Exhibit 10.1

EMPLOYMENT, CONFIDENTIALITY
AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT, CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (the “Agreement”)
is made and entered into as of the 21st day of September, 2006 (the “Effective
Date”), by and between:

COMBINATORX, INCORPORATED, a Delaware Corporation duly organized under law and
having an usual place of business at 245 First Street, Sixteenth Floor,
Cambridge, Massachusetts 02142 (hereinafter referred to as the “COMPANY”)

and

DR. JAN LESSEM of 6 Davis Brook Drive, Natick, Massachusetts 01760 (hereinafter
referred to as the “EMPLOYEE”)

The Company wishes to employ the Employee to serve as the Chief Medical Officer
and Chairman of Medical Advisory Boards and, in connection therewith, to provide
specific medical and scientific expertise and direction for the Company and the
Employee desires to be so employed by the Company on the terms and conditions
set forth in this Agreement.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
accepted and agreed to the Company, and the Employee hereby agree as follows:

1.    EMPLOYMENT.  The Company hereby employs the Employee as Chief Medical
Officer and Chairman of Medical Advisory Boards and the Employee accepts such
employment, as of September 1, 2006, for the compensation and on the other terms
and conditions set forth below.

2.    PERIOD OF EMPLOYMENT; DUTIES.  The employment of the Employee shall

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be for a fixed period commencing with the Effective Date and ending on April 7,
2008 (the “Transition Date”), or earlier if the employment is terminated
pursuant to Section 4 below (the “Employment Period”).  The Employee shall be
employed as the Chief Medical Officer and Chairman of Medical Advisory Boards,
and shall have the title, duties and responsibilities normally and customarily
associated with said offices and positions.

As a member of the Senior Management Team, the Employee shall report to and take
direction from the Company’s President/CEO.

During the Employment Period, Employee shall devote all of his business time,
attention and loyalty to the Company; provided, however, that the foregoing
shall not prevent the Employee from serving on the board of directors or similar
body of corporations or entities approved by the Board, of from entering into
consulting arrangements mutually agreed to by the President/CEO and the
Employee.  The Employee warrants and represents that he is under no contractual
or other restrictions or obligations which will in any way limit his activities
on behalf of or employment by the Company; and the entering into of this
Agreement does not violate any agreement, contract or confidentiality agreement
that the Employee may have entered into or that is binding upon the Employee.

3.    COMPENSATION

3.1         Annual Base Salary.  Subject to the provisions hereof, from the
Effective Date through December 31, 2006, the Company shall pay Employee, not
less frequently than monthly in arrears, a base salary at an annual rate of
Three Hundred Twenty Thousand Dollars ($320,000.00) (the “Base Salary”). 
Thereafter, annually during the Employment Period, the Base Salary shall be
determined by the Compensation Committee of the Company’s Board of

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Directors (the “Compensation Committee”), and in no event shall the Base Salary
be less than the most recently negotiated and accepted Base Salary.  All
payments of salary and other compensation to the Employee shall be made after
deduction of any taxes which are required to be withheld with respect thereto
under applicable federal and state laws.

3.2         Fringe Benefits.  During the Employment Period, the Employee shall
be entitled to all rights and benefits for which he shall be eligible under
group insurance and other fringe benefits which may from time to time be
provided to the Company’s executive employees generally.

Further, the Company shall reimburse the Employee for the out-of-pocket expenses
incurred by the Employee in the fulfillment of his duties and responsibilities
hereunder. Reimbursement shall be in accordance with the Company’s policies and
procedures and in compliance with the requirements of the Internal Revenue Code
of 1986, as amended.  Reimbursement of travel expenses will be consistent with
the Company’s travel policies.

3.3         Vacation. During the Employment Period, the Employee shall be
entitled to (i) one (1) week of vacation from the Effective Date until December
31, 2006, (ii)  eight (8) weeks of vacation for the calendar year 2007, six (6)
of which can be taken consecutively and (iii) one (1) week of vacation from
January 1, 2007 until the Transition Date.  Vacation time, after the year in
which it is earned, may not be carried forward to succeeding years.

3.4         Bonus Payments.  In partial consideration of the Employee entering
into this Agreement, the Company shall provide the following:

A) Performance Bonus. Upon the recommendation of the President/CEO and based on
the Company’s financial and cash position and the Employee’s contribution to the
Company’s achievement of its annual goals, the Company may

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for the 2006 and 2007 fiscal years, in its discretion, award an annual
performance bonus to the Employee.

B) Stock Option Awards.  The Compensation Committee may, on an annual basis in
its discretion, grant stock options or restricted stock awards to the Employee
based on: (i) the Employee’s performance and (ii) the Company progress and
attainment of its business goals and objectives.  The granting of the stock
options and the terms and conditions of the award (e.g. the number of shares
granted and the vesting schedule), shall be solely within the discretion of the
Compensation Committee.

3.5         Change of Control.  Notwithstanding the foregoing, it is agreed and
understood that, in the event of a “Change of Control” as hereinafter defined
prior to the Transition Date, the Employee shall be entitled to the following: 
(i) The Company shall pay the Employee his then Base Salary for a period of
eighteen (18) months, to be paid in the usual and customary manner pursuant  to
the terms of this Agreement, and (ii) all stock options granted by the Company
to the Employee to the extent not previously vested shall accelerate and be
deemed fully vested. For purposes of this Agreement, the term “Change of
Control” shall mean: (a) a sale, merger or consolidation in which securities
possessing more than fifty (50%) percent of the total combined voting power of
the Company’s outstanding securities are transferred to a person or a person
different from the persons who held the securities immediately prior to such
transaction, but excluding any merger with the subsidiary or parent company of
the Company; or (b) the sale, transfer or other disposition of all or
substantially all of the Company’s assets to one or more persons (other than a
wholly owned subsidiary of the Company in a single transaction or series of
related transaction).

3.6         Housing Stipend.  The Employee hereby acknowledges the payment of a
housing stipend of Twenty-five Thousand ($25,000) Dollars, subject to usual and
customary state and federal tax deductions on September 15, 2006 as the final
housing stipend payment made

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under this Agreement and the Employee’s prior Employment Agreement with the
Company dated as of September 1, 2003.

4.           EARLY TERMINATION OF PERIOD OF EMPLOYMENT.

4.1         Employee’s Earlier Termination.  The Employee may terminate his
employment hereunder by giving the Company written notice thereof not less than
ninety (90) days prior to the date fixed for such termination in such notice. 
If the Employee terminates his employment pursuant to Section 4.1 hereof, the
Base Salary, fringe benefits and vesting of stock options shall cease as of the
date of such termination of employment.

4.2         Company’s Earlier Termination.  The Company shall have the right to
terminate Employee’s employment hereunder prior to the Transition Date:  (i)
without Cause,  upon ninety (90) days prior written notice to the Employee and
(ii) for Cause, immediately upon, or at any time after, giving written notice of
such termination.  In the event that the Employee’s employment is terminated
without Cause pursuant to Section 4.2(i), then, subject to his prior execution
and non-revocation of a general release in favor of the Company, the Employee
shall continue to receive his Base Salary and fringe benefits for a period of
twelve (12) months following the date of termination.  In the event that the
Employee is terminated without Cause, the vesting of stock options granted to
the Employee shall be as follows: With respect to all unvested options, the
Employee shall be entitled to vest twenty five (25%) percent of the then
unvested options.

If the Company terminates the Employee’s employment pursuant to Section 4.2 (ii)
above for Cause, then Employee’s Base Salary, fringe benefits and vesting of
stock options shall cease and terminate as of the date of termination of the
Employee’s employment.  As used herein “for

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Cause” shall mean the determination, in good faith, by the Board, that any one
of the following events has occurred:  (a) the conviction of Employee of any
felony; (b) the neglect or dereliction by the Employee of his duties and
responsibilities as set forth in Article 2 hereof, which neglect or dereliction
of duties and responsibilities continues, in the reasonable judgment of the
Board, after written notice given to the Employee by the Board; (c) breach by
the Employee of this Agreement in any material respect; (d) the Employee’s
engaging in any fraudulent conduct toward the Company.  A determination that
there is for Cause termination of the Employee’s employment shall be made by the
Board, after notice to Employee and providing Employee an opportunity to be
heard, and such determination shall require that the Board find that there has
occurred an event of the kind described in (a), (b), (c), or (d) above.

4.3.  Termination for Death or Disability.  The Employee’s employment shall
terminate automatically upon the Employee’s death.  In the event that the
Executive becomes disabled as a result of any mental or physical illness or
injury such that he is unable to perform substantially all of his essential
duties for 120 days in any 365 consecutive calendar days, with or without
reasonable accommodation, the Company may terminate the Employee’s employment by
notice to him.  In the event that any question shall arise as to whether the
Employee is so disabled as to be unable to substantially perform all of his
essential duties hereunder, the Employee shall submit to a medical examination
by a physician selected by the mutual agreement of the parties (or by a
physician selected jointly by physicians designated by the company and the
Employee if no such agreement can be reached)  to determine whether the Employee
is so disabled and, for purposes of this Agreement, the conclusions of that
physician shall be binding on the parties.  If the Employee’s employment is
terminated by reason of the Employee’s death or disability in

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accordance with Section 4.3, this Agreement shall terminate without obligations
to the Employee or his legal representatives under this Agreement, other than
for payments made by the Company to the Employee (or his beneficiary or estate)
equal to the sum of: (a) the Employee’s annual base salary through the date of
termination to the extent not theretofore paid, (b) the reimbursable employment
expenses, as provided herein, through the date of termination to the extent not
theretofore paid; and (c) any accrued vacation pay to the extent not theretofore
paid.

The sum of the amounts described in clauses (a), (b) and (c) shall be
hereinafter referred to as the “Accrued Obligations”, which shall be paid to the
Employee or his beneficiary designated in writing or his estate, as applicable,
in a lump sum in cash within 30 days of the date of termination or such earlier
date as required by law.  The rights of the Employee or his beneficiaries or
estate under any of the welfare and retirement plans of the Company shall be
governed by the terms of those plans, including without limitation those terms
applicable to the bringing and processing of claims, and the provisions of the
Employee Retirement Income Security Act (“ERISA”), as amended from time to time.

4.4.  Non-renewal on the Transition Date.  If the Agreement is not renewed by
the Company prior to the Transition Date, the Company may elect, upon the
payment of $18,000 to Employee and upon the Employee executing a mutually
acceptable general release of claims, to enter into a consulting agreement with
the Employee on substantially the terms provided in Exhibit A.  In that event,
no compensation is due to the Employee under this Agreement, other than payment
of the Accrued Obligations.

5.           NON-COMPETITION.

5.1         Non-Competition Period.  Employee shall not, directly or indirectly
(including,

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without limitation, either alone or as a partner, officer, director, employee,
joint venturer or stockholder of, or as a consultant or other independent
contractor to or agent or representative for, any company, business, individual
or other entity), engage in any business activity which is directly or
indirectly in competition with the Company’s Business, as hereinafter defined,
at any time during the Employment Period and for a period of two (2) years after
the termination for any reason of the Employment Period (the “Post-Employment
Period”) (collectively, the Employment Period and the Post-Employment Period are
herein referred to as the “Non-Competition Period”); provided, however, that
nothing in this Agreement shall prevent or restrict the Employee from owning,
directly or indirectly, not more than five percent (5%) of the securities of any
publicly traded company for the sole purpose of a passive investment.  For
purposes of this Agreement, the Company’s Business shall be defined as: (a)
researching and developing a discovery platform that identifies novel,
non-obvious combinations of active molecules that will then become
patent-protected therapeutics, utilizing an automated, high-throughput process
to search combinatorial space and using multiple such automated systems in
parallel screening efforts to search combinatorial space using disease-specific
assays and (b) developing, formulating, manufacturing and commercializing
pharmaceutical products that consist of combinations of approved drugs.

5.2           Restricted Business Activities:  During the Non-Competition
Period, Employee will not, directly or indirectly:

(a)                                  solicit or request any other employee of or
consultant to the Company to join the employ of, or begin consulting for, any
individual or entity that researches, develops, markets or sells products that
compete with those of the Company;

(b)                                 solicit or request any individual or entity
that

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                                                researches, develops, markets or
sells products that compete with those of the Company, to employ or retain as a
consultant any employee or consultant of the Company;

(c)                                  divert, directly or indirectly, to any
competitor of the Company, any customer of the Company; or

(d)                                 induce or attempt to induce any supplier or
vendor of the Company to terminate or breach any written or oral agreement or
understanding with the Company.

6.           PROPRIETARY RIGHTS.

6.1         Definitions.  For the purposes of this Section 6, the terms set
forth below shall have the following meanings:

              6.1.1        Concepts and Ideas.  Those concepts and ideas known
to the Employee at any time during the Employee’s employment by the Company
which relate to the Company’s present, past or prospective activities, services
and products, all of which shall remain the sole and exclusive property of the
Company.  The Employee shall have no publication or other Intellectual Property
rights to any concepts and ideas and/or Confidential Information, and all of the
same shall belong exclusively to the Company.

              6.1.2        Confidential Information.  Confidential Information
is that secret or proprietary information of whatever kind or nature disclosed
to Employee or known by Employee (whether or not invented, discovered or
developed by Employee), at any time during Employee’s establishment of or
employment by the Company as a consequence of or through such establishment or
employment.  Such secret or proprietary information shall include (unless such
information is generally known in the industry through no action or fault of
Employee), information relating to the design, trade secrets, manufacture,
application, know-how, research

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and development relating to the Company’s products, materials, operating and
other cost data, price lists and data relating to pricing of the Company’s
products.  Such secret or proprietary information shall specifically include,
without limitation, all information contained in the Company’s manuals,
memoranda, plans, drawings and designs, specifications, supply sources, customer
lists and records legended or otherwise identified by the Company or the Board
as Confidential Information.

6.2         Non-Disclosure to Third Parties.  Except as required by Employee’s
duties in the course of his employment by the Company, Employee shall not, at
any time during or following the Employment Period, directly or indirectly, use,
publish, disseminate or otherwise disclose any Confidential Information,
Concepts or Ideas relating to the present, past or prospective business of the
Company to any third party without the prior written consent of the Board which
consent may be denied in each instance and all of the same, together with
publication rights, shall belong exclusively to the Company.

6.3         Documents, etc.  All documents, procedural, manuals, guides,
specifications, plans, drawings, designs and similar materials, lists of
present, past or prospective customers, customer proposals, invitations to
submit proposals, price lists and data relating to the pricing of the Company’s
products and services, records, notebooks and similar repositories of or
containing Confidential Information (including all copies thereof) that come
into the Employee’s possession or control by reason of Employee’s establishment
of or employment by the Company, whether prepared by Employee or others:  (a)
are the property of the Company, (b) will not be used by Employee in any way
adverse to the Company (c) will not be removed from the Company’s premises
(except as Employee’s duties require) and (d) at the termination (for

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whatever reason) of Employee’s employment by the Company, will be left with, or
forthwith returned by Employee to the Company.

6.4         Assignment of Inventions.  The Employee hereby agrees that he will
promptly make full written disclosure to the Company, and will hold in trust for
the sole right and benefit of the Company, and agrees to assign to the Company
or its designee all of his right, title and interest in and to any and all of
the inventions, original works of authorship, developments, concepts,
improvements or trade secrets, whether or not patentable or registerable under
patent, copyright or similar laws, that the Employee may, solely or jointly,
make, develop, conceive or reduce to practice, or cause to be made, developed,
conceived or reduced to practice, during the Employment Period (collectively,
referred to as the “Inventions”).  Employee further agrees that all original
works of authorship that are made by the Employee (solely or jointly with
others), within the scope of and during the Employment Period that are
protectable by copyright are “works made for hire”, as that term is defined in
the United States Copyright Act.

Employee hereby agrees to assist the Company or its designee at the Company’s
expense, in every way to secure the Company’s rights in the Inventions and any
copyrights, patents, or other intellectual property rights relating thereto in
any and all countries, including, disclosing to the Company all pertinent
information with respect thereto, and executing all applications,
specifications, oaths, assignments and all other instruments that the Company
shall deem necessary in order to apply for and obtain such rights and in order
to secure and convey to the Company and its successors and assigns, the sole and
exclusive rights, title and interests in and to such Inventions, and any
copyrights, patents or other intellectual property rights relating thereto.  The
Employee agrees that his obligations to execute or cause to be executed, when it
is in his

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power to do so, any such instruments or papers will continue after the
termination of this Agreement.  If the Employee is unwilling or refuses, for any
reason, to execute and deliver all such documents needed to complete such
applications in the United States of America or foreign patents or any copyright
registrations covering inventions or original works of authorship assigned to
the Company as above, then the Employee hereby irrevocably designates and
appoints the Company and its duly authorized officers and agents as the
Employee’s agent and attorney-in- fact, coupled with an interest, to act for an
in the Employee’s behalf and stead to execute and file any such applications, at
the Company’s expense, and to do all other lawfully permitted acts to further
the prosecution in issuance of letters patent or copyright registration thereon
with the same legal force and effect as if executed by the Employee.

7.           EQUITABLE RELIEF.  Employee agrees that any breach of Sections 5
and 6 above by Employee would cause irreparable damage to the Company and that,
in the event of such breach, the Company shall have, in addition to any and all
remedies of law, the right to an injunction, specific performance or other
equitable relief (without having to post bond) to prevent the violation or
threatened violation of Employee’s obligations hereunder.

8.           WAIVER.  Any waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach of the same or any other provision hereof by such other
party.  All waivers shall be in writing.

9.           SEVERABILITY; REFORMATION.  In case any one or more of the
provisions or parts of a provision contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not

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affect any other provision or part of a provision of this Agreement; and this
Agreement shall, to the fullest extent lawful, be reformed and construed as if
such invalid or illegal or unenforceable provision, or part of a provision, had
never been contained herein, and such provision or part shall be reformed so
that it would be valid, legal and enforceable to the maximum extent possible.
Without limiting the foregoing, if any provision (or part of a provision)
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, activity or subject, it shall be construed by limiting and
reducing it, so as to be enforceable to the fullest extent compatible with then
existing and applicable law.

 10.        ASSIGNMENT.  The Company shall have the right to assign its rights
and obligations under this Agreement to a party which assumes the Company’s
obligations hereunder.  This Agreement is personal to the Employee and
accordingly, the Employee shall not have the right to assign his rights or
obligations under this Agreement.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

11.         HEADINGS.  Headings and sub-headings are for convenience only and
shall not be deemed to be a part of this Agreement.

12.         AMENDMENTS.  This Agreement may be amended or modified, in whole or
in part, only by an instrument in writing signed by all parties hereto.  Any
amendment, consent, decision, waiver or other action to be made, taken or given
by the Company with respect to the Agreement shall be made, taken or given on
behalf of the Company only by authority of the Board.

13.         NOTICES.  Any notices or other communications required hereunder
shall be in

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writing and shall be deemed given when delivered in person or when mailed, by
certified or registered first-class mail, postage prepaid, return receipt
requested, or by faxed transmission where the date and time of the transmission
are clearly stated, addressed, if to the Company, at  245 First Street,
Sixteenth Floor, Cambridge, MA 02142, or, if to the Employee, at  6 Davis Brook
Drive, Natick, MA 01760 or to such other addresses of which a party shall have
notified the other in accordance with the provisions of this Section 13.

14.         COUNTERPARTS.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which shall
be deemed a single agreement.

15.         SURVIVAL.  The provisions of this Agreement shall survive the
termination of the Employee’s employment hereunder in accordance with their
terms.

16.         ARBITRATION.  In the event of any dispute or disagreement arising
out of or related to this Agreement, the dispute or disagreement shall be first
negotiated by the parties, in good faith, and the parties shall use their best
efforts to reach a resolution. In the event that the parties are, for whatever
reason, unable to reach a resolution, then, in that event, either party may
refer the matter to the American Arbitration Association for resolution in
accordance with the then applicable rules and regulations of the American
Arbitration Association.  The arbitration shall be held in Boston, Massachusetts
before a single arbitrator and the decision of the arbitrator shall be final and
binding upon the parties and the award may be entered in any court of competent
jurisdiction. The cost of the arbitration filing fee and the arbitrator’s fee
shall be divided equally between the parties and otherwise, each party shall be
responsible for its own costs and expenses, including attorneys’ fees and
disbursements.  Notwithstanding the foregoing,

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it is agreed that the Company may enforce its rights under Section 5, 6, and 7
hereof by means of a civil action in court.

17.         GOVERNING LAW.  This Agreement shall be construed in accordance with
and governed for all purposes by the laws of the Commonwealth of Massachusetts
applicable to contracts executed and wholly performed within such jurisdiction. 
In enforcing such governing laws, any arbitrator or court of competent
jurisdiction shall afford all relief which a Massachusetts court would afford
under the circumstances.

EXECUTED as an instrument, under seal, as of the date first above written.

COMBINATORX, INCORPORATED

 

 

 

 

 

By:

/s/ Alexis Borisy

 

Alexis Borisy, President/CEO

 

Hereunto Duly Authorized

 

 

 

 

 

EMPLOYEE:

 

 

 

/s/ Jan Lessem

 

Dr. Jan Lessem

 

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Exhibit A

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (the “Agreement”) is made and entered into this 8th
day of April, 2008 (the “Effective Date”) by and between CombinatoRx,
Incorporated, a Delaware corporation duly organized under law and having a usual
place of business at 245 First Street, Sixteenth Floor, Cambridge, MA 02142
(hereinafter referred to as the “Company”) and  Dr. Jan Lessem having a place of
business at 6 Davis Brook Drive, Natick, MA  01760 (hereinafter referred to as
the “Consultant”).

WHEREAS, the Company wishes to engage the Consultant to provide the services
described herein and Consultant agrees to provide the services for the
compensation provided under and otherwise in accordance with the terms and
conditions contained in this Agreement;

NOW THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, accepted and agreed to, the Company and the Consultant, intending
to be legally bound, agree to the terms set forth below.

1.             TERM.  Commencing as of the Effective Date, and continuing until
September 1, 2009 (the “Term”), unless earlier terminated pursuant to Article 4
hereof, the Consultant agrees that he will serve as a consultant to the
Company.  This Agreement may be renewed or extended for any period as may be
agreed by the parties.

2.                                      DUTIES AND SERVICES.

(a)           Consultant’s duties and responsibilities shall as described in
Exhibit “A” be annexed hereto and made a part hereof (collectively, the “Duties”
or “Services”).

(b)           The Consultant represents and warrants to the Company that s/he is
under no contractual or other restrictions or obligations which are inconsistent
with the execution of this Agreement, or which will interfere with the
performance of his Duties.  Consultant represents and warrants that the
execution and performance of this Agreement will not violate any policies or
procedures of any other person or entity for which he performs Services
concurrently with those performed herein.  Consultant understands and agrees
that s/he will not bring to the Company or use in the performance of
Consultant’s duties at the Company any materials or documents rightfully
belonging to any other party which are not generally available to the public.
Consultant may bring such materials and documents to the Company only if the
Consultant has obtained written authorization from such other party for their
possession and use.  Further, Consultant agrees that he will not enter into any
agreement (either written or oral) which would put Consultant in conflict with
this Agreement and/or require that s/he disclose Confidential Information.

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(c)           Compliance with Policies and Regulations.  In performing the
Services, Consultant shall comply, to the best of his knowledge, with all
business conduct and regulatory and health and safety guidelines established by
the Company for any governmental authority with respect to the Company’s
business.

(d)           Consultant represents that he has not been disbarred and, to the
best of his/her knowledge, is not under consideration for disbarment by the Food
and Drug Administration from working in or providing services to any
pharmaceutical or biotechnology company under the Generic Drug Enforcement Act
of 1992.

3.             CONSULTING FEE AND OTHER COMPENSATION.

(a)           Subject to the provisions hereof, the Company shall pay Consultant
a consulting fee as described in Appendix A.  The Consultant shall submit
monthly, on the Company’s standard reporting form, a listing of his/her hours,
the Duties performed and a summary of his activities.  The Consulting Fee shall
be paid within thirty (30) days of the Company’s receipt of the report and
invoice.

(b)           Consultant shall be entitled to prompt reimbursement for all
pre-approved expenses incurred in the performance of his Duties, upon submission
and approval of written statements and receipts in accordance with the then
regular procedures of the Company.  Pre-approval is required for expenses in
excess of $500.00.

(c)           Subject to the Consultant and his qualified beneficiaries
exercising their right to continue participation in the Company’s health and
dental plans under COBRA as of the Effective Date, the Company will continue to
contribute the employer’s share to the premium cost of their coverage under
those plans until the earlier of the end of the Term or when the Consultant’
employment is terminated in accordance with this Agreement.

(d)           During the Term, the restricted stock and options to purchase
common stock of the Company which were granted you prior to the Effective Date
shall continue to vest in accordance with the applicable stock option
agreements, certificates and plans, as in effect from time to time.  In
addition, the Consultant will not be required to exercise any of such stock
options within 90 days of April 7, 2008, but only within 90 days of the
termination of this Agreement.  The Consultant will not be eligible to receive
additional stock option or restricted stock grants during the Term or
thereafter.

(e)           The Consultant agrees that all Services will be rendered by him as
an independent contractor, and that this Agreement does not create an
employer-employee relationship between the Consultant and the Company.  The
Consultant shall have no right to receive any employee benefits, including, but
not limited to, health and accident insurance, life insurance, sick leave and/or
vacation. Consultant agrees to pay all taxes, including self-employment taxes
due in respect of the Consulting Fee and to indemnify and hold harmless the
Company in the event the Company is required to pay any such taxes on behalf of
Consultant.

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4.                                      EARLY TERMINATION OF THE TERM.

(a)           If the Consultant voluntarily ceases performing his/her Duties,
becomes physically or mentally unable to perform his/her Duties, or is
terminated for cause, then, in each instance, the Consulting Fee shall cease and
terminate as of such date.

(b)           This Agreement may be terminated without cause by either party
upon not less than thirty (30) days prior written notice by either party to the
other.

(c)           Upon termination under Sections 4(a) or 4(b), neither party shall
have any further obligations under this Agreement, except for the obligations
which by their terms survive this termination as noted in Section 16 hereof. 
Upon termination, and in any case upon the Company’s request, Consultant shall
return immediately to the Company all Confidential Information and copies
thereof.

5.             RESTRICTED ACTIVITIES.  For the period beginning on the Effective
Date and continuing until September 1, 2009 (the “Restricted Period”),
Consultant will not, directly or indirectly:

(i)            engage in any business activity (including, without limitation,
either alone or as a partner, officer, director, employee, joint venturer or
stockholder of, or as a consultant or other independent contractor to or agent
or representative for, any company, business, individual or other            
entity), which is directly or indirectly in competition with the Company’s
Business, as hereinafter defined, at any time during the Restricted Period and
for a period of one (1) year after the termination this Agreement; provided,
however, that nothing in this Agreement shall prevent or restrict the Consultant
from owning, directly or indirectly, not more than five percent (5%) of the
securities of any publicly traded company for the sole purpose of a passive
investment.  For purposes of this Agreement, the Company’s Business shall be
defined as: (a) researching and developing a discovery platform that identifies
novel, non-obvious combinations of active molecules that will then become
patent-protected therapeutics, utilizing an automated, high-throughput process
to search combinatorial space and using multiple such automated systems in
parallel screening efforts to search combinatorial space using disease-specific
assays and (b) developing, formulating, manufacturing and commercializing
pharmaceutical products that consist of combinations of approved drugs; or

(ii)           solicit or request any employee of or consultant to the Company
to leave the employ of or cease consulting for the Company; or

(iii)          solicit or request any employee of or consultant to the Company
to join the employ of, or begin consulting for, any individual or entity that
researches, develops, markets or sells products that compete with those of the
Company; or

(iv)          solicit or request any individual or entity that researches,
develops, markets or sells products that compete with those of the Company, to
employ or retain as a consultant any employee or consultant of the Company; or

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(v)           induce or attempt to induce any supplier or vendor of the Company
to terminate or breach any written or oral agreement or understanding with the
Company.

6.             PROPRIETARY RIGHTS.

(a)           Definitions.  For the purposes of this Article 6, the terms set
forth below shall have the following meanings:

              (i)            Concept and Ideas.  Those concepts and ideas
disclosed by the Company to Consultant or which are first developed by
Consultant during the course of the performance of Services hereunder and which
relate to the Company’s present, past or prospective business activities,
services, and products, all of which shall remain the sole and exclusive
property of the Company.  The Consultant shall have no publication or other
intellectual property rights, and all of the same shall belong exclusively to
the Company.

              (ii)           Confidential Information. For the purposes of this
Agreement, Confidential Information shall mean and collectively include all
information relating to the business, plans and/or technology of the Company
including, but not limited to technical information, including inventions,
methods, plans, processes, specifications, characteristics, assays, raw data,
scientific preclinical or clinical data, records, databases, formulations,
clinical protocols, equipment design, know-how, experience, and trade secrets;
developmental, marketing, sales, customer, supplier, consulting relationship
information, operating, performance, and cost information; computer programming
techniques; microscopy technology and signal identification strategy whether in
tangible or intangible form, and all record bearing media containing or
disclosing the foregoing information and techniques, including written business
plans, patents and patent applications, grant applications, notes, and
memoranda, whether in writing or presented, stored or maintained in or by
electronic, magnetic, or other means.

Notwithstanding the foregoing, the term “Confidential Information” shall not
include any information which: (a) can be demonstrated to have been in the
public domain or was publicly known or available prior to the date of the
disclosure to Consultant; (b) can be demonstrated in writing to have been
rightfully in the possession of Consultant prior to the disclosure of such
information to Consultant by the Company; (c) becomes part of the public domain
or publicly known or available by publication or otherwise, not due to any
unauthorized act or omission on the part of Consultant; or (d) is supplied to
Consultant by a third party without binder of secrecy, provided, however, that
such third party has no obligation to the Company or any of its affiliated
companies to maintain such information in confidence.

(b)           Non-Disclosure to Third Parties.  Except as required by
Consultant’s Duties, Consultant shall not, at any time now or in the future,
directly or indirectly, use, publish, disseminate or otherwise disclose any
Confidential Information, Concepts, or Ideas to any third party without the
prior written consent of the Company which consent may be denied in each
instance and all of the same, together with publication rights, shall belong
exclusively to the Company.

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(c)           Documents, etc.  All documents, diskettes, tapes, procedural
manuals, guides, specifications, plans, drawings, designs and similar materials,
lists of present, past or prospective customers, customer proposals, invitations
to submit proposals, price lists and data relating to the pricing of the
Company’s products and services, records, notebooks and all other materials
containing Confidential Information or information about Concepts or Ideas
(including all copies and reproductions thereof) that come into Consultant’s
possession or control by reason of Consultant’s performance of the relationship,
whether prepared by Consultant or others: (a) are the property of the Company,
(b) will not be used by Consultant in any way other than in connection with the
performance of his Duties, (c) will not be provided or shown to any third party
by Consultant, (d) will not be removed from the Company’s or Consultant’s
premises (except as Consultant’s Duties require), and (e) at the termination
(for whatever reason), of Consultant’s relationship with the Company, will be
left with, or forthwith returned by Consultant to the Company.

(d)           Patents, etc.  The Consultant agrees that the Company is and shall
remain the exclusive owner of the Confidential Information and Concepts and
Ideas.  Any interest in patents, patent applications, inventions, technological
innovations, trade names, trademarks, service marks, copyrights, copyrightable
works, developments, discoveries, designs, processes, formulas, know-how, data
and analysis, whether registrable or not (“Developments”), which Consultant, as
a result of rendering Services to the Company under this Agreement, may conceive
or develop, shall: (i) forthwith be brought to the attention of the Company by
Consultant and (ii) belong exclusively to the Company.  No license or conveyance
of any such rights to the Consultant is granted or implied under this Agreement.

(e)           Assignment.  The Consultant hereby assigns and, to the extent any
such assignment cannot be made at present, hereby agrees to assign to the
Company, without further compensation, all of his right, title and interest in
and to all Concepts, Ideas, and Developments. The Consultant will execute all
documents and perform all lawful acts which the Company considers necessary or
advisable to secure its rights hereunder and to carry out the intent of this
Agreement.

7.             EQUITABLE RELIEF.  Consultant agrees that any breach of Articles
5 and 6 above by him would cause irreparable damage to the Company and that, in
the event of such breach or threatened breach, the Company shall have, in
addition to any and all remedies of law, the right to an injunction, specific
performance or other equitable relief (without having to post a bond) to prevent
the violation or threatened violation of Consultant’s obligations hereunder.

8.             WAIVER.  Any waiver by the Company of a breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of the same or any other provision hereof.  All waivers by the
Company shall be in writing.

9.             SEVERABILITY; REFORMATION.  In case any one or more of the
provisions or parts of a provision contained in this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
or part of a provision of this Agreement; and this Agreement shall, to the
fullest extent lawful, be reformed and construed as if such invalid or illegal
or unenforceable

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provision, or part of a provision, had never been contained herein, and such
provision or part shall be reformed so that it would be valid, legal and
enforceable to the maximum extent possible. Without limiting the foregoing, if
any provision (or part of a provision) contained in this Agreement shall for any
reason be held to be excessively broad as to duration, activity or subject, it
shall be construed by limiting and reducing it, so as to be enforceable to the
fullest extent compatible with then existing applicable law.

10.          ASSIGNMENT.  The Company shall have the right to assign its rights
and obligations under this Agreement to a party which assumes the Company’s
obligations hereunder.  Consultant shall not have the right to assign his/her
rights or obligations under this Agreement without the prior written consent of
the Company.

11.          HEADINGS.  Headings and subheadings are for convenience only and
shall not be deemed to be a part of this Agreement.

12.          AMENDMENTS.  This Agreement may be amended or modified, in whole or
in part, only by an instrument in writing signed by all parties hereto.

13.          NOTICES.  Any notices or other communications required hereunder
shall be in writing and shall be deemed given when delivered in person or when
mailed, by certified or registered first class mail, postage prepaid, return
receipt requested, addressed to the parties at their addresses specified in the
preamble to this Agreement or to such other addresses of which a party shall
have notified the other in accordance with the provisions of this Section 13.

14.          COUNTERPARTS.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which shall
be deemed a single agreement.

15.          GOVERNING LAW.  This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the Commonwealth of
Massachusetts applicable to contracts executed and wholly performed within such
jurisdiction. Any dispute arising hereunder shall be referred to and heard in
only a court located in Massachusetts, to whose jurisdiction each party hereby
assents.

16.          SURVIVAL.  The provisions of Sections 5 to 9 and 15 to 16 of this
Agreement shall survive the expiration of the Term or the termination of this
Agreement.  This Agreement supersedes all prior agreements, written or oral,
between the Company and the Consultant relating to the subject matter of this
Agreement.

EXECUTED, under seal, effective as of the Effective Date.

COMBINATORX, INCORPORATED

 

CONSULTANT

 

 

 

By:

 

 

 

Alexis Borisy

 

Jan Lessem

President and Chief Executive Officer

 

 

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Appendix “A”

(A) Duties and Responsibilities:

The Consultant has knowledge and experience of the Company such that he is
uniquely qualified to provide business and management advice to Company’s senior
executives.  Therefore, it is agreed that, during the Term, the Consultant shall
make himself reasonably available during normal business hours to provide advice
and other consulting services to the Company and those designated by it. 
Consulting services shall include advice relating to Consultant’s prior duties
for the Company and, consistent with his knowledge and experience of the Company
and its industry, advice with respect to clinical matters, medical advisory
boards, key business relationships, strategic planning and the like.  Consulting
services during the Term may only be requested by the Company’s President/Chief
Executive Officer, or any Vice President of the Company and all work must be
authorized in advance.  Services may be provided by telephone, by traveling to
meet with individuals as requested by the Company, or at the Company’s offices,
as the Company and the Consultant may agree from time to time, provided,
however, that any performance at the Company’s offices shall be by mutual
agreement.  The Company agrees to coordinate with the Consultant to reasonably
accommodate any periods of the Consultant’s unavailability due to vacations,
illness and similar absences.

(B)  Fee Schedules and Payment Dates:

CombinatoRx agrees to pay the Consultant a fee of $600.00 per hour for
consulting to a maximum of $200,000 per year.  Invoices for hours of service
should be sent monthly to Accounts Payable at CombinatoRx, Incorporated, to
ensure that they are paid within 30 days of receipt.

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