Exhibit 10.3


 


Dr. Jan Lessem


Name of Employee


COMBINATORX, INCORPORATED


2004 Incentive Plan


 


Restricted Stock Award
Agreement


 


CombinatoRx, Incorporated

650 Albany St.


Boston, MA 02118


 


Attn:  Alexis
Borisy


 


Ladies and Gentlemen:


 


The undersigned (i) acknowledges that he has received
an award (the “Award”) of restricted stock from CombinatoRx, Incorporated (the “Company”)
under the 2004 Incentive Plan (the “Plan”), subject to the terms set forth
below and in the Plan; (ii) further acknowledges receipt of a copy of the Plan
as in effect on the date hereof; and (iii) agrees with the Company as follows:


 


1.               Effective Date. 
This Agreement shall take effect as of January 26, 2006, which is the
date of grant of the Award.


 


2.               Shares Subject to Award. 
The Award consists of 15,000 shares (the “Shares”) of common stock of
the Company (“Stock”).  The undersigned’s
rights to the Shares are subject to the restrictions described in this
Agreement and the Plan (which is incorporated herein by reference with the same
effect as if set forth herein in full) in addition to such other restrictions,
if any, as may be imposed by law.


 


3.               Meaning of Certain Terms. 
Except as otherwise expressly provided, all terms used herein shall have
the same meaning as in the Plan.  The
term “vest” as used herein with respect to any Share means the lapsing of the
restrictions described herein with respect to such Share.


 


4.               Nontransferability of Shares. 
The Shares acquired by the undersigned pursuant to this Agreement shall
not be sold, transferred, pledged, assigned or otherwise encumbered or disposed
of except as provided below and in the Plan.


 


5.               Accelerated Vesting of Unvested
Shares Upon Termination Without Cause.  If the
undersigned is terminated by the Company without Cause (as defined below), to
the extent there are any unvested Shares, the twenty five (25%) percent of the
then unvested Shares shall vest for each year of employment of the undersigned
with the Company.  For example, if there
is a termination without Cause at the end of the second year of employment,
then fifty (50%) percent of Shares would be unvested and automatically an
additional twenty five (25%) percent of the initial amount shall be vested (50%
of the remaining 50%), and thereafter no additional Shares shall vest and such
Shares shall be forfeited.

















 


For the purposes of this Agreement, the term “Cause” shall mean the determination,
in good faith, by the Board, that any one of the following events has
occurred:  (a) the conviction of the
undersigned of any felony; (b) the neglect or dereliction by the undersigned of
his duties and responsibilities in accordance with the terms or requirements of
his employment, which neglect or dereliction of duties and responsibilities
continues, in the reasonable judgment of the Board, after written notice given
to the undersigned by the Board; (c) breach
by the undersigned in any material respect of any terms or requirements of his
employment; or (d) engaging in any fraudulent conduct toward the
Company. A determination that there is for Cause termination of the undersigned’s
employment shall be made by the Board, after notice to undersigned and
providing the undersigned 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.


 


6.               Accelerated Vesting of Unvested
Shares Upon a Change of Control.  Upon the
consummation of a Change of Control (the “Change of Control Effective Date”), all unvested Shares will
immediately become 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 persons different from the persons who held such
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 transactions).


 


7.               Forfeiture Risk. 
If the undersigned ceases to be employed by the Company and its
subsidiaries because of death or disability or for any reason other than as
specified in Section 5 above, any then outstanding and unvested Shares acquired
by the undersigned hereunder shall be automatically and immediately forfeited.
With respect to any Shares that are forfeited under this Section 7 or Section 5
above, the undersigned hereby (i) appoints the Company as the attorney-in-fact
of the undersigned to take such actions as may be necessary or appropriate to
effectuate a transfer of the record ownership of any such shares that are
unvested and forfeited hereunder, (ii) agrees to deliver to the Company, as a
precondition to the issuance of any certificate or certificates with respect to
unvested Shares hereunder, one or more stock powers, endorsed in blank, with
respect to such Shares, and (iii) agrees to sign such other powers and take
such other actions as the Company may reasonably request to accomplish the
transfer or forfeiture of any unvested Shares that are forfeited hereunder.


 


8.               Retention of Certificates. 
Any certificates representing unvested Shares shall be held by the
Company.  If unvested Shares are held in
book entry form, the undersigned agrees that the Company may give stop transfer
instructions to the depository to ensure compliance with the provisions hereof.


 


9.               Vesting of Shares. 
The shares acquired hereunder shall vest in accordance with the
provisions of this Section 9 and applicable provisions of the Plan, as follows:
25% percent of the Shares on January 26, 2007 and an additional 6.25% on each
three months anniversary thereafter until January 26, 2010.


 


Notwithstanding the foregoing, no shares shall vest on
any vesting date specified above unless the undersigned is then, and since the
date of grant has continuously been, employed by the Company or its
subsidiaries.


 


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10.         Legends. 
Any certificates representing unvested Shares shall be held by the
Company, and any such certificate shall contain legends substantially in the
following form:


 


THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES
OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING
FORFEITURE) OF THE 2004 INCENTIVE PLAN AND A RESTRICTED STOCK AWARD AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER AND COMBINATORX, INCORPORATED.  COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE
IN THE OFFICES OF COMBINATORX, INCORPORATED.


 


THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.  THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT
REQUIRED.


 


As soon as practicable
following the vesting of any such Shares the Company shall cause a certificate
or certificates covering such vested Shares to be issued and delivered to the
undersigned without the first legend set forth above referencing the Restricted
Stock Award Agreement.  If any Shares are held in book-entry
form, the Company may take such steps as it deems necessary or appropriate to
record and manifest the restrictions applicable to such Shares.


 


11.         Dividends, etc.. 
The undersigned shall be entitled to (i) receive any and all dividends
or other distributions paid with respect to those Shares of which he is the
record owner on the record date for such dividend or other distribution, and
(ii) vote any Shares of which he is the record owner on the record date for such
vote; provided, however, that any property
(other than cash) distributed with respect to a share of Stock (the “associated
share”) acquired hereunder, including without limitation a distribution of
Stock by reason of a stock dividend, stock split or otherwise, or a
distribution of other securities with respect to an associated share, shall be
subject to the restrictions of this Agreement in the same manner and for so
long as the associated share remains subject to such restrictions, and shall be
promptly forfeited if and when the associated share is so forfeited;  and further provided,
that the Administrator may require that any cash distribution with respect to
the Shares other than a normal cash dividend be placed in escrow or otherwise
made subject to such restrictions as the Administrator deems appropriate to
carry out the intent of the Plan. 
References in this Agreement to the Shares shall  refer, mutatis mutandis,
to any such restricted amounts.


 


12.         Sale of Vested Shares. 
The
undersigned understands that he will be free to sell any Share once it has
vested, subject to (i) satisfaction of any applicable tax withholding
requirements with respect to the vesting or transfer of such Share;
(ii) the completion of any administrative steps (for example, but without
limitation, the transfer of certificates) that the Company may reasonably
impose; and (iii) applicable requirements of federal and state securities laws.


 


13.         Certain Tax Matters. 
The undersigned expressly acknowledges the following:


 


a.               The undersigned has been advised to
confer promptly with a professional tax advisor to consider whether the
undersigned should make a so-called “83(b) election” with respect to the
Shares.  Any such election, to be
effective, must be made in accordance 


 


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with applicable
regulations and within thirty (30) days following the date of this Award.  The Company has made no recommendation to the
undersigned with respect to the advisability of making such an election.


 


b.              The award or vesting of the Shares
acquired hereunder, and the payment of dividends with respect to such Shares,
may give rise to “wages” subject to withholding.  The undersigned expressly acknowledges and
agrees that his rights hereunder are subject to his promptly paying to the
Company in cash (or by such other means as may be acceptable to the Company in
its discretion, including, if the Administrator so determines, by the delivery
of previously acquired Stock or shares of Stock acquired hereunder or by the
withholding of amounts from any payment hereunder) all taxes required to be
withheld in connection with such award, vesting or payment.


 


	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Jan Lessem

  	
   

  
	
   

  	
  (Signature of Employee)

  	
   

  
	
   

  	
   

  	
   

  



Dated:


 


The foregoing Restricted Stock

Award Agreement is hereby accepted:


 


COMBINATORX, INCORPORATED


 


 


	
  By

  	
  /s/ Alexis Borisy

  	
   

  



 


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