Document:

<PAGE>   1
                                                                   EXHIBIT 10.33

                            MASTER SECURITY AGREEMENT
                   dated as of November 1, 1999 ("AGREEMENT")

        THIS AGREEMENT is between GENERAL ELECTRIC CAPITAL CORPORATION (together
with its successors and assigns, if any, "SECURED PARTY"), and DISCOVERY
PARTNERS INTERNATIONAL, INC. ("DEBTOR"). Secured Party has an office at 5150 EL
CAMINO REAL, SUITE B-21, LOS ALTOS, CA 94022. Debtor is a corporation organized
and existing under the laws of the state of California. Debtor's mailing address
and chief place of business is 9640 TOWN CENTRE DRIVE, SAN DIEGO, CA 92121.

1.      CREATION OF SECURITY INTEREST.

        Debtor grants to Secured Party, its successors and assigns, a security
interest in and against all property listed on any collateral schedule now or in
the future annexed to or made a part of this Agreement ("COLLATERAL SCHEDULE"),
and in and against all additions, attachments, accessories and accessions to
such property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the "COLLATERAL"). This security interest is given to secure
the payment and performance of all debts, obligations and liabilities of any
kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule
(collectively "NOTES" and each a "NOTE"), and any renewals, extensions and
modifications of such debts, obligations and liabilities (such Notes, debts,
obligations and liabilities are called the "INDEBTEDNESS"). Notwithstanding
anything to the contrary contained in this Agreement, to the extent that Secured
Party asserts a purchase money security interest in any items of Collateral
("PMSI COLLATERAL"): (i) the PMSI Collateral shall secure only that portion of
the Indebtedness which has been advanced by Secured Party to enable Debtor to
purchase, or acquire rights in or the use of such PMSI Collateral (the "PMSI
INDEBTEDNESS"), and (ii) no other Collateral shall secure the PMSI Indebtedness.

2.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.

        Debtor represents, warrants and covenants as of the date of this
Agreement and as of the date of each Collateral Schedule that:

        (a) Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the preamble of this
Agreement, has its chief executive offices at the location specified in the
preamble, and is, and will remain, duly qualified and licensed in every
jurisdiction wherever necessary to carry on its business and operations;

        (b) Debtor has adequate power and capacity to enter into, and to perform
its obligations under this Agreement, each Note and any other documents
evidencing, or given in connection with, any of the Indebtedness (all of the
foregoing are called the "DEBT DOCUMENTS");

        (c) This Agreement and the other Debt Documents have been duly
authorized, executed and delivered by Debtor and constitute legal, valid and
binding agreements enforceable in

<PAGE>   2

accordance with their terms, except to the extent that the enforcement of
remedies may be limited under applicable bankruptcy and insolvency laws;

        (d) No approval, consent or withholding of objections is required from
any governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already obtained;

        (e) The entry into, and performance by, Debtor of the Debt Documents
will not (i) violate any of the organizational documents of Debtor or any
judgment, order, law or regulation applicable to Debtor, or (ii) result in any
breach of or constitute a default under any contract to which Debtor is a party,
or result in the creation of any lien, claim or encumbrance on any of Debtor's
property (except for liens in favor of Secured Party) pursuant to any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;

        (f) There are no suits or proceedings pending in court or before any
commission, board or other administrative agency against or affecting Debtor
which could in the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations under the Debt
Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;

        (g) All financial statements delivered to Secured Party in connection
with the Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtors financial
condition;

        (h) The Collateral is not, and will not be, used by Debtor for personal,
family or household purposes;

        (i) The Collateral is, and will remain, in good condition and repair and
Debtor will not be negligent in its care and use;

        (j) Debtor is, and will remain, the sole and lawful owner, and in
possession of, the Collateral, and has the sole right and lawful authority to
grant the security interest described in this Agreement; and

        (k) The Collateral is, and will remain, free and clear of all liens,
claims and encumbrances of any kind whatsoever, except for (i) liens in favor of
Secured Party, (ii) liens for taxes not yet due or for taxes being contested in
good faith and which do not involve, in the judgment of Secured Party, any risk
of the sale, forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen's, mechanic's, repairmen's and similar liens arising by operation of
law in the normal course of business for amounts which are not delinquent (all
of such liens are called "PERMITTED LIENS").

<PAGE>   3

3.      COLLATERAL.

        (a) Until the declaration of any default, Debtor shall remain in
possession of the Collateral; except that Secured Party shall have the right to
possess (i) any chattel paper or instrument that constitutes a part of the
Collateral, and (ii) any other Collateral in which Secured Party's security
interest may be perfected only by possession. Secured Party may inspect any of
the Collateral during normal business hours after giving Debtor reasonable prior
notice. If Secured Party asks, Debtor will promptly notify Secured Party in
writing of the location of any Collateral.

        (b) Debtor shall (i) use the Collateral only in its trade or business,
(ii) maintain all of the Collateral in good operating order and repair, normal
wear and tear excepted, (iii) use and maintain the Collateral only in compliance
with manufacturers recommendations and all applicable laws, and (iv) keep all of
the Collateral free and clear of all liens, claims and encumbrances (except for
Permitted Liens).

        (c) Debtor shall not, without the prior written consent of Secured
Party, (i) part with possession of any of the Collateral (except to Secured
Party or for maintenance and repair), (ii) remove any of the Collateral from the
continental United States, or (iii) sell, rent, lease, mortgage, grant a
security interest in or otherwise transfer or encumber (except for Permitted
Liens) any of the Collateral.

        (d) Debtor shall pay promptly when due all taxes, license fees,
assessments and public and private charges levied or assessed on any of the
Collateral, on its use, or on this Agreement or any of the other Debt Documents.
At its option, Secured Party may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on the Collateral and may pay
for the maintenance, insurance and preservation of the Collateral and effect
compliance with the terms of this Agreement or any of the other Debt Documents.
Debtor agrees to reimburse Secured Party, on demand, all costs and expenses
incurred by Secured Party in connection with such payment or performance and
agrees that such reimbursement obligation shall constitute Indebtedness.

        (e) Debtor shall, at all times, keep accurate and complete records of
the Collateral, and Secured Party shall have the right to inspect and make
copies of all of Debtor's books and records relating to the Collateral during
normal business hours, after giving Debtor reasonable prior notice.

        (f) Debtor agrees and acknowledges that any third person who may at any
time possess all or any portion of the Collateral shall be deemed to hold, and
shall hold, the Collateral as the agent of, and as pledge holder for, Secured
Party. Secured Party may at any time give notice to any third person described
in the preceding sentence that such third person is holding the Collateral as
the agent of, and as pledge holder for, the Secured Party.

<PAGE>   4

4.      INSURANCE.

        (a) Debtor shall at all times bear the entire risk of any loss, theft,
damage to, or destruction of, any of the Collateral from any cause whatsoever.

        (b) Debtor agrees to keep the Collateral insured against loss or damage
by fire and extended coverage perils, theft, burglary, and for any or all
Collateral which are vehicles, for risk of loss by collision, and if requested
by Secured Party, against such other risks as Secured Party may reasonably
require. The insurance coverage shall be in an amount no less than the full
replacement value of the Collateral, and deductible amounts, insurers and
policies shall be acceptable to Secured Party. Debtor shall deliver to Secured
Party policies or certificates of insurance evidencing such coverage. Each
policy shall name Secured Party as a loss payee, shall provide for coverage to
Secured Party regardless of the breach by Debtor of any warranty or
representation made therein, shall not be subject to co-insurance, and shall
provide that coverage may not be canceled or altered by the insurer except upon
thirty (30) days prior written notice to Secured Party. Debtor appoints Secured
Party as its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or endorse all
documents, checks or drafts in connection with insurance payments. Secured Party
shall not act as Debtors attorney-in-fact unless Debtor is in default. Proceeds
of insurance shall be applied, at the option of Secured Party, to repair or
replace the Collateral or to reduce any of the Indebtedness.

5.      REPORTS.

        (a) Debtor shall promptly notify Secured Party of (i) any change in the
name of Debtor, (ii) any relocation of its chief executive offices, (iii) any
relocation of any of the Collateral, (iv) any of the Collateral being lost,
stolen, missing, destroyed, materially damaged or worn out, or (v) any lien,
claim or encumbrance other than Permitted Liens attaching to or being made
against any of the Collateral.

        (b) Debtor will deliver to Secured Party Debtors complete financial
statements, certified by a recognized firm of certified public accountants,
within ninety (90) days of the close of each fiscal year of Debtor. If Secured
Party requests, Debtor will deliver to Secured Party copies of Debtors quarterly
financial reports certified by Debtors chief financial officer, within ninety
(90) days after the close of each of Debtors fiscal quarter. Debtor will deliver
to Secured Party copies of all Forms 10-K and 10-Q, if any, within 30 days after
the dates on which they are filed with the Securities and Exchange Commission.

6.      FURTHER ASSURANCES.

        (a) Debtor shall, upon request of Secured Party, furnish to Secured
Party such further information, execute and deliver to Secured Party such
documents and instruments (including, without limitation, Uniform Commercial
Code financing statements) and shall do such other acts and things as Secured
Party may at any time reasonably request relating to the perfection or
protection of the security interest created by this Agreement or for the purpose
of carrying out the intent of this Agreement. Without limiting the foregoing,
Debtor shall cooperate and do all

<PAGE>   5

acts deemed necessary or advisable by Secured Party to continue in Secured Party
a perfected first security interest in the Collateral, and shall obtain and
furnish to Secured Party any subordination, releases, landlord, lessor, or
mortgagee waivers, and similar documents as may be from time to time requested
by, and in form and substance satisfactory to, Secured Party.

        (b) Debtor irrevocably grants to Secured Party the power to sign
Debtor's name and generally to act on behalf of Debtor to execute and file
applications for title, transfers of title, financing statements, notices of
lien and other documents pertaining to any or all of the Collateral; this power
is coupled with Secured Party's interest in the Collateral. Debtor shall, if any
certificate of title be required or permitted by law for any of the Collateral,
obtain and promptly deliver to Secured Party such certificate showing the lien
of this Agreement with respect to the Collateral.

        (c) Debtor shall indemnify and defend the Secured Party, its successors
and assigns, and their respective directors, officers and employees, from and
against all claims, actions and suits (including, without limitation, related
attorneys' fees) of any kind whatsoever arising, directly or indirectly, in
connection with any of the Collateral.

7.      DEFAULT AND REMEDIES.

        (a) Debtor shall be in default under this Agreement and each of the
other Debt Documents if:

            (i) Debtor breaches its obligation to pay when due any installment
or other amount due or coming due under any of the Debt Documents;

            (ii) Debtor, without the prior written consent of Secured Party,
attempts to or does sell, rent, lease, mortgage, grant a security interest in,
or otherwise transfer or encumber (except for Permitted Liens) any of the
Collateral;

            (iii) Debtor breaches any of its insurance obligations under Section
4;

            (iv) Debtor breaches any of its other obligations under any of the
Debt Documents and fails to cure that breach within thirty (30) days after
written notice from Secured Party;

            (v) Any warranty, representation or statement made by Debtor in any
of the Debt Documents or otherwise in connection with any of the Indebtedness
shall be false or misleading in any material respect;

            (vi) Any of the Collateral is subjected to attachment, execution,
levy, seizure or confiscation in any legal proceeding or otherwise, or if any
legal or administrative proceeding is commenced against Debtor or any of the
Collateral, which in the good faith judgment of Secured Party subjects any of
the Collateral to a material risk of attachment, execution, levy, seizure or
confiscation and no bond is posted or protective order obtained to negate such
risk;

<PAGE>   6

            (vii) Debtor breaches or is in default under any other agreement
between Debtor and Secured Party;

            (viii) Debtor or any guarantor or other obligor for any of the
Indebtedness (collectively "GUARANTOR") dissolves, terminates its existence,
becomes insolvent or ceases to do business as a going concern;

            (ix) If Debtor or any Guarantor is a natural person, Debtor or any
such Guarantor dies or becomes incompetent;

            (x) A receiver is appointed for all or of any part of the property
of Debtor or any Guarantor, or Debtor or any Guarantor makes any assignment for
the benefit of creditors; or

            (xi) Debtor or any Guarantor files a petition under any bankruptcy,
insolvency or similar law, or any such petition is filed against Debtor or any
Guarantor and is not dismissed within forty-five (45) days.

        (b) If Debtor is in default, the Secured Party, at its option, may
declare any or all of the Indebtedness to be immediately due and payable,
without demand or notice to Debtor or any Guarantor. The accelerated obligations
and liabilities shall bear interest (both before and after any judgment) until
paid in full at the lower of eighteen percent (18%) per annum or the maximum
rate not prohibited by applicable law.

        (c) After default Secured Party shall have all of the rights and
remedies of a Secured Party under the Uniform Commercial Code, and under any
other applicable law. Without limiting the foregoing, Secured Party shall have
the right to (i) notify any account debtor of Debtor or any obligor on any
instrument which constitutes part of the Collateral to make payment to the
Secured Party, (ii) with or without legal process, enter any premises where the
Collateral may be and take possession of and remove the Collateral from the
premises or store it on the premises, (iii) sell the Collateral at public or
private sale, in whole or in part, and have the right to bid and purchase at
said sale, or (iv) lease or otherwise dispose of all or part of the Collateral,
applying proceeds from such disposition to the obligations then in default. If
requested by Secured Party, Debtor shall promptly assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to both parties. Secured Party may also render
any or all of the Collateral unusable at the Debtor's premises and may dispose
of such Collateral on such premises without liability for rent or costs. Any
notice that Secured Party is required to give to Debtor under the Uniform
Commercial Code of the time and place of any public sale or the time after which
any private sale or other intended disposition of the Collateral is to be made
shall be deemed to constitute reasonable notice if such notice is given to the
last known address of Debtor at least five (5) days prior to such action.

        (d) Proceeds from any sale or lease or other disposition shall be
applied; first, to all costs of repossession, storage, and disposition including
without limitation attorneys', appraisers', and auctioneers' fees; second, to
discharge the obligations then in default; third, to discharge any other
Indebtedness of Debtor to Secured Party, whether as obligor, endorser,
guarantor, surety or indemnitor, fourth, to expenses incurred in paying or
settling liens and claims against the

<PAGE>   7

Collateral; and lastly, to Debtor, if there exists any surplus. Debtor shall
remain fully liable for any deficiency.

        (e) Debtor agrees to pay all reasonable attorneys' fees and other costs
incurred by Secured Party in connection with the enforcement, assertion, defense
or preservation of Secured Party's rights and remedies under this Agreement or
if prohibited by law, such lesser sum as may be permitted. Debtor further agrees
that such fees and costs shall constitute Indebtedness.

        (f) Secured Party's rights and remedies under this Agreement or
otherwise arising are cumulative and may be exercised singularly or
concurrently. Neither the failure nor any delay on the part of the Secured Party
to exercise any right, power or privilege under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise of that or any other right,
power or privilege. SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS
RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER
SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY
SECURED PARTY. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.

        (g) DEBTOR AND SECURED PARTY UNCONDITIONALLY WAIVE THEIR RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE SUBJECT
MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED PARTY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER
DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

8.      MISCELLANEOUS.

        (a) This Agreement, any Note and/or any of the other Debt Documents may
be assigned, in whole or in part, by Secured Party without notice to Debtor, and
Debtor agrees not to assert against any such assignee, or assignee's assigns,
any defense, set-off, recoupment claim or counterclaim which Debtor has or may
at any time have against Secured Party for any reason whatsoever. Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to confirm in
writing receipt of the notice of assignment as may be reasonably requested by
assignee.

<PAGE>   8

        (b) All notices to be given in connection with this Agreement shall be
in writing, shall be addressed to the parties at their respective addresses set
forth in this Agreement (unless and until a different address may be specified
in a written notice to the other party), and shall be deemed given (i) on the
date of receipt if delivered in hand or by facsimile transmission, (ii) on the
next business day after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified mail. As used
herein, the term "business day" shall mean and include any day other than
Saturdays, Sundays, or other days on which commercial banks in New York, New
York are required or authorized to be closed.

        (c) Secured Party may correct patent errors and fill in all blanks in
this Agreement or in any Collateral Schedule consistent with the agreement of
the parties.

        (d) Time is of the essence of this Agreement. This Agreement shall be
binding, jointly and severally, upon all parties described as the "Debtor" and
their respective heirs, executors, representatives, successors and assigns, and
shall inure to the benefit of Secured Party, its successors and assigns.

        (e) This Agreement and its Collateral Schedules constitute the entire
agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior understandings (whether written, verbal or
implied) with respect to such subject matter. THIS AGREEMENT AND ITS COLLATERAL
SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY COURSE OF CONDUCT, BUT
ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings contained in this
Agreement have been included for convenience only, and shall not affect the
construction or interpretation of this Agreement.

        (f) This Agreement shall continue in full force and effect until all of
the Indebtedness has been indefensibly paid in full to Secured Party. The
surrender, upon payment or otherwise, of any Note or any of the other documents
evidencing any of the Indebtedness shall not affect the right of Secured Party
to retain the Collateral for such other Indebtedness as may then exist or as it
may be reasonably contemplated will exist in the future. This Agreement shall
automatically be reinstated if Secured Party is ever required to return or
restore the payment of all or any portion of the Indebtedness (all as though
such payment had never been made).

        (g) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT.

<PAGE>   9

        IN WITNESS WHEREOF, Debtor and Secured Party, intending to be legally
bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first
aforesaid.

SECURED PARTY:                               DEBTOR:

GENERAL-ELECTRIC CAPITAL CORPORATION         DISCOVERY PARTNERS INTERNATIONAL,
                                             INC.

By: /s/ Barbara B. Kaiser                    By: /s/ Jack Fitzpatrick
    --------------------------------             -------------------------------

Name: Barbara Kaiser                         Name: Jack Fitzpatrick
      ------------------------------               -----------------------------

Title: VP/ General Manager                   Title: CFO
       -----------------------------                ----------------------------

<PAGE>   10

                                    AMENDMENT

        THIS AMENDMENT is made as of the 1st day of November, 1999, between
GENERAL ELECTRIC CAPITAL CORPORATION ("SECURED PARTY") and DISCOVERY PARTNERS
INTERNATIONAL, INC. ("DEBTOR") in connection with that certain MASTER SECURITY
AGREEMENT dated or dated as of November 1, 1999 ("AGREEMENT"). The terms of this
Amendment are hereby incorporated into the Agreement as though fully set forth
therein. Section references below refer to the section numbers of the Agreement.
The Agreement is hereby amended as follows:

        3. COLLATERAL.

        Delete subsection (c) and replace with the following:

               "(c) Debtor shall not, without the prior written consent of
        Secured Party, (i) part with possession of any of the Collateral (except
        to Secured Party or for maintenance and repair), (ii) remove any of the
        Collateral from the address specified in the Collateral Schedule, or
        (iii) sell, rent, lease, mortgage, grant a security interest in or
        otherwise transfer or encumber (except for Permitted Liens) any of the
        Collateral."

        5. REPORTS.

        Delete Section 5 and replace with the following:

        "5.    REPORTS.

               (a) Debtor shall promptly notify Secured Party of (i) any change
        in the name of Debtor, (ii) any relocation of its chief executive
        offices, (iii) any relocation of any of the Collateral, which relocation
        may not be made unless Debtor has obtained the prior written consent of
        Secured Party, (iv) any of the Collateral being lost, stolen, missing,
        destroyed, materially damaged or worn out, or (v) any lien, claim or
        encumbrance other than Permitted Liens attaching to or being made
        against any of the Collateral.

               (b) Debtor will deliver to Secured Party financial statements as
        follows. If Debtor is a privately held company, then Debtor agrees to
        provide monthly financial statements, certified by Debtor's chief
        financial officer including a balance sheet, statement of operations and
        cash flow statement within 30 days of each month end, and its complete
        audited annual financial statements, certified by a recognized firm of
        certified public accountants, at such time as Debtor receives the audit,
        but in no event later than 120 days from Debtor's fiscal year end. If
        Debtor is a publicly held company, then Debtor agrees to provide
        quarterly and annual audited statements, certified by a recognized firm
        of certified public accountants, within 10 days after the statements are
        provided to the Securities and Exchange Commission ("SEC"). All such
        statements are to be prepared using generally accepted accounting
        principles and, if Debtor is a publicly held company, are to be in
        compliance with SEC requirements."

<PAGE>   11

        TERMS USED, BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS
GIVEN TO THEM IN THE AGREEMENT. EXCEPT AS EXPRESSLY AMENDED HEREBY, THE
AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT. IF THERE IS ANY CONFLICT
BETWEEN THE PROVISIONS OF THE AGREEMENT AND THIS AMENDMENT, THEN THIS AMENDMENT
SHALL CONTROL.

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment
simultaneously with Agreement by signature of their respective authorized
representative set forth below.

SECURED PARTY:                               DEBTOR:

GENERAL ELECTRIC CAPITAL CORPORATION         DISCOVERY PARTNERS INTERNATIONAL,
                                             INC.

By: /s/ Barbara B. Kaiser                    By:   /s/ Jack Fitzpatrick
    --------------------------------             -------------------------------

Title: VP/General Manager                    Title: CFO
       --------------------------                   ----------------------------

<PAGE>   12

(3/91)

                            COLLATERAL SCHEDULE NO. 1

THIS COLLATERAL SCHEDULE NO. 1 is annexed to and made a part of that certain
Master Security Agreement dated as of November 1, 1999 between General Electric
Capital Corporation, together with its successors and assigns, if any, as
Secured Party and Discovery Partners International, Inc. as Debtor and describes
collateral in which Debtor has granted Secured Party a security interest in
connection with the Indebtedness (as defined in the Master Security Agreement)
including without limitation that certain Promissory Note dated March 1, 2000 in
the original principal amount of $256,904.52.

              See the attached Exhibit A, which more fully describes the
              equipment on this schedule.

              Note: Equipment is located at:      9640 Towne Centre Drive
                                                  San Diego, CA 92121

SECURED PARTY:                               DEBTOR:

GENERAL-ELECTRIC CAPITAL CORPORATION         DISCOVERY PARTNERS INTERNATIONAL,
                                             INC.

By: /s/ Barbara B. Kaiser                    By: /s/ Jack Fitzpatrick
    --------------------------------             -------------------------------

Name: VP/General Manager                     Name: CFO
      ------------------------------               -----------------------------

Title: 3/1/00                                Title: March 1, 2000
       -----------------------------                ----------------------------

<PAGE>   13

                                 PROMISSORY NOTE

                                  MARCH 1. 2000
                                     (DATE)

--------------------------------------------------------------------------------

                  9640 Towne Centre Drive, San Diego, CA 92121
                               (ADDRESS OF MAKER)

FOR VALUE RECEIVED, DISCOVERY PARTNERS INTERNATIONAL, INC. ("MAKER") promises,
jointly and severally if more than one, to pay to the order of GENERAL ELECTRIC
CAPITAL CORPORATION or any subsequent holder hereof (each, a "PAYEE") at its
office located at 5150 EL CAMINO REAL, SUITE B-21, LOS ALTOS, CA 94022 or at
such other place as Payee or the holder hereof may designate, the principal sum
of TWO HUNDRED FIFTY SIX THOUSAND NINE HUNDRED FOUR DOLLARS 52/100
($256,904.52), with interest on the unpaid principal balance, from the date
hereof through and including the dates of payment, at a fixed interest rate of
13.10% per annum, to be paid in lawful money of the United States, in forty-two
(42) consecutive monthly installments of principal and interest as follows:

<TABLE>
<CAPTION>
         Periodic
        Installment                 Amount
        -----------                 ------
<S>                                <C>
        Monthly                    $7,096.00
</TABLE>

(each "Periodic Installment"), and a final installment which shall be in the
amount of Twenty Five Thousand Six Hundred Ninety Dollars ($25,690.00), plus any
outstanding principal and interest. The first Periodic Installment shall be due
and payable on March 1, 2000 and the following Periodic Installments and the
final installment shall be due and payable on the same day of each succeeding
month (each, a "Payment Date"). Such installments have been calculated on the
basis of a 360 day year of twelve 30-day months. Each payment may, at the option
of the Payee, be calculated and applied on an assumption that such payment would
be made on its due date.

The acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "SECURITY
AGREEMENT").

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful

<PAGE>   14

maximum. If (i) Maker fails to make payment of any amount due hereunder within
ten (10) days after the same becomes due and payable; or (ii) Maker is in
default under, or fails to perform under any term or condition contained in any
Security Agreement, then the entire principal sum remaining unpaid, together
with all accrued interest thereon and any other sum payable under this Note or
any Security Agreement, at the election of Payee, shall immediately become due
and payable, with interest thereon at the lesser of eighteen percent (18%) per
annum or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

Notwithstanding anything to the contrary contained herein or in the Security
Agreement, Maker may not prepay in full or in part any indebtedness hereunder
without the express written consent of Payee in its sole discretion.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
terns of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "OBLIGOR") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this

<PAGE>   15

Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee's actual attorney
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be demed reasonable,

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.

<PAGE>   16

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

                                          Discovery Partners International, Inc.

/s/ Susan M. Sisk                         By:   /s/ Jack Fitzpatrick  (L.S.)
-----------------------------------             --------------------------------
(Witness)                                       (Signature)

Susan M. Sisk                             Jack Fitzpatrick, CFO
-----------------------------------       --------------------------------------
(Print name)                              Print name (and title, if applicable)

203 3rd St. Encinitas, CA                 33-0655706
-----------------------------------       --------------------------------------
(Address)                                 (Federal tax identification number)

<PAGE>   17

                      CERTIFICATE OF DELIVERY/INSTALLATION

Undersigned hereby certifies that all equipment and property covered by a
Security Agreement or Chattel Mortgage dated November 1, 1999 and Note dated
March 1, 2000, between General Electric Capital Corporation (together with its
successors and assigns, if any, "SECURED PARTY") and undersigned has been
delivered to undersigned and found satisfactory, and that any and all
installation has been satisfactorily completed. In order to induce Secured Party
to advance the loan evidenced by such Note, undersigned hereby waives any
defense, counterclaim or offset thereunder as against Secured Party.

                                        DISCOVERY PARTNERS INTERNATIONAL, INC.

                                        By:     /s/ Jack Fitzpatrick
                                                --------------------------------

                                        Title:   CFO
                                                 -------------------------------

                                        Date:    March 1, 2000
                                                 -------------------------------

<PAGE>   18

                                    EXHIBIT A
                      TO COLLATERAL SCHEDULE NO. 01 AND TO
                             UCC FINANCING STATEMENT
        NAMING GENERAL ELECTRIC CAPITAL CORPORATION AS SECURED PARTY AND
                DISCOVERY PARTNERS INTERNATIONAL, INC. AS DEBTOR

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
              VENDOR           INVOICE #   INVOICE    QTY.               DESCRIPTION                 SERIAL #    GECC      AMOUNT
                                             DATE                                                                TAG #    FINANCED
------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>         <C>        <C>   <C>                                      <C>         <C>      <C>
1    Savant Instruments*         11159     06/18/99    1    Speed Vac DDA Concentrator                                     1,275.30
------------------------------------------------------------------------------------------------------------------------------------
2    Hanson Lab Furniture,       99297     06/30/99    14   6' Fume Hoods & (2)8' Walk-In Fume                             7,712.34
     Inc.*                                                  Hoods
------------------------------------------------------------------------------------------------------------------------------------
3    Airgas, Inc.*               603497    08/25/99    6    Victor High Purity Instrument Manifold                           466.54
------------------------------------------------------------------------------------------------------------------------------------
4    Anderson Audio Visual *     101159    08/23/99    1    Audio Visual Equipment                                         1,721.73
------------------------------------------------------------------------------------------------------------------------------------
5    Anderson Audio Visual *     101160    08/23/99    1    Audio Visual Equipment                                         3,852.15
------------------------------------------------------------------------------------------------------------------------------------
6    Haworth, Inc.*             19155342   09/02/99   Lots  Cubicles                                                       5,592.69
------------------------------------------------------------------------------------------------------------------------------------
7    Haworth, Inc.*             19151442   08/28/99   Lots  Assembly for Cubicles                                             94.57
------------------------------------------------------------------------------------------------------------------------------------
                                                            USED Bruker Instruments
                                                            Superconduction NMR Spectrometer
8    Amylin Pharmaceuticals,    990203WC   02/03/99    1    ACP-300 console w/HP 7550 Plotter &
     Inc.*                                                  Software                                   1120                3,000.00
------------------------------------------------------------------------------------------------------------------------------------
9    Vacuubrand, Inc.*            996      08/26/99    1    MD-4C Oilfree Chemical Diaphram Pump   19945003-97               349.97
------------------------------------------------------------------------------------------------------------------------------------
                                                            Multiple Probe demo 215 Liquid
                                                            Handler, IML Syringe, Needle Septum
                                                            Piercing, Multiple Probe Holder/Guide
                                                            Kit, Transfer Tubing Assembly for
                                                            8-Probe 100 UL, Code 205H Racky
10   Gilson, Inc. *              170836    09/02/99    1    w/Covers, code 505H Rack w/Covers         175409               2,343.45
------------------------------------------------------------------------------------------------------------------------------------
11   Hanson Lab Furniture,
     Inc.*                       99359     09/22/99    1    Fume Hoods Ceiling Panels                                         71.62
------------------------------------------------------------------------------------------------------------------------------------
                                                            Multiple Probe demo 215 Liquid
                                                            Handler, IML Syringe, Needle Septum
                                                            Piercing, Multiple Probe Holder/Guide
                                                            Kit, Transfer Tubing Assembly for
                                                            8-Probe 100 UL, Code 205H Racky
12   Gilson, Inc.                174417    12/29/99    1    w/Covers, code 505H Rack w/Covers                             19,589.40
------------------------------------------------------------------------------------------------------------------------------------
13   Shimadzu Scientific         226532    12/27/99    2    High Pressure Liquied Chromatography                          76,196.80
     Instruments                                            System (HPLC)
------------------------------------------------------------------------------------------------------------------------------------
14   Ultronix, Inc.              99448,    12/29/99    1    Solvent Tand w/Zer-O-Coil, Solvent                            25,115.00
                                 99309                      Distillation Unit
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Debtor: /s/JF (initials)     Secured Party: /s/BK (initials)

                                                                          1 of 2

<PAGE>   19

                                    EXHIBIT A
                      TO COLLATERAL SCHEDULE NO. 01 AND TO
                             UCC FINANCING STATEMENT
        NAMING GENERAL ELECTRIC CAPITAL CORPORATION AS SECURED PARTY AND
                DISCOVERY PARTNERS INTERNATIONAL, INC. AS DEBTOR

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
              VENDOR             INVOICE #    INVOICE   QTY.                DESCRIPTION                SERIAL #    GECC     AMOUNT
                                                DATE                                                               TAG #   FINANCED
------------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>          <C>       <C>   <C>                                      <C>         <C>     <C>
15   Haworth, Inc.*              19153355     08/31/99  Lots  Cubicles                                                      1,156.10
------------------------------------------------------------------------------------------------------------------------------------
16   Haworth, Inc.*              19168605     09/23/99  Lots  Cubicles                                                      4,874.28
------------------------------------------------------------------------------------------------------------------------------------
17   Helmut's Fine Furniture
     Shop                         704630      01/14/00    1   Conference Table 66"x17'x6" Oak-Walnut                        8,604.00
------------------------------------------------------------------------------------------------------------------------------------
                                                              78"Hx36"Wx24"D w/ 4Adjustable Shelves,
                                                              4 Equal Doors 18"Hx36"W HPL Top of
18   Persnickety Mfg. Inc.*       99-922      09/01/99   20   Back Only                                                       870.00
------------------------------------------------------------------------------------------------------------------------------------
                                                              Printer Cabinets 30" Hx36"Wx25"D w/l
                                                              Adjustable Shelf, 1" Overhang Front
19   Persnickety Mfg. Inc.*       98-107      09/23/99    3   Edge                                                             88.50
------------------------------------------------------------------------------------------------------------------------------------
20   Persnickety Mfg. Inc.*       98-108      10/08/99   20   Cabinet Locks                                                   700.10
------------------------------------------------------------------------------------------------------------------------------------
                                                              Full Height Storage Cabinets
                                                              78"Hx36"Wx24"D w/ 4Adjustable Shelves,
                                                              4-Equal Doors 18"HX36"W HPL Top of
                                                              Back Only, Cam Locks Key 2 Alike & 5
21   Persnickety Mfg. Inc.*       99-1105     10/05/99   10   Different                                                       470.00
------------------------------------------------------------------------------------------------------------------------------------
                                                              Lab Workbenches 60"Wx15/34"OD
                                                              Depthx32"W/S & 62" (+) H(OD), Butcher
                                                              Block Full Hardwood Tip Finish, (2)
21   Persnickety Mfg. Inc. *      99-1129     10/08/99   22   Equal Flipper Door Upper Cabinets                              1,540.0
------------------------------------------------------------------------------------------------------------------------------------
                                                              Mass Spectrometer, Opt. Tubioionspray
                                                              Brackett Injector, , Cable Null Modem,
22   PE Biosystems               905686,28    12/24/99    1   Digital Serial Port Expansion Card      2089909              91,220.00
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                                 TOTAL   $256,904.52
                                                                                                                         ===========
</TABLE>

                      Number of invoices: 22

 ...and including all additions, attachments, accessories and accessions thereto,
and any and all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof.

Debtor:  /s/JF (initials)           Secured Party:  /s/BK (initials)

                                                                          2 of 2
<PAGE>   20

3007 (3/91)

February 29, 2000

General Electric Capital Corporation
5150 El Camino Real
Suite B-21
Los Altos, CA 94022

Gentlemen/ Ladies:

        You are hereby irrevocably authorized and directed to deliver and apply
the proceeds of your loan to the undersigned evidenced by that Note dated March
1, 2000 and secured by that Security Agreement or Chattel Mortgage dated
November 1, 1999, as follows:

                    $256,904.52         Proceeds from Note

LESS:

                      $7,096.00         First installment payment due March 1,
                                        2000.

                         $90.00         UCC Filing Fee

                     $51,381.00         Due to General Electric Capital
                                        Corporation; to pay for Security
                                        Deposit.

PLUS:

                      $2,569.00         Credit for Commitment Fee refund.
                    -----------

                    $200,906.52         Due to Debtor/ Maker

        This authorization and direction is given pursuant to the same authority
authorizing the above mentioned borrowing.

                                        Discovery Partners International, Inc.

                                        By:

                                        /s/ Jack Fitzpatrick
                                        ----------------------------------------

                                        Title:

                                        CFO
                                        ----------------------------------------

<PAGE>   21

                                 GE CAPITAL LSTF

DISCOVERY PARTNERS INTERNATIONAL, INC.
PRICING
PSM ACCOUNT #: 4099909001
MSA DATED #: 1101/99

                                                      INDEXING
Base Rental Factor:      2.715%                       Indexed bp for bp for
             Yield:      12.15%                       increases on 3-yr.
              Term:      42%                          Treasuries of  8/20/99
           Balloon:      10%

                Co-Terminous Treasuries         Co-Terminous Treasuries for
                for base week ending            CURRENT WEEK ending 02/18/00
                08/20/99

3-YEAR                            5.75%                                6.71%

-----------------------------------------------------------------------------
                    The basis point difference in treasuries is:         +96
-----------------------------------------------------------------------------
                                 The Yield for this schedule is:      13.11%
-----------------------------------------------------------------------------
                                Therefore, the Rental Factor is:      2.762%
-----------------------------------------------------------------------------

<PAGE>   22

    [LOGO]GE CAPITAL LSTF
    5150 El Camino Real, Suite B-21                   CREDIT MEMO NO. 4099909001
    Los Altos, CA  94022
    ph: (650) 404-1600, fax (650) 404-1610

                                                                     CREDIT MEMO
================================================================================

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
    Customer

Name          Discovery Partners International, Inc.    Date         3/1/00
Address       9640 Towne Centre Drive                   Account:     4099909001
              San Diego, CA 92121                       MSA Dated:   11/01/99
Phone         (858) 546-1300
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                         Description                                TOTAL
--------------------------------------------------------------------------------

             First Months' Rent:                                       7,096.00
             UCC Filing Fee(s):                                           90.00

             SECURITY DEPOSIT:
               Equipment (20%):                                       51,381.00
               Softcosts (30%):                                          N/A

      PLUS:
             Prorata Commitment Fee:                                  (2,569.00)
             Credit for Vendor Payments:                            (256,904.52)
--------------------------------------------------------------------------------
                                                          TOTAL    ($200,906.52)
                                                               -----------------

----------------------------------------
    PREFERRED
    PAYMENT
    METHOD
                                                --------------------------------
( )     Check                                   GE Capital, LSTF Use Only
[ ]     Wire Transfer
                                                --------------------------------

Acct. #                                         SCHEDULE START DATE:  3/1/00
       ------------------------------
ABA #
       ------------------------------
    Bank Name
              -----------------------

----------------------------------------

             Please feel free to call our office with any questions.

================================================================================

--------------------------------------------------------------------------------

                          THANK YOU FOR YOUR BUSINESS!

<PAGE>   23

[LOGO]GE CAPITAL LIFE SCIENCE AND TECHNOLOGY FINANCE
PREPARED FOR:                     Discovery Partners International, Inc.
SCHEDULE #:                       4099909001 -01
COMMENCE DATE:                    01-Mar-00            PV OF PAYMENT $256,904.52
PRINCIPAL:                        $256,904.52
IMPLICIT INTEREST RATE:           8.96%
ALL-IN INTEREST RATE:             13.10%
TERM:                             43
ADV or ARR:                       2
        (1=ARR, 2=ADV)

<TABLE>
<CAPTION>
                                                    APPLIED TO  APPLIED TO    REMAINING     REMAINING
 PYMT #       MONTH      PRINCIPAL      PAYMENT      INTEREST   PRINCIPAL     PRINCIPAL        P+I
---------- ------------ ------------- ------------- ----------- ----------- -------------- -------------
<S>        <C>          <C>           <C>           <C>         <C>         <C>            <C>
    1       03/01/00    $256,904.52    $7,096.00    $    0.00   $7,096.00    $249,808.52   $316,626.00
    2       04/01/00     249,808.52     7,096.00     2,727.53    4,368.47     245,440.05    309,530.00
    3       05/01/00     245,440.05     7,096.00     2,679.83    4,416.17     241,023.88    302,434.00
    4       06/01/00     241,023.88     7,096.00     2,631.61    4,464.39     236,559.50    295,338.00
    5       07/01/00     236,559.50     7,096.00     2,582.87    4,513.13     232,046.37    288,242.00
    6       08/01/00     232,046.37     7,096.00     2,533.59    4,562.41     227,483.96    281,146.00
    7       09/01/00     227,483.96     7,096.00     2,483.78    4,612.22     222,871.74    274,050.00
    8       10/01/00     222,871.74     7,096.00     2,433.42    4,662.58     218,209.16    266,954.00
    9       11/01/00     218,209.16     7,096.00     2,382.51    4,713.49     213,495.67    259,858.00
   10       12/01/00     213,495.67     7,096.00     2,331.05    4,764.95     208,730.72    252,762.00
   11       01/01/01     208,730.72     7,096.00     2,279.02    4,816.98     203,913.74    245,666.00
   12       02/01/01     203,913.74     7,096.00     2,226.43    4,869.57     199,044.17    238,570.00
   13       03/01/01     199,044.17     7,096.00     2,173.26    4,922.74     194,121.43    231,474.00
   14       04/01/01     194,121.43     7,096.00     2,119.51    4,976.49     189,144.94    224,378.00
   15       05/01/01     189,144.94     7,096.00     2,065.17    5,030.83     184,114.11    217,282.00
   16       06/01/01     184,114.11     7,096.00     2,010.25    5,085.75     179,028.36    210,186.00
   17       07/01/01     179,028.36     7,096.00     1,954.72    5,141.28     173,887.08    203,090.00
   18       08/01/01     173,887.08     7,096.00     1,898.58    5,197.42     168,689.66    195,994.00
   19       09/01/01     168,689.66     7,096.00     1,841.83    5,254.17     163,435.49    188,898.00
   20       10/01/01     163,435.49     7,096.00     1,784.47    5,311.53     158,123.96    181,802.00
   21       11/01/01     158,123.96     7,096.00     1,726.47    5,369.53     152,754.43    174,706.00
   22       12/01/01     152,754.43     7,096.00     1,667.85    5,428.15     147,326.28    167,610.00
   23       01/01/02     147,326.28     7,096.00     1,608.58    5,487.42     141,838.86    160,514.00
   24       02/01/02     141,838.86     7,096.00     1,548.66    5,547.34     136,291.52    153,418.00
   25       03/01/02     136,291.52     7,096.00     1,488.10    5,607.90     130,683.62    146,322.00
   26       04/01/02     130,683.62     7,096.00     1,426.87    5,669.13     125,014.48    139,226.00
   27       05/01/02     125,014.48     7,096.00     1,364.97    5,731.03     119,283.45    132,130.00
   28       06/01/02     119,283.45     7,096.00     1,302.39    5,793.61     113,489.85    125,034.00
   29       07/01/02     113,489.85     7,096.00     1,239.14    5,856 86     107,632.98    117,938.00
   30       08/01/02     107,632.98     7,096.00     1,175.19    5,920.81     101,712.17    110,842.00
   31       09/01/02     101,712.17     7,096.00     1,110.54    5,985.46      95,726.71    103,746.00
   32       10/01/02      95,726.71     7,096.00     1,045.19    6,050.81      89,675.90     96,650.00
   33       11/01/02      89,675.90     7,096.00       979.12    6,116.88      83,559.03     89,554.00
   34       12/01/02      83,559.03     7,096.00       912.34    6,183.66      77,375.36     82,458.00
   35       01/01/03      77,375.36     7,096.00       844.82    6,251.18      71,124.19     75,362.00
   36       02/01/03      71,124.19     7,096.00       776 57    6,319.43      64,804.75     68,266.00
   37       03/01/03      64,804.75     7,096.00       707.57    6,388.43      58,416.32     61,170.00
   38       04/01/03      58,416.32     7,096.00       637.82    6,458.18      51,958.14     54,074.00
   39       05/01/03      51,958.14     7,096.00       567.30    6,528.70      45,429.44     46,978.00
   40       06/01/03      45,429.44     7,096.00       496.02    6,599.98      38,829.46     39,882.00
   41       07/01/03      38,829.46     7,096.00       423.96    6,672.04      32,157.42     32,786.00
   42       08/01/03      32,157.42     7,096.00       351.11    6,744.89      25,412.53     25,690.00
   43       09/01/03      25,412.53    25,690.00       277.47   25,412.53           0.00          0.00
---------- ------------ ------------- ------------- ----------- ----------- -------------- -------------
TOTAL INTEREST                                                               $ 66,817.48
TOTAL PRINCIPAL                                                               256,904.52
                                                                             -----------
TOTAL RECEIVABLE                              $323,722.00                    $323,722.00
</TABLE>

The above amortization schedule has been prepared using standard amortization
software. You may want to submit a copy of this schedule, along with the
contract documents, to your CPA firm so they can verify that your accounting
records comply with generally accepted accounting principles.

<PAGE>   24

                                    EXHIBIT A
                      TO COLLATERAL SCHEDULE NO. 01 AND TO
                             UCC FINANCING STATEMENT
        NAMING GENERAL ELECTRIC CAPITAL CORPORATION AS SECURED PARTY AND
                DISCOVERY PARTNERS INTERNATIONAL, INC. AS DEBTOR

<TABLE>
<CAPTION>
                                                                                                       ----------------------------
                                                                                                       Columns printed for Check
                                                                                                       Follow-Up and Category Info.
-----------------------------------------------------------------------------------------------------------------------------------
                               INVOICE                                                 GECC   AMOUNT               CHECK  EQMT
         VENDOR      INVOICE #  DATE    QTY.          DESCRIPTION           SERIAL #   TAG #  FINANCED  CHECK NO.   XLD?  CATEGORY
-----------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>       <C>      <C>  <C>                           <C>         <C>  <C>         <C>        <C>    <C>
1   Savant             11159   06/18/99  1   Speed Vac DDA Concentrator                       1,275.30    13540      Y      LFS
    Instruments*
-----------------------------------------------------------------------------------------------------------------------------------
2   Hanson Lab         99297   06/30/99  14  6' Fume Hoods & (2) 8'                           7,712.34   12625,      Y      LFN
    Furniture, Inc.*                         Walk-In Fume Hoods                                           13725
-----------------------------------------------------------------------------------------------------------------------------------
3   Airgas, Inc.*     603497   08/25/99  6   Victor High Purity                                 466.54    14673      Y      LFS
                                             Instrument Manifold
-----------------------------------------------------------------------------------------------------------------------------------
4   Anderson Audio    101159   08/23/99  1   Audio Visual Equipment                           1,721.73    14192      Y      OEQ
    Visual*
-----------------------------------------------------------------------------------------------------------------------------------
5   Anderson Audio    101160   08/23/99  1   Audio Visual Equipment                           3,852.15    14691      Y      OEQ
    Visual*
-----------------------------------------------------------------------------------------------------------------------------------
6   Haworth, Inc.*   19155342  09/02/99 Lots Cubicles                                         5,592.69    14950      Y      OFN
-----------------------------------------------------------------------------------------------------------------------------------
7   Haworth, Inc.*   19151442  08/28/99 Lots Assembly for Cubicles                               94.57    14950      Y      OFN
-----------------------------------------------------------------------------------------------------------------------------------
8   Amylin           990203WC  02/03/99  1   USED Bruker Instruments          1120            3,000.00    10918      Y      LFS
    Pharmaceuticals,                         Superconduction NMR
    Inc.*                                    Spectrometer ACP-300 console
                                             w/HP 7550 Plotter & Software
-----------------------------------------------------------------------------------------------------------------------------------
9   Vacuubrand, Inc.    996    08/26/99  1   MD-4C Oilfree Chemical        19945003-97          349.97    14566      Y      LFS
                                             Diaphram Pump
-----------------------------------------------------------------------------------------------------------------------------------
10  Gilson, Inc.*     170836   09/02/99  1   Multiple Probe demo 215         175409           2,343.45    14819      Y      LFS
                                             Liquid Handler, IML Syringe,
                                             Needle Septum Piercing,
                                             Multiple Probe Holder/Guide
                                             Kit, Transfer Tubing
                                             Assembly for 8-Probe 100 UL,
                                             Code 205H Racky w/Covers,
                                             code 505H Rack w/ Covers
-----------------------------------------------------------------------------------------------------------------------------------
11  Hanson Lab         99359   09/22/99  1   Fume Hoods Ceiling Panels                           71.62    14949      Y      LFN
    Furniture, Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
12  Gilson, Inc.      174417   12/29/99  1   Multiple Probe demo 215                         19,589.40    16577      N      LFS
                                             Liquid Handler, IML Syringe,
                                             Needle Septum Piercing,
                                             Multiple Probe Holder/Guide
                                             Kit, Transfer Tubing
                                             Assembly for 8-Probe 100 UL,
                                             Code 205H Racky w/Covers,
                                             code 505H Rack w/ Covers
-----------------------------------------------------------------------------------------------------------------------------------
13  Shimadzu          226532   12/27/99  2   High Pressure Liquid                            76,196.80    16762      N      LFS
    Scientific                               Chromatography System (HPLC)
    Instruments
-----------------------------------------------------------------------------------------------------------------------------------
14  Ultronix, Inc.   99448,    12/29/99  1   Solvent Tand w/Zer-O-Coil,                      25,115.00    14202,     Y      LFS
                     99309                   Solvent Distillation Unit                                    16130
-----------------------------------------------------------------------------------------------------------------------------------
15  Haworth, Inc.*   19153355  08/31/99 Lots Cubicles                                         1,156.10    14950      Y      OFN
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                                          1 of 2

<PAGE>   25

                                    EXHIBIT A
                      TO COLLATERAL SCHEDULE NO. 01 AND TO
                             UCC FINANCING STATEMENT
        NAMING GENERAL ELECTRIC CAPITAL CORPORATION AS SECURED PARTY AND
                DISCOVERY PARTNERS INTERNATIONAL, INC. AS DEBTOR

<TABLE>
<CAPTION>
                                                                                                           -------------------------
                                                                                                           Columns printed for Check
                                                                                                            Follow-Up and Category
                                                                                                                     Info.
------------------------------------------------------------------------------------------------------------------------------------
                               INVOICE                                         SERIAL   GECC   AMOUNT                 CHECK EQMT
        VENDOR       INVOICE #   DATE   QTY.            DESCRIPTION               #     TAG # FINANCED     CHECK NO.   XLD? CATEGORY
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>       <C>      <C>   <C>                              <C>      <C>   <C>          <C>        <C>   <C>
16 Haworth, Inc.*    19168605  09/23/99 Lots  Cubicles                                            4,874.28    16296,    Y     OFN
                                                                                                              15197
------------------------------------------------------------------------------------------------------------------------------------
17 Helmut's Fine       704630  01/14/00   1    Conference Table 66"x17'x6"                        8,604.00    14573,    Y     OFN
   Furniture Shop                              Oak-Walnut                                                     16540
------------------------------------------------------------------------------------------------------------------------------------
18 Persnickety Mfg.    99-922  09/01/99   20   Full Height Storage Cabinets                         870.00    15223,    Y     OFN
   Inc.*                                       78"Hx36"Wx24"D w/ 4 Adjustable                                 14373
                                               Shelves, 4 Equal Doors 18"Hx36"W
                                               HPL Top of Back Only
------------------------------------------------------------------------------------------------------------------------------------
19 Persnickety Mfg.    98-107  09/23/99   3    Printer Cabinets 30" Hx36"Wx25"D                      88.50    15223,    Y     OFN
   Inc.*                                       w/l Adjustable Shelf, 1"                                       14374
                                               Overhang Front Edge
------------------------------------------------------------------------------------------------------------------------------------
20 Persnickety Mfg.    98-108  10/08/99   20   Cabinet Locks                                        700.10    15223,    Y     OFN
   Inc.*                                                                                                      14375
------------------------------------------------------------------------------------------------------------------------------------
21 Persnickety Mfg.   99-1105  10/05/99   10   Full Height Storage Cabinets                         470.00    15577      Y    OFN
   Inc.*                                       78"Hx36"Wx24"D w/ 4 Adjustable
                                               Shelves, 4-Equal Doors 18"HX36"W
                                               HPL Top of Back Only, Cam Locks
                                               Keys 2 Alike and 5 Different
------------------------------------------------------------------------------------------------------------------------------------
                                               Lab Workbenches 60"Wx15/34"OD
21 Persnickety Mfg.   99-1129  10/08/99   22   Depthx32"W/S & 62" (+) H(OD),                      1,540.00    15154,    Y     LFN
   Inc.*                                       Butcher Block Full Hardwood Tip                                16021
                                               Finish, (2) Equal Flipper Door
                                               Upper Cabinets
------------------------------------------------------------------------------------------------------------------------------------
22 PE Biosystems     90568628  12/24/99   1    Mass Spectrometer, Opt.          2089909          91,220.00    16937      N    LFS
                                               Tubioionspray Brackett Injector,
                                               Cable Null Modem, Digital
                                               Serial Port Expansion Card
------------------------------------------------------------------------------------------------------------------------------------

                                                                                        Total  $256,904.52
                                                                                               ===========

                                                                                                 -----------------------------
                                                                                                    Prepared by:       Date
                                                                                                 -----------------------------
                                                                                                  Leanorg Barrasan   2/20/00
                                                                                                 -----------------------------

                                                                                                 -----------------------------
                                                                                                    Approved by:      Date:
                                                                                                 -----------------------------
                                                                                                    /s/illegible     2/29/00
                                                                                                 -----------------------------
</TABLE>

        Number of invoices: 22

 ...and including all additions, attachments, accessories and accessions thereto,
and any and all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof.

*AMOUNT FINANCIAL REDUCED 10% DUE (COVERAGE OF EQUIPMENT.)

                                                                          2 of 2
<PAGE>   26

                                 GE CAPITAL LSTF

DISCOVERY PARTNERS INTERNATIONAL, INC.
PMS Account# 4099909001                 CREDIT APPROVAL DATE:   October 12, 1999
MSA Dated:   11/01/99                   CREDIT EXPIRATION DATE: October 31, 2000

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                 EQUIPMENT ALLOWANCE SUMMARY
----------------------------------------------------------------------------------------------------------------------------
                                                                                           LEASEHOLDS,
                                              LAB & SCIENTIFIC      CMP, FURNITURE, &      SOFTWARE, &
      SCHEDULE #            START DATE        EQUIPMENT (18%)         SIMILAR (28%)       SIMILAR (54%)        TOTAL
----------------------------------------------------------------------------------------------------------------------------
<S>                         <C>               <C>                   <C>                   <C>                <C>
  ORIGINAL ALLOTMENT                             $216,000.00           $336,000.00           $648,000.00     $1,200,000.00
          1                  03/01/00           ($219,556.46)          ($37,348.06)                $0.00      ($256,904.52)

             SUB-TOTAL                          ($219,556.46)          ($37,348.06)                $0.00      ($256,904.52)

--------------------------------------------------------------------------------------------------------
             REMAINING                            ($3,556.46)          $298,651.94           $648,000.00       $943,095.48
----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Note: Higher value equipment can be substituted for lower value equipment. For
example, excess computer takedowns can be substituted for soft costs. Lab and
scientific equipment can be substituted for any other equipment.

<PAGE>   27

(3/91)

                            COLLATERAL SCHEDULE NO. 2

THIS COLLATERAL SCHEDULE NO. 2 is annexed to and made a part of that certain
Master Security Agreement dated as of November 1, 1999 between General Electric
Capital Corporation, together with its successors and assigns, if any, as
Secured Party and Discovery Partners International, Inc. as Debtor and describes
collateral in which Debtor has granted Secured Party a security interest in
connection with the Indebtedness (as defined in the Master Security Agreement)
including without limitation that certain Promissory Note dated March 1, 2000 in
the original principal amount of $490,246.34.

               See the attached Exhibit A, which more fully describes the
               equipment on this schedule.

               Note: Equipment is located at:      9640 Towne Centre Drive
                                                   San Diego, CA 92121

SECURED PARTY:                                DEBTOR:

GENERAL-ELECTRIC CAPITAL CORPORATION         DISCOVERY PARTNERS INTERNATIONAL,
                                             INC.

By: /s/ Barbara Kaiser                       By: /s/ Jack Fitzpatrick
    --------------------------------             -------------------------------

Name: VP/GM                                  Name: CFO
      ------------------------------               -----------------------------

Title: 3/1/00                                Title: March 1, 2000
       -----------------------------                ----------------------------

<PAGE>   28

                                 PROMISSORY NOTE

                                  MARCH 1, 2000

                                     (DATE)

--------------------------------------------------------------------------------

                   9640 Tome Centre Drive, San Diego, CA 92121
                               (ADDRESS OF MAKER)

FOR VALUE RECEIVED, DISCOVERY PARTNERS INTERNATIONAL, INC. ("MAKER") promises,
jointly and severally if more then one, to pay to the order of GENERAL ELECTRIC
CAPITAL CORPORATION or any subsequent holder hereof (each, a "PAYEE") at its
office located at 5150 EL CAMINO REAL, SUITE B-21, LOS ALTOS, CA 94022 or at
such other place as Payee or the holder hereof may designate, the principal sum
of FOUR HUNDRED NINETY THOUSAND TWO HUNDRED FORTY SIX DOLLARS 34/100
($490,246.34), with interest on the unpaid principal balance, from the date
hereof through and including the dates of payment, at a fixed interest rate of
14.20% per annum, to be paid in lawful money of the United States, in forty-two
(42) consecutive monthly installments of principal and interest as follows:

<TABLE>
<CAPTION>
         Periodic
        Installment                Amount
        -----------                ------
<S>                                <C>
        Monthly                    $14,707.00
</TABLE>

(each "Periodic Installment"), and a final installment which shall be in the
amount of the total outstanding principal and interest. The first Periodic
Installment shall be due and payable on March 1, 2000 and the following Periodic
Installments and the final installment shall be due and payable on the same day
of each succeeding month (each, a "Payment Date"). Such installments have been
calculated on the basis of a 360 day year of twelve 30-day months. Each payment
may, at the option of the Payee, be calculated and applied on an assumption that
such payment would be made on its due date.

The acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full at such time or at any prior or subsequent
time.

The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.

This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which is hereinafter called a "SECURITY
AGREEMENT").

Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
its due date, the Maker agrees to pay, in addition to the amount of each such
installment or other sum, a late payment charge of five percent (5%) of the
amount of said installment or other sum, but not exceeding any lawful

<PAGE>   29

maximum. If (i) Maker fails to make payment of any amount due hereunder within
ten (10) days after the same becomes due and payable; or (ii) Maker is in
default under, or fails to perform under any term or condition contained in any
Security Agreement, then the entire principal sum remaining unpaid, together
with all accrued interest thereon and any other sum payable under this Note or
any Security Agreement, at the election of Payee, shall immediately become due
and payable, with interest thereon at the lesser of eighteen percent (18%) per
annum or the highest rate not prohibited by applicable law from the date of such
accelerated maturity until paid (both before and after any judgment).

Notwithstanding anything to the contrary contained herein or in the Security
Agreement, Maker may not prepay in full or in part any indebtedness hereunder
without the express written consent of Payee in its sole discretion.

It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or any Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or any Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.

The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "OBLIGOR") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this

<PAGE>   30

Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waives
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agrees to pay (if permitted by
law) all expenses incurred in collection, including Payee's actual attorneys'
fees. Maker and each Obligor agrees that fees not in excess of twenty percent
(20%) of the amount then due shall be deemed reasonable.

THE MAKER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS
NOTE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.) THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE, ANY RELATED DOCUMENTS, OR
TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.

This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supercedes all
prior understandings, agreements and representations, express or implied.

No variation or modification of this Note or any waiver of any of its provisions
or conditions, shall be valid unless in writing and signed by an authorized
representative of Maker and Payee. any such waiver, consent, modification or
change shall be effective only in the specific instance and for the specific
purpose given.

<PAGE>   31

Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.

                                          Discovery Partners International, Inc.

/s/ Susan M. Sisk                         By:   /s/ Jack Fitzpatrick (L.S.)
-----------------------------------             --------------------------------
(Witness)                                       (Signature)

Susan M. Sisk                             Jack Fitzpatrick, CFO
-----------------------------------       --------------------------------------
(Print name)                              Print name (and title, if applicable)

203 3rd St, Encinitas, CA                 33-0655706
-----------------------------------       --------------------------------------
(Address)                                 (Federal tax identification number)

<PAGE>   32

(3/91)

                      CERTIFICATE OF DELIVERY/INSTALLATION

Undersigned hereby certifies that all equipment and property covered by a
Security Agreement or Chattel Mortgage dated November 1, 1999 and Note dated
March 1, 2000, between General Electric Capital Corporation (together with its
successors and assigns, if any, "SECURED PARTY") and undersigned has been
delivered to undersigned and found satisfactory, and that any and all
installation has been satisfactorily completed. In order to induce Secured Party
to advance the loan evidenced by such Note, undersigned hereby waives any
defense, counterclaim or offset thereunder as against Secured Party.

                                        DISCOVERY PARTNERS INTERNATIONAL, INC.

                                        By:     /s/ Jack Fitzpatrick
                                                --------------------------------

                                        Title:   CFO
                                                 -------------------------------

                                        Date:    March 1, 2000
                                                 -------------------------------

<PAGE>   33

                                    EXHIBIT A
                      TO COLLATERAL SCHEDULE NO. 02 AND TO
                             UCC FINANCING STATEMENT
        NAMING GENERAL ELECTRIC CAPITAL CORPORATION AS SECURED PARTY AND
                DISCOVERY PARTNERS INTERNATIONAL, INC. AS DEBTOR

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                               INVOICE  QTY.                                  SERIAL   GECC
                VENDOR              INVOICE#    DATE                   DESCRIPTION               #      TAG #    AMOUNT FINANCED
---------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>        <C>      <C>  <C>                              <C>      <C>       <C>
 1   The Irving Hughes Group,        62499     06/24/99  1   Leasehold Improvement for New                         413,946.34
     Inc.*                                                   Facility
---------------------------------------------------------------------------------------------------------------------------------
 2   The Irving Hughes Group,        1550E     08/01/99  1   Leasehold Improvement for New                          2,500.00
     Inc.                                                    Facility
---------------------------------------------------------------------------------------------------------------------------------
 3   The Irving Hughes Group,        1550F     09/01/99      Leasehold Improvement for New                          5,000.00
     Inc.                                                    Facility
---------------------------------------------------------------------------------------------------------------------------------
 4   West Coast Cabling, Inc.         6410     09/10/99  1   Cabling Installation for New                           42,925.00
                                                             Facility
---------------------------------------------------------------------------------------------------------------------------------
 5   West Coast Cabling, Inc.         6415     09/14/99  1   Cabling Installation for New                           3,675.00
                                                             Facility
---------------------------------------------------------------------------------------------------------------------------------
 6   West Coast Cabling, Inc.         6411     09/10/99  1   Cabling for Phone System in                            10,700.0
                                                             New Facility
---------------------------------------------------------------------------------------------------------------------------------
 7   PE Biosystems                  90568628   12/24/99  1   9-Month Service Agreement,       2089909               11,500.00
                                                             Analyst Software V1.0
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Total    $490,246.34
                                                                                                                   ===========
</TABLE>

        Number of invoices: 7

 ...and including all additions, attachments, accessories and accessories
thereto, and any and all substitutions, replacements or exchanges therefore, and
all insurance and/or other proceeds thereof.

*Financed 64% of construction cost overage $(646,791.15).

Debtor:  /s/JF (initials)           Secured Party:  /s/BK (initials)

<PAGE>   34

3007 (3/91)

February 29, 2000

General Electric Capital Corporation
5150 El Camino Real
Suite B-21
Los Altos, CA 94022

Gentlemen/ Ladies:

        You are hereby irrevocably authorized and directed to deliver and apply
the proceeds of your loan to the undersigned evidenced by that Note dated March
1, 2000 and secured by that Security Agreement or Chattel Mortgage dated
November 1, 1999, as follows:

                    $490,246.34         Proceeds from Note

LESS:

                     $14,707.00         First installment payment due March 1,
                                        2000.

                    $147,074.00         Due to General Electric Capital
                                        Corporation, to pay for Security
                                        Deposit.

PLUS:

                      $4,902.00         Credit for Commitment Fee refund.
                    -----------

                    $333,367.34         Due to Debtor/ Maker

        This authorization and direction is given pursuant to the same authority
authorizing the above mentioned borrowing.

                                       DISCOVERY PARTNERS INTERNATIONAL, INC.

                                       By:      /s/ Jack Fitzpatrick
                                                --------------------------------

                                       Title:   CFO
                                                --------------------------------

<PAGE>   35

    [LOGO] GE CAPITAL LSTF
    5150 El Camino Real, Suite B-21                   CREDIT MEMO NO. 4099924001
    Los Altos, CA  94022
    ph: (650) 404-1600, fax (650) 404-1610

                                                                     CREDIT MEMO
================================================================================

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
    Customer
Name          Discovery Partners International, Inc.    Date         3/1/00
Address       9640 Towne Centre Drive                   Account:     4099924001
              San Diego, CA 92121                       MSA Dated:   11/01/99
Phone         (858) 546-1300
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                          Description                               TOTAL
--------------------------------------------------------------------------------

              First Months' Rent:                                     14,707.00
              UCC Filing Fee(s):                                           0.00

              SECURITY DEPOSIT:

                Equipment                                                N/A
                Softcosts                                            147,074.00

       PLUS:
              Prorata Commitment Fee:                                 (4,902.00)
              Credit for Vendor Payments:                           (490,246.34)
--------------------------------------------------------------------------------
                                                         TOTAL     $(333,367.34)
                                                               -----------------

-------------------------------------------
    PREFERRED
    PAYMENT
    METHOD
                                                 -------------------------------
( )     Check                                    GE Capital, LSTF Use Only
[ ]     Wire Transfer
                                                 -------------------------------

Acct. #                                          SCHEDULE START DATE:  3/1/00
       ------------------------------
ABA #
       ------------------------------
    Bank Name
              -----------------------

-------------------------------------------

             Please feel free to call our office with any questions.

================================================================================

--------------------------------------------------------------------------------

                          THANK YOU FOR YOUR BUSINESS!

<PAGE>   36

                                         GE CAPITAL LSTF

DISCOVERY PARTNERS INTERNATIONAL, INC.
PRICING
PMS ACCOUNT #: 4099924001
MSA DATED #: 11/01/99

                                              INDEXING
       Base Rental Factor: 2.955%             Indexed bp for bp for increases on
                    Yield: 13.24%             3-yr. Treasuries of 8/20/99
                     Term: 42
                 Balloon : $1.00

             Co-Terminous Treasuries         Co-Terminous Treasuries for
             for base week ending            CURRENT WEEK ending 02/18/00
             08/20/99

3-Year                            5.75 %                                6.71%
------------------------------------------------------------------------------
                    The basis point difference in treasuries is:          +96
------------------------------------------------------------------------------
                                 The Yield for this schedule is:       14.20%
------------------------------------------------------------------------------
                                Therefore, the Rental Factor is:       3.000%
------------------------------------------------------------------------------

<PAGE>   37

[LOGO] GE CAPITAL LIFE SCIENCE AND TECHNOLOGY FINANCE
PREPARED FOR:                     Discovery Partners International, Inc.
SCHEDULE #:                       4099924001-02
COMMENCE DATE:                    01-Mar-00            PV OF PAYMENT $490,246.34
PRINCIPAL:                        $490,246.34
IMPLICIT INTEREST RATE:           14.20%
ALL-IN INTEREST RATE:             14.20%
TERM:                             43
ADV or ARR:                       2
(1=ARR, 2=ADV)

<TABLE>
<CAPTION>
                                                     APPLIED     APPLIED
                                                        TO         TO         REMAINING     REMAINING
 PYMT #       MONTH      PRINCIPAL      PAYMENT      INTEREST   PRINCIPAL     PRINCIPAL        P+I
---------- ------------ ------------- ------------- ----------- ----------- -------------- -------------
<S>        <C>          <C>           <C>           <C>         <C>         <C>            <C>
    1       03/01/00     $490,246.34    $14,707.00       $0.00  $14,707.00    $475,539.34   $602,988.00
    2       04/01/00      475,539.34     14,707.00    5,629.07    9,077.93     466,461.41    588,281.00
    3       05/01/00      466,461.41     14,707.00    5,521,61    9,185.39     457,276.02    573,574.00
    4       06/01/00      457,276.02     14,707.00    5,412.88    9,294.12     447,981.90    558,867.00
    5       07/01/00      447,981.90     14,707.00    5,302.87    9,404.13     438,577.76    544,160.00
    6       08/01/00      438,577.76     14,707.00    5,191.55    9,515.45     429,062.31    529,453.00
    7       09/01/00      429,062.31     14,707.00    5,078.91    9,628.09     419,434.22    514,746.00
    8       10/01/00      419,434.22     14,707.00    4,964.94    9,742.06     409,692.16    500,039.00
    9       11/01/00      409,692.16     14,707.00    4,849.62    9,857.38     399,834.78    485,332.00
   10       12/01/00      399,834.78     14,707.00    4,732.94    9,974.06     389,860.72    470,625.00
   11       01/01/01      389,860.72     14,707.00    4,614.87   10,092.13     379,768.59    455,918.00
   12       02/01/01      379,768.59     14,707.00    4,495.41   10,211.59     369,557.00    441,211.00
   13       03/01/01      369,557.00     14,707.00    4,374.53   10,332.47     359,224.53    426,504.00
   14       04/01/01      359,224.53     14,707.00    4,252.22   10,454.78     348,769.76    411,797.00
   15       05/01/01      348,769.76     14,707.00    4,128.47   10,578.53     338,191.23    397,090.00
   16       06/01/01      338,191.23     14,707.00    4,003.25   10,703.75     327,487.47    382,383.00
   17       07/01/01      327,487.47     14,707.00    3,876.55   10,830.45     316,657.02    367,676.00
   18       08/01/01      316,657.02     14,707.00    3,748.34   10,958.66     305,698.36    352,969.00
   19       09/01/01      305,698.36     14,707.00    3,618.62   11,088.38     294,609.98    338,262.00
   20       10/01/01      294,609.98     14,707.00    3,487.37   11,219.63     283,390.35    323,555.00
   21       11/01/01      283,390.35     14,707.00    3,354.56   11,352.44     272,037.91    308,848.00
   22       12/01/01      272,037.91     14,707.00    3,220.18   11,486.82     260,551.08    294,141.00
   23       01/01/02      260,551.08     14,707.00    3,084.20   11,622.80     248,928.29    279,434.00
   24       02/01/02      248,928.29     14,707.00    2,946.62   11,760.38     237,167.91    264,727.00
   25       03/01/02      237,167.91     14,707.00    2,807.41   11,899.59     225,268.32    250,020.00
   26       04/01/02      225,268.32     14,707.00    2,666.55   12,040.45     213,227.87    235,313.00
   27       05/01/02      213,227.87     14,707.00    2,524.03   12,182.97     201,044.90    220,606.00
   28       06/01/02      201,044.90     14,707.00    2,379.82   12,327.18     188,717.72    205,899.00
   29       07/01/02      188,717.72     14,707.00    2,233.90   12,473.10     176,244.61    191,192.00
   30       08/01/02      176,244.61     14,707.00    2,086.25   12,620.75     163,623.86    176,485.00
   31       09/01/02      163,623.86     14,707.00    1,936.85   12,770.15     150,853.71    161,778.00
   32       10/01/02      150,853.71     14,707.00    1,785.69   12,921.31     137,932.40    147,071.00
   33       11/01/02      137,932.40     14,707.00    1,632.74   13,074.26     124,858.14    132,364.00
   34       12/01/02      124,858.14     14,707.00    1,477.97   13,229.03     111,629.12    117,657.00
   35       01/01/03      111,629.12     14,707.00    1,321.38   13,385.62      98,243.50    102,950.00
   36       02/01/03       98,243.50     14,707.00    1,162.93   13,544.07      84,699.43     88,243.00
   37       03/01/03       84,699.43     14,707.00    1,002.61   13,704.39      70,995.03     73,536.00
   38       04/01/03       70,995.03     14,707.00      840.38   13,866.62      57,128.42     58,829.00
   39       05/01/03       57,128.42     14,707.00      676.24   14,030.76      43,097.66     44,122.00
   40       06/01/03       43,097.66     14,707.00      510.16   14,196.84      28,900.82     29,415.00
   41       07/01/03       28,900.82     14,707.00      342.11   14,364.89      14,535.92     14,708.00
   42       08/01/03       14,535.92     14,707.00      172.07   14,534.93           0.99          1.00
   43       09/01/03            0.99          1.00        0.01        0.99         (0.00)          0.00
---------- ------------ ------------- ------------- ----------- ----------- -------------- -------------

-------------------------------------------------------------------------------------------------
TOTAL INTEREST                                      $127,448.66
TOTAL PRINCIPAL                                      490,246.34
                                                    -----------
TOTAL RECEIVABLE                   $617,695.00      $617,695.00
</TABLE>

The above amortization schedule has been prepared using standard amortization
software. You may want to submit a copy of this schedule, along with the
contract documents, to your CPA firm so they can verify that your accounting
records comply with generally accepted accounting principles.

<PAGE>   38

                                    EXHIBIT A

                      TO COLLATERAL SCHEDULE NO. 02 AND TO
                             UCC FINANCING STATEMENT
        NAMING GENERAL ELECTRIC CAPITAL CORPORATION AS SECURED PARTY AND
                DISCOVERY PARTNERS INTERNATIONAL, INC. AS DEBTOR

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Columns printed for Check
                                                                                                           Follow-Up and Category
                                                                                                                   Info.
------------------------------------------------------------------------------------------------------------------------------------
                                INVOICE                                     SERIAL    GECC       AMOUNT               CHECK   EQMT
        VENDOR        INVOICE #   DATE    QTY.        DESCRIPTION              #      TAG #     FINANCED   CHECK NO.   XLD? CATEGORY
------------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>       <C>       <C>  <C>                          <C>       <C>     <C>          <C>        <C>   <C>
1  The Irving Hughes    62499    06/24/99  1   Leasehold Improvement for                       413,946.34    13359      Y     BFX
   Group, Inc.*                                New Facility
------------------------------------------------------------------------------------------------------------------------------------
2  The Irving Hughes    1550E    08/01/99  1   Leasehold Improvement for                        25,000.00    14239      Y     BFX
   Group, Inc.                                 New Facility
------------------------------------------------------------------------------------------------------------------------------------
3  The Irving Hughes    1550F    09/01/99  1   Leasehold Improvement for                         5,000.00    14628      Y     BFX
   Group, Inc.                                 New Facility
------------------------------------------------------------------------------------------------------------------------------------
4  West Coast Cabling,  6410     09/10/99  1   Cabling Installation for New                     42,925.00   13360,      Y     BFX
   Inc.                                        Facility                                                     13672,
                                                                                                            14668,
                                                                                                             14758
------------------------------------------------------------------------------------------------------------------------------------
5  West Coast Cabling,  6415     09/14/99  1   Cabling Installation for New                      3,675.00   13360,             BFX
   Inc.                                        Facility                                                      13672
                                                                                                            14668,
                                                                                                             14758
------------------------------------------------------------------------------------------------------------------------------------
6  West Coast Cabling,  6411     09/10/99  1   Cabling for Phone System in                      10,700.00   13360,      Y      BFX
   Inc.                                        New Facility                                                 13672,
                                                                                                            14668,
                                                                                                             14759
------------------------------------------------------------------------------------------------------------------------------------
                                               9-Month Service Agreement,
7  PE Biosystems        9056828  12/24/99  1   Analyst Software V1.0         2089909            11,500.00    16937      N      SAP
------------------------------------------------------------------------------------------------------------------------------------

                                                                                        Total $490,246.34
                                                                                              ===========

                                                                                             ---------------------------------
                                                                                             Prepared By             Date:
                                                                                             ---------------------------------
                                                                                             Leanora Barragan        2/29/00
                                                                                             ----------------------- ---------

                                                                                             ---------------------------------
                                                                                             Approved by:            Date:
                                                                                             ---------------------------------
                                                                                             /s/illegible            2.29.00
                                                                                             ---------------------------------
</TABLE>

        Number of invoices: 7

 ...and including all additions, attachments, accessories and accessions thereto,
and any and all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof.

*Financed 64% of construction cost average ($646,791.15).

<PAGE>   39

                                 GE CAPITAL LSTF

DISCOVERY PARTNERS INTERNATIONAL, INC.  CREDIT APPROVAL DATE:   OCTOBER 12, 1999

PMS Account#  4099924001                CREDIT EXPIRATION DATE: OCTOBER 31, 2000

MSA Dated:    11/01/99

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
                                                 EQUIPMENT ALLOWANCE SUMMARY
-----------------------------------------------------------------------------------------------------------------------------
                                             Lab & Scientific    CMP, Furniture, &   Leaseholds, Software,
      SCHEDULE #            Start Date       Equipment (18)%       Similar (28)%        & Similar (54)%          TOTAL
-----------------------------------------------------------------------------------------------------------------------------
<S>                         <C>              <C>                 <C>                 <C>                       <C>
ORIGINAL ALLOTMENT                                  $216,000.00          $336,000.00            $648,000.00    $1,200,000.00
        1                          03/01/00       $(219,556.46)         $(37,348.06)                  $0.00    $(256,904.52)
        2                          03/01/00               $0.00                $0.00          $(490,246.34)    $(490,246.34)

              SUBTOTAL                            $(219,556.46)         $(37,348.06)          $(490,246.34)    $(747,150.86)

-----------------------------------------------------------------------------------------------------------------------------
             Remaining                              $(3,556.46)          $298,651.94            $157,753.66      $452,849.14
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Note: Higher value equipment can be substituted for lower value equipment. For
example, excess computer takedowns can be substituted for soft costs. Lab and
scientific equipment can be substituted for any other equipment.<PAGE>   1
                                                                   EXHIBIT 10.39

                          STRATEGIC ALLIANCE AGREEMENT

                                     BETWEEN

                          BRISTOL-MYERS SQUIBB COMPANY

                                       AND

                                      IRORI

                            DATED AS OF MAY 22, 1998

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>     <C>                                                                               <C>
1.      DEFINITIONS.........................................................................1
        1.1    "Acceptance Date"............................................................1
        1.2    "Affiliate"..................................................................1
        1.3    "BMS Resins".................................................................2
        1.4    "Development Committee"......................................................2
        1.5    "Development Milestone"......................................................2
        1.6    "Effective Date".............................................................2
        1.7    "Enhancement"................................................................2
        1.8    "Enhancement Specifications".................................................2
        1.9    "Facility"...................................................................2
        1.10   "Initial Delivery Deadline"..................................................2
        1.11   "NanoKan"....................................................................2
        1.12   "NanoKan Specifications".....................................................3
        1.13   "Party"......................................................................3
        1.14   "Purchase Price".............................................................3
        1.15   "Right and License"..........................................................3
        1.16   "Software"...................................................................3
        1.17   "System".....................................................................3
        1.18   "System Specifications"......................................................3
        1.19   "Third Party"................................................................3
        1.20   "Update".....................................................................3

2.      MANUFACTURE; DELIVERY; OPTION.......................................................3
        2.1    Generally....................................................................4
        2.2    Satisfaction of Development Milestones, etc.; Acceptance; Rejection..........4
        2.3    Delivery; Installation.......................................................5
        2.4    Identification; Passage of Title.............................................5
        2.5    Option to Purchase Additional System.........................................5

3.      DEVELOPMENT COMMITTEE...............................................................7
        3.1    Members......................................................................7
        3.2    Responsibilities.............................................................7
        3.3    Meetings.....................................................................7
        3.4    Decisions....................................................................8
        3.5    Term.........................................................................8
        3.6    Expenses.....................................................................8

4.      INITIAL SYSTEM PURCHASE PRICE; PAYMENT..............................................8
        4.1    Initial System Purchase Price................................................8
        4.2    Payment Schedule.............................................................9
        4.3    Mode of Payment; Taxes.......................................................9

5.      INTELLECTUAL PROPERTY; UPDATES......................................................9
        5.1    Invention Ownership..........................................................9
</TABLE>

                                       i
<PAGE>   3

                                TABLE OF CONTENTS
                                   (Continued)

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>     <C>                                                                               <C>
        5.2    Title Does Not Pass; Right and License.......................................9
        5.3    Updates.....................................................................10
        5.4    Enhancements................................................................10
        5.5    Installation................................................................11
        5.6    Source Code.................................................................11

6.      SUPPORT; TRAINING..................................................................12
        6.1    Support and Maintenance.....................................................12
        6.2    Training....................................................................12

7.      SUPPLY AND PURCHASE................................................................12
        7.1    Initial Obligations.........................................................12
        7.2    Requirements................................................................13
        7.3    Orders......................................................................13
        7.4    Delivery....................................................................13
        7.5    Quality Control.............................................................14
        7.6    Acceptance; Rejection.......................................................14
        7.7    Interim Replacement.........................................................14
        7.8    Replacement of BMS Resins...................................................15
        7.9    Invoicing; Payment..........................................................15
        7.10   Allocation..................................................................15
        7.11   Right to Manufacture........................................................16
        7.12   BMS's Right to Manufacture..................................................16

8.      REPRESENTATIONS AND WARRANTIES; COVENANTS..........................................16
        8.1    Representations and Warranties of Both Parties..............................16
        8.2    Representations and Warranties of IRORI.....................................17
        8.3    Limited Right of Repair.....................................................17
        8.4    Disclaimer of Warranty......................................................18
        8.5    Covenants of BMS............................................................18

9.      THIRD PARTIES......................................................................18
        9.1    Semi-Exclusivity............................................................18
        9.2    Most Favored Nation.........................................................18
        9.3    Audit Request...............................................................19

10.     INDEMNIFICATION....................................................................19
        10.1   Obligation to Indemnify.....................................................20
        10.2   Notice......................................................................20
        10.3   Complete Indemnification....................................................20
        10.4   Insurance...................................................................20
        10.5   Partial Limitation on IRORI Indemnity.......................................20
</TABLE>

                                       ii
<PAGE>   4

                                TABLE OF CONTENTS
                                   (Continued)

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>     <C>                                                                               <C>
11.     CONFIDENTIALITY....................................................................21
        11.1   Confidential Information....................................................21
        11.2   Permitted Disclosures.......................................................21
        11.3   Remedies....................................................................21

12.     TERM; TERMINATION..................................................................22
        12.1   Term........................................................................22
        12.2   Termination by BMS..........................................................22
        12.3   Breach......................................................................22
        12.4   Effect of Termination.......................................................23
        12.5   Accrued Rights, Surviving Obligations.......................................23

13.     FORCE MAJEURE......................................................................24
        13.1   Events of Force Majeure.....................................................24

14.     MISCELLANEOUS......................................................................24
        14.1   Non-Solicitation............................................................24
        14.2   Relationship of Parties.....................................................24
        14.3   Assignment..................................................................25
        14.4   Binding Effect..............................................................25
        14.5   Further Actions.............................................................25
        14.6   Costs and Expenses..........................................................25
        14.7   Inconsistency...............................................................25
        14.8   Notice......................................................................26
        14.9   Use of Name.................................................................26
        14.10  Public Announcements........................................................26
        14.11  Waiver......................................................................27
        14.12  Severability................................................................27
        14.13  Amendment...................................................................27
        14.14  Governing Law...............................................................27
        14.15  Arbitration.................................................................27
        14.16  Limitation on Liability.....................................................28
        14.17  Entire Agreement............................................................28
        14.18  Counterparts................................................................28
        14.19  Descriptive Headings........................................................28
</TABLE>

                                    EXHIBITS

EXHIBIT A  SYSTEM AND NANOKAN SPECIFICATIONS AND MILESTONES

EXHIBIT B  PROGRESS PAYMENT SCHEDULE

EXHIBIT C  DESCRIPTION OF INSURANCE COVERAGE

                                      iii
<PAGE>   5

                          STRATEGIC ALLIANCE AGREEMENT

        THIS STRATEGIC ALLIANCE AGREEMENT (this "Agreement") dated as of May 22,
1998 by and between Bristol-Myers Squibb Company, a corporation duly organized
and existing under the laws of the State of Delaware, having offices at P.O. Box
4000, Route 206 and Province Line Road, Princeton, New Jersey 08543-4000, for
and on behalf of itself and its Affiliates ("BMS"), and IRORI, a corporation
duly organized and existing under the laws of the State of California, having
offices at 11149 North Torrey Pines Road, La Jolla, California 92037-1030
("IRORI").

                             PRELIMINARY STATEMENTS

        A. BMS is a pharmaceutical company that engages in the discovery and
development of new drug products.

        B. IRORI has developed directed sorting combinatorial chemistry systems
that use microreactors and miniature electronic tags.

        C. BMS wishes to purchase from IRORI and secure a license from IRORI
with respect to, and IRORI wishes to manufacture and sell to BMS and grant a
license to BMS with respect to, a System, upon the terms and conditions set
forth in this Agreement.

        D. In addition, BMS wishes to purchase from IRORI, and IRORI wishes to
sell to BMS, a quantity of NanoKans, also upon the terms and conditions set
forth in this Agreement.

        E. In conjunction with the execution of this Agreement, the Parties are
entering into that certain Series D Preferred Stock Purchase Agreement, dated as
of the Effective Date (the "Stock Purchase Agreement"), and such other
agreements as are contemplated thereby.

        NOW, THEREFORE, in consideration of the foregoing Preliminary Statements
and the mutual covenants and agreements of the Parties contained in this
Agreement, the Parties agree as follows:

1. DEFINITIONS.

        As used in this Agreement, the following terms will have those meanings
set forth in this Section 1 unless the context dictates otherwise.

        1.1 "Acceptance Date" shall mean, with respect to a System or an
Enhancement, the date on which BMS accepts such System or Enhancement in
accordance with Section 2.2 or 5.4, as the case may be.

        1.2 "Affiliate", with respect to any party, shall mean any entity
controlling, controlled by, or under common control with, such Party (but only
so long as such control relationship exists). For these purposes, "control"
shall refer to (i) the possession, directly or indirectly, of the power to
direct the management or policies of an entity, whether through the ownership of
voting

<PAGE>   6

securities, by contract or otherwise or (ii) the ownership, directly or
indirectly, of at least 50% of the voting securities or other ownership interest
of an entity.

        1.3 "BMS Resins" shall have the meaning assigned thereto in Section
7.1(b).

        1.4 "Development Committee" shall have the meaning assigned thereto in
Section 3.1.

        1.5 "Development Milestone" shall mean each of the milestones set forth
on Exhibit A attached.

        1.6 "Effective Date" shall mean the date first written above.

        1.7 "Enhancement" shall mean any upgrade or improvement to the System
that materially improves its utility, efficiency or efficacy and that is not
primarily intended to correct or avoid errors, malfunctions or defects in the
System.

        1.8 "Enhancement Specifications" shall mean, with respect to any
Enhancement, written specifications that set forth with specificity the quality
and degree of improvement to the System that such Enhancement provides.

        1.9 "Facility" shall mean a facility in the continental United States
selected by BMS at its sole discretion pursuant to Section 2.3.

        1.10 "Initial Delivery Deadline"shall mean   ***   .

        1.11 "NanoKan" shall mean IRORI's proprietary microreactor for solid
phase synthesis that conforms to the NanoKan Specifications.

        1.12 "NanoKan Specifications" shall mean the specifications set forth in
Exhibit A attached which relate to NanoKans (including, without limitation, the
percentage of BMS Resins supplied to IRORI for incorporation into a shipment(s)
of NanoKans that actually is incorporated into such shipment(s)), as may be
amended by the Development Committee from time to time.

        1.13 "Party" shall mean BMS or IRORI and, when used in the plural, shall
mean BMS and IRORI.

        1.14 "Purchase Price" shall mean the Initial System Purchase Price (as
such term is defined in Section 4.1), the Second System Purchase Price (as such
term as defined in Section 2.5) and the Enhancement Purchase Price(s) (as such
term is defined in Section 5.4), either individually or collectively, as context
dictates.

        1.15 "Right and License" shall have the meaning assigned thereto in
Section 5.2.

        1.16 "Software" shall mean all of the software adapted or incorporated
into the system from time to time.

*** Portions of this page have been omitted pursuant to a request for
    Confidential Treatment and filed separately with the Commission

                                       2
<PAGE>   7

        1.17 "System" shall mean IRORI's proprietary NanoKan Reactor System,
including all hardware, equipment, Software and other components and any Updates
or Enhancements provided to BMS pursuant to Section 5.3 or 5.4. Except to the
extent context dictates otherwise, "System" shall include both the Initial
System (as defined in Section 2.1) and the Second System (as defined in Section
2.5).

        1.18 "System Specifications" shall mean the specifications set forth on
Exhibit A attached relating to the System, as may be amended by the Development
Committee from time to time.

        1.19 "Third Party" shall mean any Person who or which is neither a Party
nor an Affiliate of a Party.

        1.20 "Update" shall mean with any update, upgrade or improvement to the
System other than Enhancements.

2. MANUFACTURE; DELIVERY; OPTION.

        2.1 Generally. On or before the Initial Delivery Deadline, IRORI shall
manufacture, deliver and install at the Facility, in accordance with the System
Specifications and the terms of this Agreement, one System (the "Initial
System"). During the period between the Effective Date and the date on which the
initial System is delivered to the Facility, IRORI shall use its best commercial
efforts to diligently fulfill its obligations under this Agreement and to
satisfy each Development Milestone in a timely and expeditious manner and by the
target completion date set forth on Exhibit A with respect to such Development
Milestone.

        2.2 Satisfaction of Development Milestones, etc.; Acceptance; Rejection.

               (a) (i) IRORI shall give BMS notice promptly after IRORI believes
that it has satisfied each Development Milestone with respect to the Initial
System. For a period of *** (a "Testing Period") after the date of each such
notice, BMS shall have the right to test the Initial System, as it then exists,
at IRORI's site to verify that such Development Milestone has been satisfied
(using the Development Milestone Criteria). BMS shall use reasonable efforts to
expedite the performance of such testing.

                      (ii) If, prior to the expiration of any Testing Period,
BMS fails to notify IRORI that such Development Milestone has not been
satisfied, then such Development Milestone shall be deemed to have been
satisfied.

                      (iii) If such testing indicates that such Development
Milestone has not been satisfied, then prior to the expiration of the Testing
Period, BMS shall notify IRORI of such non-satisfaction in sufficient detail to
allow IRORI to attempt to remedy it. During the   ***   period following receipt
of any such notice, IRORI shall use its best commercial efforts to satisfy such
Development Milestone. If BMS reasonably determines, within  ***  after such ***
period, that such Development Milestone still has not been satisfied, then BMS
shall he excused

*** Portions of this page have been omitted pursuant to a request for
    Confidential Treatment and filed separately with the Commission

                                       3
<PAGE>   8

temporarily from its obligation to make the payment of the Initial System
Purchase Price that pertains to such Development Milestone under Section 4.2,
until such Development Milestone has been achieved. If BMS fails to notify IRORI
that such Development Milestone has not been satisfied prior to the expiration
of such  ***  period, then such Development Milestone shall be deemed to have
been satisfied.

               (b) (i) On or before the Initial Delivery Deadline, IRORI shall
manufacture the Initial System and have it ready at IRORI's factory for testing
pursuant to this Section 2.2(b), IRORI shall give BMS notice (a "Readiness
Notice") promptly after IRORI believes that the Initial System has been
completed and is ready for delivery. BMS shall have the right, as promptly as
possible after the date of each Readiness Notice, and in any event not more than
*** after the date of such notice, to test the Initial System to verify that the
Initial System conforms to the System Specifications (using testing protocols
developed by the Development Committee).

                      (ii) If, prior to the expiration of such  ***  period, BMS
fails to notify IRORI that the Initial System does not conform to the System
Specifications, then the Initial System shall be deemed to conform to the System
Specifications, and BMS shall be deemed to have accepted the Initial System.

                      (iii) If such testing indicates that the Initial System
does not conform to the System Specifications, then prior to the expiration of
such  ***  period, BMS shall notify IRORI of such non-conformity in sufficient
detail to allow IRORI to attempt to remedy it. During the  ***  period following
receipt of any such notice, IRORI shall use its best commercial efforts to bring
the Initial System into conformity with the System Specifications. If BMS
reasonably determines, within  *** after such  ***  period, that the Initial
System still does not conform to the System Specifications, then BMS shall be
entitled to reject the Initial System by notice to IRORI, in addition to any
other rights BMS may have under this Agreement, at law or in equity. If BMS
fails to notify IRORI that the Initial System does not conform to the System
Specifications prior to the expiration of such  ***  period; then the Initial
System shall be deemed to conform to the System Specifications, and BMS shall be
deemed to have accepted the Initial System.

               (c) Notwithstanding Section 14.15, any dispute arising between
the Parties as to whether a Development Milestone has been satisfied or the
Initial System conforms to the System Specifications shall finally be determined
by the Development Committee in accordance with Section 3.4.

        2.3 Delivery; Installation.

               (a) Within  ***  after BMS's receiving a Readiness Notice with
respect to the Initial System, BMS shall notify IRORI of the location of the
Facility and of any special delivery instructions. The Parties shall cooperate
in coordinating the delivery and installation of the

*** Portions of this page have been omitted pursuant to a request for
    Confidential Treatment and filed separately with the Commission

                                       4
<PAGE>   9

Initial System at the Facility. IRORI shall install the Initial System at the
Facility in accordance with BMS's reasonable instructions and the System
Specifications.

               (b) BMS shall have the right, as promptly as possible after
installation of the Initial System but in any event not more than *** after
IRORI's installation of the initial System at the Facility, to verify that the
Initial System continues to conform to the System Specifications. To the extent
it does not, IRORI shall promptly bring the Initial System into such conformity.

        2.4 Identification; Passage of Title. The Initial System shall be
identified to this Agreement as of the Effective Date. IRORI shall bear the risk
of any loss, deterioration or damage until the Initial System has been delivered
and installed at the Facility in accordance with the term of this Agreement.
Except as provided in Section 5.2, title to the Initial System shall pass to BMS
upon delivery and installation of the Initial System at the Facility in
accordance with the terms of this Agreement.

        2.5 Option to Purchase Additional System.

               (a) At any time prior to   ***    ***  , BMS shall have an option
to purchase a second System (the "Second System"). The total purchase price (the
"Second System Purchase Puce") payable by BMS in consideration of IRORI's
manufacture, delivery and installation of the Second System by IRORI, and the
Right and License with respect to the Second System that will be effective upon
the Acceptance Date with respect thereto, shall be   ***  ; provided, however,
that if the Acceptance Date with respect to the Second System is delayed more
than   ***   (such period, as may be extended as provided below, the "Grace
Period") after the Second Delivery Deadline (as defined herein), the Second
System Purchase Price shall be reduced by   ***   (calculated without regard to
any previous reductions) for each   ***   (of portion thereof) that such
Acceptance Date is delayed beyond the Grace Period, except to the extent that
BMS causes any such delay. The Parties acknowledge and agree that BMS's testing
of the Second System in accordance with Section 2.2 shall not constitute delay.
If the Grace Period has not expired at the time IRORI sends a Readiness Notice
with respect to the Second System, then the Grace Period shall be extended (or,
as the case may be, any period of delay of the Acceptance Date with respect to
the Second System beyond the expiration of the Grace Period shall be tolled),
day-for-day, for each day that elapses between BMS's receipt of any Readiness
Notice and completion of BMS's inspection of the Second System pursuant to
Section 2.2(b)(i) (as such Section relates to the Second System pursuant to
Section 2.5(d)). BMS shall notify IRORI Promptly of the completion of any such
inspection.

               (b) BMS may exercise such option by delivering a notice (the
"Option Exercise Notice") to IRORI. The Option Exercise Notice shall set forth
the date on which BMS expects IRORI to deliver a Readiness Notice with respect
to the Second System (the "Second Delivery Deadline"), which shall not be sooner
than        ***         ***

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***   Following receipt of an Option Exercise Notice, IRORI shall use its best
commercial efforts to diligently manufacture, deliver and install the Second
System in a timely and expeditious manner. The Second System shall be identified
to this Agreement as of the date of the Option Exercise Notice.

               (c) BMS shall pay the Second System Purchase Price according to
the following schedule:

                      (i)   ***   shall be paid in conjunction with delivery of
the Option Exercise Notice;

                      (ii)   ***   shall be paid within 45 days after the
Acceptance Date with respect to the Second System; and

                      (iii)   ***   shall be paid within 45 days after BMS's
verification, pursuant to Section 2.3(b), that the Second System conforms to the
System Specifications.

In the event that BMS rejects the Second System pursuant to Section 2.2(b)(iii),
BMS shall be excused from making any further payment of the Second System
Purchase Price.

               (d) Except as expressly set forth in this Section 2.5, Sections
2.2(b), 2.3 and 2.4 shall apply to IRORI's manufacture, delivery and
installation of the Second System as well as to its manufacture, delivery and
installation of the Initial System; provided, however, that the   ***   periods
referred to in Sections 2.2(b) and 2.3(b) shall be reduced to   ***   with
respect to the Second System, so long as IRORI shall have given BMS at least ***
prior notice as to the date on which the Readiness Notice with respect to the
Second System will be delivered.

3. DEVELOPMENT COMMITTEE.

        3.1 Members. The Parties shall establish the Development Committee (the
"Development Committee"), which shall be comprised of six members, three
representatives designated by each Party. Members of the Development Committee
may be represented at any meeting by a designee appointed by such member for
such meeting. The chairperson of the Development Committee shall be designated
annually on an alternating basis between the Parties. The initial chairperson
shall be selected by BMS. The Party not designating the chairperson shall
designate one of its representative members as secretary to the Development
Committee for such year. Each Party shall be free to change its representative
members, on notice to the other Party.

        3.2 Responsibilities. The Development Committee shall be responsible
for:

               (a) developing, reviewing and modifying, from time to time,
testing protocols for all Systems and Enhancements;

               (b) reviewing and modifying, from time to time, the System
Specifications, Enhancement Specifications and NanoKan Specifications;

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               (c) developing, reviewing and modifying, from time to time,
criteria (the "Development Milestone Criteria") for determining whether each of
the Development Milestones has been satisfied; and

               (d) overseeing the testing of all Systems prior to the delivery
thereof.

The Development Committee shall use its best efforts to develop the testing
protocols for the Initial System and the Development Milestone Criteria not
later than 90 days after the Effective Date.

        3.3 Meetings. The Development Committee shall meet at such times and in
such places as the Parties shall agree. Meetings may also be called by either
Party, on 10 days' written notice to the other unless such notice is waived by
the Parties. The meetings shall alternate between the offices of the Parties
unless the Parties otherwise agree. The chairperson shall be responsible for
sending notices of meetings to all members. The Development Committee may also
convene or be polled or consulted from time to time by means of
telecommunications, video conferences or correspondence, as deemed necessary or
appropriate.

        3.4 Decisions.

               (a) All decisions of the Development Committee shall be made by
unanimous agreement of the members (or their designees) present in person or by
telephone at any meeting, provided that at least one representative of each
Party is present at such meeting.

               (b) In the event that unanimity cannot be reached by the
Development Committee with respect to a matter that is subject to its
decision-making authority, then the matter shall be referred for further review
and resolution to the Vice President, Chemistry, at BMS, or such other similar
position designated by BMS from time to time, and the Vice President, Business
Development, at IRORI, or such other similar position designated by IRORI from
time to time. Such designated officers of each Party shall use reasonable
efforts to resolve the matter within 30 days after the matter is referred to
them. If they cannot resolve the matter within 30 days, the matter shall be
referred for further review and resolution to the President of BMS's
Pharmaceutical Research Institute, or such other similar position designated by
BMS from time to time, and IRORI's Chief Executive Officer, or such other
similar position designated by IRORI from time to time. Such designated officers
of each Party shall use reasonable efforts to resolve the matter within 30 days
after the matter is referred to them. If they cannot resolve the matter within
30 days, then the matter shall be decided by the President of BMS's
Pharmaceutical Research Institute, or such other similar position designated by
BMS from time to time, in good faith, giving appropriate consideration to the
reasonable business, scientific and technical feasibility concerns of IRORI.

               (c) All decisions of the Development Committee or the designated
officer(s) of the Party(ies) made in accordance with the procedures set forth in
this Section 3.4 shall be final and binding upon the Parties and shall only he
appealable by either of the Parties if not made in good faith or, to the extent
applicable, with appropriate consideration of reasonable business, scientific
and technical feasibility concerns.

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<PAGE>   12

        3.5 Term. The Development Committee shall exist for such period as
necessary to perform the responsibilities assigned to it under this Agreement.

        3.6 Expenses. Each Party shall be responsible for all travel and related
costs for its representatives to attend meetings of, and otherwise participate
on, the Development Committee.

4. INITIAL SYSTEM PURCHASE PRICE; PAYMENT.

        4.1 Initial System Purchase Price. The total purchase price (the
"Initial System Purchase Price") payable by BMS in consideration of IRORI's
manufacture, delivery and instillation of the Initial System by IRORI, and the
Right and License with respect thereto that will be effective upon the
Acceptance Date with respect to the Initial System, shall be $4,000,000.
Notwithstanding any other provision of this Agreement, IRORI shall not be
entitled to receive any consideration beyond the amount of the Initial System
Purchase Price in connection with such manufacture, delivery and installation,
except pursuant to Section 5.4.

        4.2 Payment Schedule. BMS shall pay the Initial System Purchase Price
upon the occurrence of the events set forth on Exhibit A (each such event, a
"Development Milestone") and in accordance with the progress payment schedule
set forth on Exhibit B attached. Each progress payment shall be made within 30
days after the satisfaction of the relevant Development Milestone as provided in
Section 2.2, without the need for IRORI to submit an invoice therefor to BMS.

        4.3 Mode of Payment; Taxes. BMS shall make all payments required under
this Agreement as directed by IRORI from time to time in U.S. Dollars. BMS shall
pay all federal, state and local sales, use, property, excise or other taxes
imposed on or with respect to the manufacture, delivery and installation of the
Systems, except taxes levied on IRORI's net income.

5. INTELLECTUAL PROPERTY; UPDATES.

        5.1 Invention Ownership. IRORI shall own all inventions, processes,
improvements, works of authorship, technology, ideas, data and know-how, whether
or not entitled to patent or copyright protection, that arise from IRORI's
performance of its obligation to manufacture the System (collectively,
"inventions"). The Parties agree that any Inventions shall not constitute "works
made for hire" under U.S. copyright law.

        5.2 Title Does Not Pass; Right and License. Notwithstanding any other
provision of this Agreement, title to any Software, Inventions and other
proprietary intellectual property of IRORI adapted or incorporated into the
System, Updates (as such term is defined herein) or Enhancements (collectively,
the "IRORI Intellectual property") shall not pass to BMS. Instead, to the extent
necessary, IRORI hereby grants BMS (effective upon the Acceptance Date with
respect to each System) a non-exclusive, paid-up worldwide right and license
during the term of this Agreement under the IRORI Intellectual Property to
operate each respective System purchased pursuant to this Agreement and exercise
its rights under this Agreement (collectively, the "Right and License"). BMS
shall not have the right to sublicense the Right and License without the prior
written consent of IRORI. BMS shall not have the right to assign the Right and

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License except in connection with an assignment of all of BMS's rights and
obligations under this Agreement pursuant to, and in compliance with, Section
14.3.

        5.3 Updates. For a period of   ***   following the Acceptance Date with
respect to each System and at no cost to BMS, IRORI shall provide and
incorporate into such System, or grant BMS a Right and License to use, as the
case may be, all Updates to such System that are developed during such period.
Following such   ***   period, BMS shall have the right to purchase, or to be
granted a Right aid License to use, as the case may be, such Updates at IRORI's
standard commercial races therefor. Title to all Updates that are not IRORI
Intellectual Property shall pass to BMS upon their incorporation into the
System.

        5.4 Enhancements.

               (a) During the term of this Agreement, IRORI shall notify BMS
promptly after the development of any Enhancement not developed for BMS pursuant
to Section 5.4(b). Any such notice shall include a copy of the applicable
Enhancement Specifications. BMS shall have the right to purchase, or to obtain a
Right and License to use, as the case may be, any or all such Enhancements. In
the event that BMS wishes to purchase any such Enhancement or such Right and
License, BMS shall notify IRORI, and IRORI shall quote BMS a price therefor (the
"Enhancement Purchase Price").   ***     ***     ***. BMS may purchase such
Enhancement or a Right and License to use same, as the case may be, by
submitting a purchase order which is in a form mutually acceptable to the
parties, to the extent that such form is not inconsistent with the terms of this
Agreement, within    ***   .

               (b) In addition, BMS shall have the right to request, from time
to time, that IRORI develop Enhancements to meet Enhancement Specifications
proposed by BMS. IRORI shall not unreasonably refuse to develop any such
Enhancements. Promptly after any such request by BMS, the Development Committee
shall develop the Enhancement Specifications for the Enhancement. Promptly after
the Enhancement Specifications have been finalized, IRORI shall quote BMS the
Enhancement Purchase Price for the development and incorporation of such
Enhancement into the System (and, to the extent necessary a Right and License to
use same), *** , and shall provide a good faith estimate of the time IRORI will
require to develop such Enhancement. BMS may purchase such Enhancement or a
Right and License to use same, as the case may be, by submitting a purchase
order which is in a form mutually acceptable to the parties, to the extent that
such form is not inconsistent with the terms of this Agreement, *** . Following
receipt of any such purchase order, IRORI shall use its best commercial efforts
to deliver and incorporate into the System such Enhancement within the estimated
development period.

               (c) For a period of *** after IRORI's incorporation of any
Enhancement into the System, BMS shall have the right to test the System to
verify that the Enhancement conforms to the applicable Enhancement
Specifications (using the testing protocol developed by the

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Development Committee). If BMS fails to notify IRORI that the Enhancement does
not conform to the applicable Enhancement Specifications prior to the end of
such *** period, then the Enhancement shall be deemed so to conform, and BMS
shall be deemed to have accepted it.

               (d) If such testing indicates that the Enhancement does not
conform to the Enhancement Specifications, then prior to the expiration of such
***   period referred to in Section 5.4(c), BMS shall notify IRORI of such
non-conformity in sufficient detail to allow IRORI to attempt to bring the
Enhancement into conformity with the applicable Enhancement Specifications.
During the   ***   period following receipt of any such notice, IRORI shall use
its best commercial efforts to bring the Enhancement into conformity with the
applicable Enhancement Specifications, and BMS shall allow IRORI's
representatives reasonable access to the System(s), during normal business
hours, for such purpose. If BMS reasonably determines, within   ***   after such
     ***   period, that the Enhancement does not conform to the applicable
Enhancement Specifications, then BMS shall be entitled to reject the Enhancement
by notice to IRORI. In the event of any such rejection, IRORI shall promptly
un-install the Enhancement and refund to BMS the entire amount of price
previously paid by BMS with respect thereto. If BMS fails to notify IRORI that
the Enhancement does not conform to the applicable Enhancement Specifications
prior to the end of such   ***   period, then the Enhancement shall be deemed so
to conform, and BMS shall be deemed to have accepted it.

               (e) Title to all Enhancements (i.e., to BMS's physical copies
thereof) that are not IRORI Intellectual Property shall pass to BMS upon BMS's
acceptance thereof.

               (f) IRORI shall submit an invoice for the Enhancement Purchase
Price to BMS upon delivery and installation of an Enhancement into the System.
All invoices shall be sent to the address specified on the BMS purchase order.
Payment of such invoices shall made within 45 days after receipt of an invoice
for such payment.

        5.5 Installation. The Parties shall cooperate in coordinating the
delivery and installation of any Updates or Enhancements.

        5.6 Source Code.

               (a) Within 180 days after the Effective Date and within 10 days
after the first day of each calendar quarter thereafter until the Source Code
Release Date (as herein defined), IRORI shall deposit with Data Securities
International, located in San Diego, California (the "Escrow Agent"), a copy of
the most current source code and any documentation (including drawings,
blueprints and other technical information) of and for the Software or otherwise
necessary or useful for the operation of the System, all pursuant to an escrow
agreement (the "Escrow Agreement") the terms and conditions of which are
acceptable to BMS. The Escrow Agreement shall provide, among other things, that
BMS shall have access to such source code, subject to the Right and License and
the other terms and conditions of this Agreement, if IRORI or any of its
Affiliates becomes the subject of any voluntary or involuntary proceeding, under
state or federal law, in the nature of bankruptcy, receivership or assignment
for the benefit

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 of creditors which is not dismissed withal 60 days after the
institution, initiation or filing of such proceeding.

                      (b)    ***
                             ***
                             ***

               ***    . Notwithstanding any other provision of this Agreement,
BMS's rights under this Section 5.6(b) shall terminate upon any assignment of
its rights and obligations under this Agreement to a Third Party,

6. SUPPORT; TRAINING.

        6.1 Support and Maintenance. During the   ***   period following the
Acceptance Date with respect to each System, IRORI shall provide BMS with
customer and technical support in connection with BMS's use of such System, and
maintenance of such System, at no additional cost to BMS. After such   ***
period and during the remainder of the term of this Agreement, IRORI shall
provide BMS with customer and technical support in connection with BMS's use of
such System, and maintenance of such System, at IRORI's published commercial
rates therefor. Such support and maintenance shall include critical bug fixes,
reasonable assistance via telephone and fax, dial in via modem assistance,
receipt of any newsletter or other customer publications put out by IRORI and
on-site support.

        6.2 Training. For a period of   ***   after the Acceptance Date with
respect to each System, and for a period of   ***   following the installation
of any major Update or BMS's acceptance of any Enhancement, IRORI shall provide
training in the operation and maintenance thereof to BMS's employees at the
Facility, at no additional cost to BMS. BMS shall be responsible for all per
diem expenses incurred by its employees in connection with any such training.
The Parties shall cooperate in the scheduling of all such training.

7. SUPPLY AND PURCHASE.

                7.1 Initial Obligations.

               (a) On the Acceptance Date with respect to the Initial System,
BMS automatically shall be deemed to have ordered from IRORI an aggregate of
   ***   NanoKans, at a price of   ***   each, and IRORI shall be entitled to
submit to BMS an invoice therefor, in accordance with Section 7.9(a).

               (b) From time to time after the Acceptance Date with respect to
the Initial System, BMS shall deliver to IRORI resins to be loaded into the
NanoKans ordered by BMS pursuant to Section 7.1(a) (arty resins delivered by BMS
pursuant to this Section 7 collectively, the "BMS Resins"), accompanied by
instructions as to how many of such NanoKans should be loaded with such BMS
Resins and as to shipping and delivery of such NanoKans. Within 30

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days after each such delivery of a sufficient quantity of BMS Resins, IRORI
shall load such NanoKans with such BMS Resins and deliver same to BMS in
accordance with Section 7.4, at no additional cost or expense to BMS. IRORI
acknowledges that all BMS Resins shall be proprietary to, and shall constitute
Confidential Information of, BMS.

                7.2 Requirements.

               (a) After BMS has ordered an aggregate of *** NanoKans pursuant
to Section 7.1, BMS shall purchase from IRORI, and IRORI shall supply to BMS,
NanoKans representing 100(degree)% of BMS's requirements for microreactors for
solid phase synthesis for use with the Systems. ***
                                                      ***
                      ***    . If IRORI has not supplied NanoKans to any Third
Party within such 12-month period, then such price shall be   ***   per NanoKan,
subject to adjustment commencing on January 1, 2001 (and on each January 1
thereafter) to reflect the aggregate change, if any, in the Consumer Price Index
(All Consumers, All Urban Areas), published by the U.S. Department of Labor,
during the period commencing on the immediately preceding January 1.

               (b) At any time following the seventh anniversary of the
Acceptance Date with respect to the Initial System, BMS shall have the right to
terminate its obligations under Section 7.2(a), or from time to time to reduce
the percentage of BMS's requirements for NanoKans that it is obligated to
purchase thereunder, by giving 180 days' prior notice to IRORI.

        7.3 Orders. Except as set forth in Section 7.1, BMS shall place orders
for NanoKans with IRORI, setting forth trade units, delivery dates and shipping
instructions with respect to each shipment, from time to time. IRORI shall
accept such orders from BMS. BMS's orders shall be made pursuant to a purchase
order which is in a form mutually acceptable to the parties, to the extent that
such form is not inconsistent with the terms of this Agreement. In conjunction
with the delivery of each such purchase order, BMS shall deliver to IRORI a
sufficient quantity of the BMS Resins with which the NanoKans ordered by BMS are
to be loaded.

        7.4 Delivery. IRORI shall deliver all NanoKans ordered by BMS pursuant
to Section 7.3 or 7.7 within   ***   of IRORI's receipt of BMS's purchase order
therefor (provided that BMS has delivered a sufficient quantity of the BMS
Resins as provided in Section 7.3 or 7.7, as applicable). All NanoKans delivered
pursuant to this Agreement shall be suitably packed for shipment by IRORI and
marked for shipment to the destination point indicated in BMS's purchase order.
All NanoKans will be delivered F.O.B. the shipping point designated by IRORI.
The shipping packaging shall be in accordance with good commercial practice with
respect to protection of the NanoKans during transportation. All shipping and
insurance costs, as well as any special packaging expenses, shall be paid by
BMS.

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        7.5 Quality Control. IRORI shall conduct quality control testing of the
NanoKans prior to shipment in accordance with its customary quality control
procedures. IRORI shall retain records pertaining to such testing.

        7.6 Acceptance; Rejection.

               (a) BMS may test or cause to be tested the NanoKans supplied by
IRORI, using a random sampling methodology and otherwise in accordance with
BMS's customary procedures, within   ***   of receipt thereof by BMS or its
designee. BMS or its designee shall have the right to reject any shipment of
NanoKans made to it under this Agreement which does not meet the NanoKan
Specifications when received by BMS. All claims by BMS of non-conforming
NanoKans shall be deemed waived unless made by BMS in writing and received by
IRORI within such   ***   period. At IRORI's request and expense, BMS shall
return to IRORI or destroy, in accordance with IRORI's instructions, any
rejected shipment of NanoKans.

               (b) In the event that the parties are unable to agree as to
whether a shipment of NanoKans supplied by IRORI hereunder meet the NanoKan
Specifications, such question shall be submitted to an independent quality
control laboratory as the Parties may mutually agree upon. The findings of such
independent laboratory shall be binding upon the Parties, absent manifest error.
The cost of the independent quality control laboratory shall be borne by the
Party whose results are shown by such laboratory to have been incorrect.

               (c) In the event that IRORI concedes or the independent quality
control laboratory finds that a shipment of NanoKans does not comply with the
NanoKan Specifications, IRORI will, to the extent such shipment has not been
replaced pursuant to Section 7.7, remanufacture and deliver to BMS the same
quantity of NanoKans as contained in the shipment in question promptly after
BMS's delivery of replacement BMS Resins to be loaded into such NanoKans.

        7.7 Interim Replacement. During the pendency of any dispute concerning
the conformity of a shipment of NanoKans to the NanoKan Specifications, IRORI
shall replace the shipment under dispute, at the request of BMS, promptly after
BMS's delivery of replacement BMS Resins to be loaded into such NanoKans. Such
replacement NanoKans shall be ordered in accordance with Section 7.3 and shall
be invoiced by IRORI and paid for by BMS at the same price as the rejected
shipment of NanoKans was invoiced.

        7.8 Replacement of BMS Resins. In the event that any BMS Resins
delivered to IRORI pursuant to this Section 7 are damaged or destroyed due to
the negligence or willful misconduct of IRORI, or its employees or agents, then
IRORI shall reimburse BMS for any actual manufacturing costs incurred by BMS in
connection with the replacement of such BMS Resins.

        7.9 Invoicing; Payment.

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               (a) IRORI shall submit an invoice to BMS upon shipment of
NanoKans ordered by BMS hereunder, whether pursuant to Section 7.1, 7.3 or 7.7.
All invoices shall be sent to the address specified on the BMS purchase order,
and each such invoice shall include any insurance, taxes or other costs incident
to the purchase or shipment initially paid by IRORI but to be borne by BMS
hereunder.

               (b) Payment of such invoices shall made within 45 days after
receipt of an invoice for such payment; provided, however, that BMS shall not be
required to pay any invoice with respect to any shipment of NanoKans that fails
to meet the NanoKan Specifications, but BMS shall be obligated to pay in full
for any rejected shipment of NanoKans that is subsequently determined to meet
the NanoKan Specifications; and provided, further, that the running of such
45-day period shall be tolled during the pendency of any dispute concerning the
conformity of a shipment of NanoKans to the NanoKan Specifications. In the event
that BMS pays for a shipment of NanoKans and subsequently rejects such shipment
in accordance with the terms of this Agreement, BMS shall be entitled to a
refund or credit equal to the amount paid with respect to such rejected shipment
and to reimbursement of the actual manufacturing costs incurred by BMS in
connection with a BMS Resins loaded into such NanoKans.

        7.10 Allocation.

               (a) Subject to Section 7.10(b), in the event that IRORI is unable
to supply all of BMS's requirements for NanoKans in accordance with Section 7.4,
due to force majeure or otherwise, IRORI shall allocate to   ***   of its
available NanoKans to BMS until IRORI has supplied all such NanoKans.

               (b) The Parties acknowledge and agree that during the term of
this Agreement IRORI may enter into a relationship with one Third Party that
shall be a strategic partner for purposes of this Section 7.10. If, at any time
when IRORI is unable to supply all of BMS's requirements for NanoKans, IRORI has
entered into a relationship with such a strategic partner, then IRORI shall
allocate   ***   of its available NanoKans between BMS and such partner, in
proportion to the quantity of NanoKans for which each of them has orders pending
at such time. IRORI shall promptly disclose BMS the identity of any such
strategic partner, if such strategic partner consents to such disclosure, in
which case IRORI shall have the right to disclose to such strategic partner the
existence (but not the specific financial terms) of BMS's relationship with
IRORI under this Agreement. In any event, in connection with any allocation
under this Section 7.10(b), IRORI shall notify BMS promptly of the identity of
any such strategic partner, if IRORI has not already done so.

        7.11 Right to Manufacture.

               (a) In the event of an Inability to Supply, BMS may elect either:
(i) to manufacture (or have manufactured) pursuant to Section 7.12 such quantity
of NanoKans that IRORI fails so to supply; or (ii) to assume full responsibility
for the supply of all of BMS's requirements for NanoKans under this Agreement.
For purposes of this Section 7, an "Inability

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<PAGE>   19

to Supply" shall mean: (X) with respect to any 60-day period, more than   ***
of the NanoKans to be delivered during such period were delivered more than 30
days after the respective delivery dates therefor; or (Y) with respect to any
six-month period, more than   ***   of the NanoKans to be delivered during such
period were delivered after the respective delivery dates therefor, provided, in
each case, that not more than   ***  , nor fewer than   ***   , NanoKans were to
be delivered during any 30-day period.

               (b) The remedy provided in this Section 7.11 shall be in addition
to any other remedies available to BMS under this Agreement, at law or in
equity. BMS's rights under this Section 7.11 shall not be affected in any way by
its waiver or failure to take action with respect to any previous event giving
rise to such right.

        7.12 BMS's Right to Manufacture. IRORI hereby grants to BMS, and BMS
hereby accepts, a license (the "Manufacturing License") under all necessary
IRORI patents and know-how to make or have made NanoKans for such of BMS's
requirements as BMS has elected pursuant to Section 7.11(a)(i) or (ii). Such
Manufacturing License shall be subject to all other terms and conditions of this
Agreement. In addition, BMS agrees not to exercise any of its rights under the
Manufacturing License except to the extent expressly permitted in Section
7.11(a). In such event: (i) IRORI shall provide to BMS (or its designee) copies
of all documentation within IRORI's control that is reasonably necessary for BMS
to manufacture (or have manufactured) NanoKans; (ii) IRORI shall provide such
technical assistance to BMS (or its designee) as is reasonably necessary to
enable BMS (or such of its Affiliates, Third Parties or designees as it may
designate) to manufacture NanoKans pursuant to the NanoKan Specifications,
including, without limitation, providing all information and know-how necessary
or useful for the construction of a resin-loading machine; (iii) BMS shall be
relieved of its obligation to purchase such quantities of NanoKans from IRORI,
to the extent that BMS has the right to exercise the Manufacturing License; and
(iv) IRORI shall reasonably cooperate with BMS to establish an alternative
supply, including sources of materials. In the event that BMS has NanoKans
manufactured by a Third Party, such Third Party shall enter into a
confidentiality agreement with IRORI to protect against the unauthorized use and
disclosure of IRORI's Confidential Information.

8. REPRESENTATIONS AND WARRANTIES; COVENANTS.

        8.1 Representations and Warranties of Both Parties. Each Party
represents and warrants to the other Party that: (i) it is free to enter into
this Agreement; (ii) in so doing, it will not violate my other agreement to
which it is a party; and (iii) it has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the performance of
its obligations under this Agreement.

        8.2 Representations and Warranties of IRORI. IRORI represents and
warrants to BMS that:

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               (a) IRORI shall adhere to all governmental laws and regulations
applicable to the performance of its obligations under this Agreement.

               (b) IRORI shall have secured in a timely manner all permits or
licenses required in connection with the performance of its obligations under
this Agreement.

               (c) Neither IRORI's manufacture, delivery, installation and sale
of the System, nor its manufacture and sale of NanoKans, nor BMS's use of the
System or NanoKans shall infringe upon any U.S. or foreign Patent and shall not
violate, convict with or infringe upon any other rights of any Third Party.

               (d) No action; suit of claim, has been initiated, or threatened
in writing, against IRORI with respect to the intellectual property necessary
for it to perform its obligations under this Agreement (including, without
limitation, the IRORI Intellectual Property in existence as of the Effective
Date), or its right to enter into and perform its obligations under this
Agreement.

               (e) Each System and Enhancement shall be free from defects in
material and workmanship under normal use and service and, if operated and
maintained in accordance with IRORI's reasonable written instructions, shall
perform in accordance with the System Specifications or applicable Enhancement
Specifications, as the case may be, for a period of   ***  with respect thereto.

               (f) IRORI has not previously entered into or agreed to enter into
any agreements with any Third Parties with respect to the manufacture, delivery
and installation of any Systems or the manufacture and supply of NanoKans;
provided, however, that BMS acknowledges that IRORI is in advanced stages of
discussions with one Third Party which may become the strategic partner referred
to in Section 7.10(b) and/or the Permitted Purchaser (as such term is defined in
Section 9.1); and provided, further, that the Parties agree that in the event,
prior to the Effective Date, IRORI has entered into an agreement with any Third
Party pursuant to which it becomes such strategic partner and/or such Permitted
Purchaser, then IRORI shall not have the right to enter into any agreements with
any additional Third Parties pursuant to Section 7.10(b) and/or 9.1, as the case
may be.

        8.3 Limited Right of Repair. In connection with any breach of the
representations and warranties of IRORI set forth in Section 8.2(e) arising
after BMS's acceptance of a System or an Enhancement, as the case may be, IRORI
shall be entitled, at its sole cost and expense, to attempt to rectify, via
repair, replacement or Update, any such breach during a reasonable period of
time (but in no event greater than 60 days) after BMS provides IRORI notice of
such breach. During any such period when IRORI is diligently attempting to
rectify any such breach (or, if IRORI succeeds in so rectifying, thereafter),
BMS shall not pursue any remedy under this Agreement or otherwise at law or in
equity with respect to such breach. The Parties acknowledge and agree that any
forbearance by BMS pursuant to the preceding sentence shall not constitute a
waiver of any of BMS's rights in connection with such breach.

*** Portions of this page have been omitted pursuant to a request for
    Confidential Treatment and filed separately with the Commission

                                       16
<PAGE>   21

        8.4 Disclaimer of Warranty. EXCEPT AS SPECIFICALLY SET FORTH IN SECTIONS
8.1 AND 8.2, IRORI DOES NOT MAKE, AND HEREBY DISCLAIMS, ANY EXPRESS OR IMPLIED
WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF DESIGN, MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, OR ARISING FRONT A COURSE OF DEALING OR
USAGE OF TRADE PRACTICE, WITH RESPECT TO ANY SYSTEM OR NANOKANS PURCHASED BY BMS
UNDER THIS AGREEMENT.

        8.5 Covenants of BMS. BMS covenants to IRORI that BMS shall not create,
or attempt to create, by decompilation, reverse engineering or otherwise, the
System or any of its components, including without limitation the Software, or
NanoKans.

9. THIRD PARTIES.

        9.1 Semi-Exclusivity. During the period commencing on the Effective Date
and ending on the first anniversary of the Acceptance Date with respect to the
Initial System, IRORI shall not sell, license, lease or otherwise transfer any
interest in a System (or any functionally equivalent system,) to or for, or
operate a System (or any functionally equivalent system) for the benefit of,
more than one Third Party (such one Third Party, the "Permitted Purchaser"),
which shall be chosen at IRORI's sale discretion.

        9.2 Most Favored Nation.

               (a) If, during the period commencing on the Effective Date and
ending on the   ***   with respect to the Initial System (the "Protected
Period"), IRORI sells, or otherwise conveys full or substantially full title to,
a System (or any functionally equivalent system) to any Third Party at a price
less than the Initial System Purchase Price (a "Below-Price Sale"), then the
Initial System Purchase Price shall be adjusted, whether prospectively or
retroactively, to such lower price. IRORI shall promptly notify BMS of any
Below-Price Sale. If a Below-Price Sale occurs prior to BMS's payment in full of
the Initial System Purchase Price, then BMS's remaining payments against the
Initial System Purchase Price shall be adjusted accordingly. To the extent that
the amount of such remaining payments is insufficient to realize the full
adjustment to be made pursuant to this Section 9.2 or if a Below-Sale occurs
after BMS's payment in full of the Initial System Purchase Price, IRORI shall
refund the difference or the amount of such adjustment, as the case may be, to
BMS within 30 days after the date of IRORI's notice of such Below-Price Sale.

               (b) During the Protected Period, following any adjustment of the
Initial System Purchase Price pursuant to Section 9.2(a), if and as often as
IRORI sells, or otherwise conveys full or substantially full title to, a System
(or any functionally equivalent system,) to any Third Party at a price less than
the price to which the Initial System Purchase Price previously has been
adjusted, then the Initial System Purchase Price shall be further adjusted to
such lower price, in accordance with Section 9.2(a).

*** Portions of this page have been omitted pursuant to a request for
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                                       17
<PAGE>   22

               (c) Notwithstanding the other provisions of this Section 9.2, the
Parties acknowledge and agree that if any Third Party purchases a System for no
less than   ***   and subsequently purchases a second System for no less than
   ***   , the purchase and sale of such second System shall not constitute a
Below-Price Sale.

        9.3 Audit Request.

               (a) Commencing on the Effective Date and until the sixth
anniversary of the Acceptance Date with respect to the Initial System, at the
request of BMS, IRORI and its Affiliates shall permit an independent certified
public accountant appointed by BMS, at reasonable times and upon reasonable
notice, to examine all relevant records and all other documents in the
possession or control of IRORI or its Affiliates as may be necessary: (i) to
verify IRORI's satisfaction of its obligations under Sections 9.1 and 9.2; or
(ii) to verify that IRORI is not in breach of its representation and warranty
under Section 8.2(f).

               (b) During the term of this Agreement and for a period of three
years thereafter, at the request of BMS, IRORI and its Affiliates shall permit
an independent certified public accountant appointed by BMS, at reasonable times
and upon reasonable notice, to examine all relevant records and all other
documents in the possession or control of IRORI or its Affiliates as may be
necessary: (i) to verify IRORI's satisfaction of its obligations under Section
7.10; or (ii) in connection with any assignment pursuant to Section 14.3(b), to
verify the correctness of any Assignment Fee charged by IRORI.

               (c) Said accountant shall not disclose to BMS the identity of any
Third party with which IRORI has a relationship. The results of any such
examination shall be made available to both Parties. BMS shall bear the full
cost of the performance of any such audit unless the results of such audit
indicate that IRORI is in default with respect to its obligations identified in
Section 9.3(a) or (b), in which event IRORI shall bear such cost.

10. INDEMNIFICATION.

        10.1 Obligation to Indemnify. Subject to Section 8.3, IRORI shall
defend, indemnify and hold BMS and its Affiliates, and each of their respective
directors, officers and employees (each, an "Indemnitee"), harmless from and
against any and all claims, suits or demands for liability, damages, losses,
costs and expenses (including the costs and expenses of attorneys and other
professionals) arising out of Third Party claims or suits resulting from a
breach of IRORI's representations and warranties set forth in Section 8.2, or
from any tort claims of personal injury (including death) or property damage
relating to or arising out of BMS's use of the System and/or NanoKans in
accordance with the System Specifications and/or the NanoKan Specifications, as
the case may be, and IRORI's written instructions.

        10.2 Notice. In the event that any Indemnitee is seeking indemnification
under Section 10.1, such Indemnitee shall inform IRORI of a claim as soon as
reasonably practicable after it receives notice of the claim, shall permit IRORI
to assume direction and control of the defense of the claim (including the sole
right to settle the claim at IRORI's sole discretion,

*** Portions of this page have been omitted pursuant to a request for
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                                       18
<PAGE>   23

provided that such settlement does not materially adversely affect any rights
of, or impose any obligation on, the Indemnitee) with legal counsel selected by
IRORI and reasonably acceptable to BMS, and shall cooperate as requested (at the
expense of the IRORI) in the defense of the claim.

        10.3 Complete Indemnification. As the Parties intend complete
indemnification, all costs and expenses incurred by an Indemnitee in connection
with enforcement of this Section 10 shall also be reimbursed by IRORI.

        10.4 Insurance. During the term of this Agreement and for a period of 10
years thereafter, IRORI shall maintain basic comprehensive general liability and
products liability insurance (including contractual liability coverage on
IRORI's indemnification obligations under this Agreement) with respect to the
work it performs and the products it manufactures and sells under this Agreement
substantially consistent with the insurance coverage described on Exhibit C,
which insurance shall designate BMS as an additional insured and shall pay the
premiums due thereunder. The terms and conditions of such insurance policy and
any and all amendments thereto, as well as the amount insured, shall be
submitted for reasonable approval to BMS, and BMS shall receive a copy of any
such policy and amendments thereto.

        10.5 Partial Limitation on IRORI Indemnity. In no event shall IRORI's
liability under this Section 10 with respect to Third Party claims or suits
resulting from a breach of IRORI's representations and warranties set forth in
Section 8.2 exceed the total Purchase Price paid by BMS under this Agreement.

11. CONFIDENTIALITY.

        11.1 Confidential Information. Except as expressly provided herein, the
Parties agree that, during the term of this Agreement and for eight years
thereafter, the receiving Party shall not publish or otherwise disclose and
shall not use for any purpose any information furnished to it by the other Party
pursuant to this Agreement which, if disclosed in tangible form, is marked
"Confidential" or with other similar designation to indicate its confidential or
proprietary nature or, if disclosed orally, is indicated as confidential or
proprietary in writing by the disclosing Patty within a reasonable time after
such disclosure (collectively, "Confidential Information"). Notwithstanding the
foregoing, Confidential Information shall not include information that, in each
case as demonstrated by written documentation:

               (a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure;

               (b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party;

               (c) became generally available to the public or otherwise part of
the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement; or

                                       19
<PAGE>   24

               (d) was subsequently lawfully disclosed to the receiving Party by
a Third Party or developed by the receiving Party without reference to any
information or materials disclosed by the disclosing Party.

        11.2 Permitted Disclosures. Notwithstanding the provisions of Section
11.1, each Party may disclose the other Party's Confidential Information to the
extent such disclosure is reasonably necessary to exercise the rights granted to
it under this Agreement or to comply with applicable laws and regulations,
provided that if a Party is required to make any such disclosure of the other
Party's Confidential Information, to the extent it may legally do so, it will
give reasonable advance notice to the latter Party of such disclosure and will
use its reasonable efforts to limit the scope of such disclosure to only that
information which it is necessary to disclose and to secure confidential
treatment of such information prior to its disclosure. If the Party whose
Confidential Information is to be disclosed has not filed a patent application
with respect to such Confidential Information, it may require the other Party to
delay the proposed disclosure (to the extent the disclosing Party may legally do
so) for up to 90 days, to allow for the filing of such as application.

        11.3 Remedies. Each Party shall be entitled, in addition to any other
right or remedy it may have, at law or in equity, to temporary, preliminary and
permanent injunctions, without the posting of any bond or other security,
enjoining or restraining the other Party and its Affiliates from any violation
or threatened violation of this Section 11.

12. TERM; TERMINATION.

        12.1 Term. The term of this Agreement shall commence as of the Effective
Date and shall expire upon the termination, pursuant to Section 7.2(b), of BMS's
obligation to purchase NanoKans from IRORI, unless sooner terminated in
accordance with this Section 12.

        12.2 Termination by BMS. BMS shall have the right to terminate this
Agreement at any time prior to the Acceptance Date with respect to the Initial
System, upon notice to IRORI, without further obligation to IRORI except as
provided in this Section 12.2 and in Section 12.4(b). In conjunction with BMS's
giving of any such notice, BMS shall pay the next payment of the Initial System
Purchase Price that would have accrued under Section 4.2 if BMS had not
terminated this Agreement. In addition, following any such termination, IRORI
shall be entitled to retain all payments of the Initial System Purchase Price
that BMS shall have made prior to the date of any such notice, and BMS shall
remain liable to IRORI for all payments of the Initial System Purchase Price
that shall have accrued but shall not have been paid prior to the date of any
such notice.

        12.3 Breach.

               (a) Subject to Section 12.3(b), failure by either Party to comply
with any of the material obligations contained in this Agreement shall entitle
the other Party to give to the Party in default notice specifying the nature of
the default and requiring it to cure such default. If such default is not cured
within 30 days after the receipt of such notice (or, if such default reasonably
cannot be cured within such 30-day period, if the Party in default does not
commence and diligently continue actions to cure such default), the notifying
Party shall be entitled, without

                                       20
<PAGE>   25

prejudice to any of its other rights conferred on it by this Agreement and in
addition to any other remedies available to it at law or in equity, to terminate
this Agreement by giving further written notice, to take effect immediately upon
delivery thereof. The right of either Party to terminate this Agreement, as
provided in this Section 12.3(a), shall not be affected in any way by its waiver
or failure to take action with respect to any previous default.

               (b) Notwithstanding Section 12.3(a), BMS shall not have the right
to terminate this Agreement with respect to:

                      (i) Any failure of IRORI to satisfy a Development
Milestone or any failure of a System to conform to the System Specifications
until IRORI has been given an opportunity to rectify such failure, as provided
in Sections 2.2 and 2.3, as the case may be;

                      (ii) Any failure of as Enhancement to conform to the
applicable Enhancement Specifications;

                      (iii) Any alleged failure of NanoKans supplied hereunder
to conform to the NanoKan Specifications;

                      (iv) Any Inability to Supply;

                      (v) Any breach of the representations and warranties of
IRORI set forth in Section 8.2(e) arising after BMS's acceptance of a System
unless IRORI has been given an opportunity to rectify such breach, as provided
in Section 8.3; or

                      (vi) Any breach of the representations and warranties of
IRORI set forth in Section 8.2(e) with respect to any Enhancement.

        12.4 Effect of Termination.

               (a) Following the expiration of the term of this Agreement
pursuant to Section 12.1 due to the termination, pursuant to Section 7.2(b), of
BMS's obligation to purchase NanoKans from IRORI, the Right and License shall
become perpetual.

               (b) Following the termination of this Agreement by BMS pursuant
to Section 12.2, BMS shall return to IRORI the Initial System, or any components
thereof, to the extent that same shall have been delivered to BMS prior to the
effective date of such termination, at BMS's sole cost and expense. Neither
Party thereafter shall have any obligation to the other, except under Section 11
and BMS's obligation to make payment of any portion of the Initial System
Purchase Price that shall have accrued as of the date of such termination, and
each Party shall return to the other all Confidential Information disclosed to
such Party by the other Party (and all copies, analyses, derivatives,
reflections and physical manifestations thereof); provided that each Party shall
have the right to retain one copy for archival purposes only.

               (c) Following the termination of this Agreement by IRORI pursuant
to Section 12.3: (i) BMS shall return to IRORI all Systems and Enhancements
which it has not accepted prior to the effective date of any such termination,
at BMS's sole cost and expense; (ii) BMS shall be entitled to retain all Systems
and Enhancements which it has accepted and paid the

                                       21
<PAGE>   26

Purchase Price for prior to the effective date of any such termination; (iii)
the light and License with respect to the Systems and Enhancements referred to
in clause (ii) shall become perpetual; and (iv) IRORI shall be entitled to
retain all payments of Purchase Price made by BMS prior to the effective date of
such termination.

               (d) following the termination of this Agreement by BMS pursuant
to Section 12.3: (i) BMS shall be entitled to retain all Systems and
Enhancements which have been delivered to it prior to the effective date of any
such termination, to the extent that BMS subsequently accepts and pays for same
(including by offsetting any such payment obligations against BMS's claims
against IRORI for damages); (ii) BMS shall be entitled to return to IRORI all
Systems and Enhancements which have been delivered to BMS prior to the effective
date of any such termination that BMS subsequently rejects; (iii) the Right and
License with respect to the Systems and Enhancements referred to in clause (i)
shall become perpetual; and (iv) the Manufacturing License shall become
perpetual.

        12.5 Accrued Rights, Surviving Obligations.

               (a) Termination, relinquishment or expiration of this Agreement
for any reason shall be without prejudice to any rights which shall have accrued
to the benefit of either Party prior to such termination, relinquishment or
expiration. Such termination, relinquishment or expiration shall not relieve
either Party from obligations which are expressly indicated to survive
termination or expiration of this Agreement.

               (b) Except as provided in Section 12.4(b), all of the Parties'
rights and obligations under Sections 2.4, 4.3, 5.1, 5.2, 5.4(e), the last
sentence of Section 7.1(b), 7.6, 7.7, 7.8, 8, 9.3, 10, 11, 12.4, 14.1, 14.3,
14.9, 14.14, 14.15 and 14.16 shall survive expiration, termination or
relinquishment of this Agreement.

13. FORCE MAJEURE.

        13.1 Events of Force Majeure. Neither Party shall be held liable or
responsible to the other Party or be deemed to be in default under or in breach
of any provision of this Agreement (other than, any obligation to pay money) far
failure or delay in fulfilling or performing any obligation of this Agreement
when such failure or delay is due to force majeure, and without the fault or
negligence of the Party so failing or delaying. For purposes of this Agreement,
force majeure shall be defined as causes beyond the control of the Party,
including, without limitation, acts of God; acts, regulations, or laws of any
government; war; civil commotion; destruction of production facilities or
materials by fire, flood, earthquake, explosion or storm; labor disturbances;
epidemic; and failure of public utilities or common carriers. In such event BMS
or IRORI, as the case may be, shall immediately notify the other Party of such
inability and of the period for which such inability is expected to continue.
The Party giving such notice shall thereupon be excused from such of its
obligations under this Agreement (other than any obligation to pay money) as it
is thereby disabled from performing for so long as it is so disabled and the 30
days thereafter. However, the Party giving such notice shall use all reasonable
efforts to remedy such inability as soon as reasonably possible or seek an
alternative arrangement during the period of such inability.

                                       22
<PAGE>   27

14. MISCELLANEOUS.

        14.1 Non-Solicitation. During the period commencing on the Effective
Date and ending on the 18-month anniversary of the Acceptance Date with respect
to the Initial System (or, if BMS has ordered a Second System by such Acceptance
Date and subsequently accepts the Second System, the 18-month anniversary of the
Acceptance Date with respect to the Second System), neither Party shall solicit,
induce, encourage or attempt to induce or encourage any employee of the other
Party to terminate his or her employment with such other Party or to breach any
other obligation to such other Party.

        14.2 Relationship of Parties. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, employer-employee or joint
venture relationship between the Parties. No Party shall incur any debts or make
any commitments for the other, except to the extent, if at all, specifically
provided herein.

        14.3 Assignment.

               (a) This Agreement may not be assigned, in whole or in part, by
IRORI without the prior written consent of BMS.

               (b) BMS may assign its rights and obligations under this
Agreement to a Third Party provided that: (i) such assignment is of all of such
rights and obligations; (ii) such Third Party agrees in writing to be bound by
the terms of this Agreement as if it were a party hereto; and (iii) IRORI is
paid the applicable Assignment Fee in connection with such assignment. For
purposes of this Section 14.3(b), "Assignment Fee" shall mean: (X )   ***
if, on the effective date of such assignment, IRORI has sold, licensed, leased
or otherwise disposed of any interest in a System (or any functionally
equivalent system) to or for, or operated a System (or any functionally
equivalent system) for the benefit of,     ***    or fewer Third Parties, and
(Y)    ***    if, on such date, IRORI has sold, licensed, leased or otherwise
disposed of any interest in a System (or any functionally equivalent system) to
or for, or operated a System (or any functionally equivalent system) for the
benefit of, more than    ***   Third Parties.

               (c) Notwithstanding Sections 14.3(a) and (b), either Party may
assign its respective rights and transfer its respective duties hereunder,
without the consent of the other Party, to any assignee of all or substantially
all of its respective business or in the event of its respective merger,
consolidation or similar transaction.

               (d) Any assignment not in accordance with this Section 14.3 shall
be void.

        14.4 Binding Effect. This Agreement shall be binding upon the successors
and permitted assigns of the Parties, and the name of a Party appearing herein
shall be deemed to include the names of such Parties successors and permitted
assigns to the extent necessary to carry out the intent of this Agreement.

*** Portions of this page have been omitted pursuant to a request for
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                                       23
<PAGE>   28

        14.5 Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the proposes and intent of this
Agreement, .

        14.6 Costs and Expenses. Except as otherwise expressly provided in this
Agreement, each Party shall bear all costs and expenses associated with the
performance of such Party's obligations under this Agreement.

        14.7 Inconsistency. If there is any inconsistency between the provisions
of this Agreement and any other document passing between the Parties, the
provisions of this Agreement shall control and be determinative.

        14.8 Notice. Any notice, request or other communication required or
permitted to be given under or in connection with this Agreement shall be deemed
to have been sufficiently given if in writing and personally delivered or sent
by registered or certified mail, postage prepaid (return receipt requested),
facsimile transmission (receipt verified) or express courier service (signature
required), to the Party for which such notice is intended, at the address set
forth for such Party below:

               (a) In the case of BMS, to:

                      Bristol-Myers Squibb Company
                      P.O. Box 4000
                      Route 206 & Province Line Road
                      Princeton, New Jersey 08543-4000
                      Attention: Vice President & Senior Counsel
                                 Pharmaceutical Research Institute
                                 and Worldwide Strategic Business
                                 Development
                      Facsimile No.: (609) 252-4232

               (b) In the case of IRORI, to:

                      IRORI
                      11149 North Torrey Pines Road
                      La Jolla, California 92037-1030
                      Attention: President
                      Facsimile No.: (619) 546-3083

or to such other address for such Party as it shall have specified by like
notice to the other Party, provided that notices of a change of address shall be
effective only upon receipt thereof. If sent by facsimile transmission or
express courier service, the date of mailing or transmission shall be deemed to
be the date on which such notice or request was given. If sent by registered or
certified mail, the third business day after the date of mailing shall be deemed
to be the date on which such notice or request was given.

                                       24
<PAGE>   29

        14.9 Use of Name. Except as otherwise provided herein, neither Party
shall have any right, express or implied, to use in any manner the name or other
designation of the other Party or any other trade name or trademark of the other
Party for any purpose.

        14.10 Public Announcements. Neither Party shall make any public
announcement concerning this Agreement or the subject matter hereof without the
prior written consent of the other, which shall not be unreasonably withheld. In
the event of a required public announcement, the Party making such announcement
shall provide the other Party with a copy of the proposed text prior to such
announcement sufficiently in advance of the scheduled release of such
announcement to afford such other Party a reasonable opportunity to review and
comment upon the proposed text.

        14.11 Waiver. A waiver by either Party of any of the terms and
conditions of this Agreement in any instance shall not be deemed or construed to
be a waiver of such term or condition for the future, or of any subsequent
breach hereof. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement shall be cumulative and none of them shall be in
limitation of any other remedy, right, undertaking, obligation or agreement of
either Party.

        14.12 Severability. When possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement. In such event, the Parties agree to substitute a valid and
enforceable provision therefor which, as nearly as possible, achieves the
desired economic effect and mutual understanding of the Parties under this
Agreement.

        14.13 Amendment. No amendment, modification or supplement of any
provisions of this Agreement shall be valid or effective unless made in writing
and signed by a duly authorized officer of each Party.

        14.14 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York, without regard to its
choice of law principles.

        14.15 Arbitration.

               (a) Except as otherwise provided in this Agreement, any dispute
arising out of or relating to any provisions of this Agreement shall be finally
settled by arbitration to be held in San Diego, California, under the auspices
and then current commercial arbitration rules of the American Arbitration
Association. Such arbitration shall be conducted by three arbitrators appointed
according to said rules. The Parties shall instruct such arbitrators to render a
determination of any such dispute within 30 days after their appointment.
Judgment upon any award rendered may be entered in any court having
jurisdiction, or application may be made to such court for a judicial acceptance
of the award and an order of enforcement, as the case may be.

                                       25
<PAGE>   30

               (b) Section 14.15(a) shall not prohibit a Party from seeking
injunctive relies from a court of competent jurisdiction in the event of a
breach or prospective breach of this Agreement by the other Party which would
cause irreparable harm to the first Party or under Section 11.

        14.16 Limitation on Liability. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, UNDER NO CIRCUMSTANCES SHALL IRORI BE LIABLE UNDER THIS
AGREEMENT FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL OR EXCEPTIONAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS OR REVENUES).

        14.17 Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the Parties as to the subject matter hereof and merges
all prior discussions and negotiations between them, and neither of the Parties
shall be bound by any conditions, definitions, warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein or as duly set forth on or subsequent to the date hereof in
writing and signed by a proper and duly authorized officer or representative of
the Party to be bound thereby.

        14.18 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, any one of which need not contain the signature of more
than one Party but all such counterparts taken together shall constitute one and
the same agreement.

        14.19 Descriptive Headings. The descriptive headings of this Agreement
are for convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.

                                       ***

                                       26
<PAGE>   31

        IN WITNESS WHEREOF, each of the Parties has caused this Strategic
Alliance Agreement to be executed by its duly authorized officer as of the day
and year first above written.

                                        BRISTOL-MYERS SQUIBB COMPANY

                                        By: /s/ Charles Linzner
                                            ------------------------------------

                                        Name: Charles Linzner
                                              ----------------------------------

                                        Title: Vice President & Senior Counsel
                                               ---------------------------------

                                        IRORI

                                        By: /s/ Riccardo Pigliucci
                                            ------------------------------------

                                        Name: Riccardo Pigliucci
                                              ----------------------------------

                                        Title: Chief Executive Officer
                                               ---------------------------------

<PAGE>   32

                                    EXHIBIT A

                SYSTEM AND NANOKAN SPECIFICATIONS AND MILESTONES

                                       ***
                                       ***
                                       ***

*** Portions of this page have been omitted pursuant to a request for
    Confidential Treatment and filed separately with the Commission

                                   Exhibit A-1
<PAGE>   33

                                    EXHIBIT B

                            PROGRESS PAYMENT SCHEDULE

                                       ***
                                       ***
                                       ***

*** Portions of this page have been omitted pursuant to a request for
    Confidential Treatment and filed separately with the Commission

                                   Exhibit B-1
<PAGE>   34

                                    EXHIBIT C

                        DESCRIPTION OF INSURANCE COVERAGE

<TABLE>
<CAPTION>
               TYPE OF COVERAGE                       PRIMARY COVERAGE            UMBRELLA
<S>                                                   <C>                     <C>
Comprehensive General Liability (including               $2,000,000*             $9,000,000
Contractual Liability)
Personal & Advertising Injury                            $1,000,000           (incl. in above)
Products and Completed Operations                         2,000,000*             $9,000,000
</TABLE>

*  $1,000,000 per occurrence and $2,000,000 in the aggregate.

                                   Exhibit C-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}]]