure of which to be disclosed in the prospectus
included in the registration statement would result in a Violation (as defined
below) and (b) the Company shall furnish to the Purchasers a certificate signed
by the Chairman of the Board of Directors of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would have a
material adverse effect on the Company (which for this purpose shall include a
material adverse effect on a pending transaction) to disclose such material
nonpublic information or events in the prospectus included in the registration
statement (a "SUSPENSION"). The Company shall not disclose such information or
events to any Purchaser. If the Company requires the Purchasers to cease sales
of Registrable Securities pursuant to a Suspension, the Company shall, as
promptly as practicable following the termination of the circumstance which
entitled the Company to do so, take such actions as may be necessary to
reinstate the

                                      10.

<PAGE>

effectiveness of the Registration Statement and/or give written notice to the
Purchasers authorizing them to resume sales pursuant to the Registration
Statement. If as a result thereof the prospectus included in the Registration
Statement has been amended to comply with the requirements of the Securities
Act, the Company shall enclose such revised prospectus with the notice to the
Purchasers given pursuant hereto, and the Purchasers shall make no offers or
sales of Registrable Securities pursuant to the Registration Statement other
than by means of such revised prospectus. No more than two such Suspensions, for
a maximum cumulative period of 45 days, shall occur in any 12 month period.

     10. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the Purchasers
hereunder, including the right to have the Company register Registrable
Securities pursuant to this Agreement, shall be automatically assignable by each
Purchaser to any affiliate of the Purchaser to which all or any portion of the
Registrable Securities are transferred if: (i) the Purchaser agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company after such assignment, (ii) the Company is
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) the transferee or assignee agrees in
writing for the benefit of the Company to be bound by all of the provisions
contained herein, and (iv) such transfer shall have been made in accordance with
the applicable requirements of the Stock Purchase Agreement and the Warrants, as
applicable.

     11. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with
written consent of the Company and Purchasers who hold a majority in interest of
the Registrable Securities; provided, however, that no consideration shall be
paid to an Purchaser by the Company in connection with an amendment hereto
unless each Purchaser similarly affected by such amendment receives a pro-rata
amount of consideration from the Company. Unless an Purchaser otherwise agrees,
each amendment hereto must similarly affect each Purchaser. Any amendment or
waiver effected in accordance with this Section 11 shall be binding upon each
Purchaser and the Company.

     12. MISCELLANEOUS.

          (A) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

          (B) All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (i) upon delivery to the party to be
notified, (ii) when received by confirmed facsimile, or (iii) one (1) business
day after deposit with a nationally recognized overnight carrier, specifying
next business day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Purchasers as follows or at
such other

                                      11.

<PAGE>

addresses as the Company or the Purchasers may designate upon ten (10) days'
advance written notice to the other party:

          If to the Company:

               Idera Pharmaceuticals, Inc.
               345 Vassar Street
               Cambridge, MA 02139
               Attn: Chief Executive Officer
               Fax: 617-679-5592

               with a copy simultaneously transmitted by like means to:

               Wilmer Cutler Pickering Hale and Dorr LLP
               60 State Street
               Boston, Massachusetts 02109
               Attn: Stuart Falber
               Fax: (617) 526-5000

     If to a Purchaser, at its address as set forth on the Schedule of
Purchasers attached to the Stock Purchase Agreement.

          (C) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

          (D) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. The Company and the Purchasers
irrevocably consent to the jurisdiction of the United States federal courts and
the state courts located in the State of New York, Borough of Manhattan, in any
suit or proceeding based on or arising under this Agreement and irrevocably
agree that all claims in respect of such suit or proceeding may be determined in
such courts. The Company and the Purchasers irrevocably waive the defense of an
inconvenient forum to the maintenance of such suit or proceeding. Each party
further agrees that service of process upon such party, mailed by first class
mail, shall be deemed in every respect effective service of process upon such
party in any such suit or proceeding. Nothing herein shall affect the a party's
right to serve process in any other manner permitted by law.

          (E) This Agreement, the Stock Purchase Agreement (including all
schedules and exhibits thereto) and the Warrants constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the Stock
Purchase Agreement and the Warrants supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

          (F) Subject to the requirements of Section 10 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.

                                      12.

<PAGE>

          (G) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

          (H) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

          (I) Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

          (J) All consents, approvals and other determinations to be made by the
Purchasers pursuant to this Agreement shall be made by the Purchasers holding a
majority in interest of the Registrable Securities (determined as if all shares
of Warrants then outstanding had been converted into or exercised for
Registrable Securities) held by all Purchasers.

          (K) Each party to this Agreement has participated in the negotiation
and drafting of this Agreement. As such, the language used herein shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party to
this Agreement.

          (L) For purposes of this Agreement, the term "business day" means any
day other than a Saturday or Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law, regulation or
executive order to close, and the term "TRADING DAY" means any day on which
AMEX, or if the Common Stock is not then traded on AMEX the principal securities
exchange or trading market where the Common Stock is then listed or traded, is
open for trading.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      13.

<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.

IDERA PHARMACEUTICALS, INC.

By: /s/ Sudhir Agrawal
    ---------------------------------
Name: Sudhir Agrawal
Its: Chief Executive Officer and
     Chief Scientific Officer

                [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

<PAGE>

PURCHASER:

                                        BAKER BROS. INVESTMENTS, L.P.

                                        By: Baker Bros. Capital, L.P.,
                                            its general partner

                                        By: Baker Bros. Capital (GP), LLC,
                                            its general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        BAKER BROS. INVESTMENTS II, L.P.

                                        By: Baker Bros. Capital, L.P.,
                                            its general partner

                                        By: Baker Bros. Capital (GP), LLC,
                                            its general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

<PAGE>

PURCHASER:

TANG CAPITAL PARTNERS, LP

By: Tang Capital Management, LLC,
    its General Partner

By: /s/ Kevin C. Tang
    ---------------------------------
    Kevin C. Tang, Manager

                                       2.

<PAGE>

PURCHASER:

FINSBURY EMERGING BIOTECHNOLOGY TRUST
PLC

By: /s/ Samuel D. Isaly
    ---------------------------------
Name: Samuel D. Isaly
Title: Managing Partner of Investment
       Advisor

                                       3.

<PAGE>

PURCHASER:

                                        BAKER BIOTECH FUND I, L.P.

                                        By: Baker Biotech Capital, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital (GP), LLC,
                                            its general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        BAKER BIOTECH FUND II, L.P.

                                        By: Baker Biotech Capital II, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital II (GP), LLC,
                                            is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        BAKER BIOTECH FUND II (Z), L.P.

                                        By: Baker Biotech Capital II (Z), L.P.,
                                            its general partner

                                        By: Baker Biotech Capital II (Z) (GP),
                                            LLC, is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        BAKER BIOTECH FUND III, L.P.

                                        By: Baker Biotech Capital III, L.P.,
                                            its general partner

                                        By: Baker Biotech Capital III (GP), LLC,
                                            is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                       4.

<PAGE>

PURCHASER:

                                        BAKER BIOTECH FUND III (Z), L.P.

                                        By: Baker Biotech Capital III (Z), L.P.,
                                            its general partner

                                        By: Baker Biotech Capital III (Z) (GP),
                                            LLC, is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                        14159, L.P.

                                        By: 14159 Capital, L.P.,
                                            its general partner

                                        By: 14159 Capital (GP), LLC,
                                            is general partner

                                        By: /s/ Julian Baker
                                            ------------------------------------
                                        Name: Julian Baker
                                        Title: Managing Member

                                       5.

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