50% Uses in Kan-Service Business Clause

Kan-Service Business from Asset Purchase Agreement

This Asset Purchase Agreement is entered into as of October 7, 2005 (the Effective Date), by and between: DISCOVERY PARTNERS INTERNATIONAL, INC., a Delaware corporation (the Seller), and IRORI DISCOVERY, INC., a California corporation (the Purchaser). Certain capitalized terms used in this Agreement are defined in Exhibit A.

Kan-Service Business. All of the X-Kan and Nano-Kan system assets, as set forth in Section 4.5 of the Disclosure Schedule (the Kan Assets), all related non-synthesis (sorting, washing and cleaving) service contracts (including without limitation the contract with Kalypsys, Inc.), and the future use of the Kan Assets to provide non-synthesis services to future customers (the Kan Services) shall be included in the Assets. The Purchaser shall grant the Seller a license to sell the Kan Services, as set forth in the license agreement set forth in Section 4.6 below, whether or not such Kan Services are bundled with other services provided by the Seller. The Purchaser shall permit an employee or officer of the Seller to use the Kan Assets, on an as available and AS IS basis (in no event to exceed, without agreement of Purchaser, 40% of the monthly usage capacity of the Kan Assets during normal business hours), at no charge to the Seller upon the reasonable request of the Seller, or, if the Seller requests and Purchaser agrees, the Purchaser shall provide the Kan Services to the Seller for an amount equal to cost plus 15%; provided, however, that Seller shall purchase consumables used in such services from Purchaser at Purchaser's then-current list price (or the price paid by a customer of the Purchaser, if more favorable), whether or not such services are conducted by Seller or Purchaser. The rights and privileges granted to the Seller under this Section 4.5 shall not be transferable or sublicenseable without the Purchaser's prior written consent, except that Seller may assign such rights and privileges to a third party that acquires all or substantially all of the Seller's assets, whether by merger or otherwise. The Seller shall be responsible for, and shall indemnify, defend, and hold the Purchaser harmless with respect to, (i) all obligations to, and claims by, the Seller's customers in connection with the Kan Services offered by the Seller to such customers, and (ii) all actions of the Seller's employees or agents in connection with their use of the Kan Assets, including without limitation any damage to such Kan Assets. The Purchaser represents and warrants that, with respect to Kan Services provided to Seller by Purchaser hereunder, Purchaser shall conduct such services in a professional and workmanlike manner comparable to the level used by Purchaser in providing such services to its other customers purchasing Kan Services. For a period of four years following the Closing Date, so long as the Purchaser continues to offer Kan Services to Persons other than the Seller, the Purchaser shall be obligated to maintain the Kan Assets in working order. The foregoing shall not be construed to prohibit the Purchaser from selling the Kan Assets and/or from discontinuing the business of providing the Kan Services during such period; provided, however, that (i) if the Purchaser sells the Kan Assets prior to the expiration of such four-year period, the Purchaser shall pay to the Seller an amount equal to 400,000, less 1/48th of such amount for each month by which the effective date