THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

CombinatoRx, Incorporated (CRXX)

4/19/2006 Proxy Information

Stock Issuances

Issuance of Series E Preferred Stock

On October 5, 2005, in exchange for $15.0 million and in connection with entering into a research and license agreement with Angiotech, CombinatoRx issued to Angiotech 1,363,636 shares of Series E preferred stock that automatically converted into 1,948,051 shares of CombinatoRx common stock upon the closing of the Company’s initial public offering. The shares of CombinatoRx common stock held by Angiotech may not be sold or transferred by Angiotech, subject to limited exceptions, until after November 9, 2006.

Registration Rights The holders of 18,049,586 shares of CombinatoRx common stock and holders of warrants to purchase up to 124,252 shares of common stock, are entitled to require us to register their shares or participate in a registration of shares by us under the Securities Act. These rights are provided under the terms of various agreements between us and the holders of these shares and warrants. These holders include the following directors, officers, and holders of more than five percent of our voting securities and their affiliates: (See page 25 of proxy for table).

Other Agreements with Stockholders

CombinatoRx has entered into a research and license agreement with Angiotech, a holder of more than 5% of our common stock.

Employment Agreements

CombinatoRx entered into employment agreements with its executive officers. For a detailed description of the employment agreements with CombinatoRx’s Named Executive Officers, see ‘‘Employment Agreements’’.

Mr. Daniel Grau is employed as our Senior Vice President of Commercial Operations pursuant to an employment agreement which is terminable by us or Mr. Grau for any reason at any time. Under the employment agreement, Mr. Grau is entitled to receive an annual base salary that is subject to increase from time to time by the Board of Directors in its discretion, and upon the recommendation of the chief executive officer, an annual bonus based on Mr. Grau’s performance and CombinatoRx’s performance against CombinatoRx’s goals, with a target bonus of up to 30% of base salary. If CombinatoRx terminates Mr. Grau without cause, as defined in the employment agreement, he is entitled to a lump sum payment equal to his then current base salary for 6 months following the date of termination, accelerated vesting of 25% of his options granted under this agreement or otherwise which remain unvested on the date of termination for each year of employment with us, and continuation of medical and dental benefits. In the event of a termination without cause within two years following a change of control, with change of control defined in the employment agreement, CombinatoRx is obligated to pay Mr. Grau in a lump sum payment twenty-four months of his then current base salary, twenty-four months of the premium cost of participation in CombinatoRx’s medical and dental plans, subject to applicable law and plan terms, and 100% of all unvested options granted under his employment agreement or otherwise must be accelerated and fully vest.

Mr. Jason Cole is employed as our Senior Vice President and General Counsel pursuant to an employment agreement employment agreement, which is terminable by us or Mr. Cole for any reason at any time. Under the employment agreement, Mr. Cole will receive an initial annual salary of $250,000. In addition, upon the recommendation the Chief Executive Officer, Mr. Cole is eligible for a bonus at an annual target rate of 30% of his base compensation. Mr. Cole will also receive a grant of an option to purchase 100,000 shares of the Company’s common stock, vesting with respect to 25% of the shares on January 23, 2007 and quarterly thereafter over the remaining three-year period, at an option exercise price of $10.68. If the Company terminates Mr. Cole’s employment without cause (as defined in the agreement), Mr. Cole is entitled to continue to receive his base salary, medical and dental benefits for a period of six months. Upon a change in control of the Company (as defined in the agreement), if Mr. Cole’s employment is terminated without cause within two years of the change in control, Mr. Cole is entitled to the following: (i) all unvested options as of that date will become fully vested and exercisable; and (ii) Mr. Cole will be entitled to continue to receive his base salary and medical and dental benefits for a period of six months following the date of termination.

Director and Executive Officer Compensation

Please see ‘‘Director Compensation’’ for a discussion of options granted and payments made to non-employee directors. Please see ‘‘Management—Executive Compensation’’ and ‘‘Management—Option Grants in Last Fiscal Year’’ for additional information regarding compensation of CombinatoRx’s executive officers.

Other Agreements with Executive Officers, Directors and their Affiliates

Other than those referred to above, the following agreements are in effect with CombinatoRx’s executive officers, directors, and their affiliates as of March 31, 2006: (See page 27 of proxy for table).