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EXHIBIT 10.29
PROMISSORY NOTE AND
WARRANT PURCHASE AGREEMENT
THIS PROMISSORY NOTE AND WARRANT PURCHASE AGREEMENT (the
"Agreement") is made as of March 9, 2000, among Discovery Partners
International, Inc., a California corporation (the "Company"), and each of the
investors listed on Exhibit A attached hereto (each individually, an "Investor"
and collectively, the "Investors").
RECITALS
WHEREAS, each Investor desires to purchase from the Company, and
the Company desires to sell and issue to each Investor, a Promissory Note in
substantially the same form as Exhibit B attached hereto (each, a "Note" and
collectively, the "Notes") in the principal amount set forth opposite each
Investor's name on Exhibit A attached hereto under the headings "Principal
Amount of Notes"; and
WHEREAS, each Investor desires to purchase from the Company, and
the Company desires to sell and issue to each Investor, Warrants in
substantially the same form as Exhibit C attached hereto and on the terms and
conditions set forth herein (each, a "Warrant" and collectively, the
"Warrants"), such Warrants to purchase that number of shares of the Company's
capital stock ("Exercise Stock") as determined pursuant to the terms and
conditions of this Agreement and the Warrants.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereby agree as
follows:
1. Purchase and Sale of Notes and Warrants.
1.1 Purchase and Sale of Notes and Warrants. Subject to the terms
and conditions of this Agreement, each Investor agrees, severally and not
jointly, to purchase at the Closing and the Company agrees to sell and issue to
each Investor, severally and not jointly, at the Closing (a) a Note in
substantially the same form as attached hereto as Exhibit B, in the principal
amount set forth opposite that Investor's name on Exhibit A attached hereto
under the heading "Principal Amount of Notes" at a price equal to 100% of the
principal amount thereof, up to an aggregate amount of $2,000,000.00 and (b)
Warrants to purchase such variable number of shares of Exercise Stock as set
forth by the terms of this Agreement and of each Warrant in substantially the
same form as attached hereto as Exhibit C.
1.2 Closing.
(a) The purchase and sale of the Notes and the Warrants
shall occur at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, 000 Xxxx X
Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx, at 10:00 a.m. on March 9, 2000, or at
such other time and place as the Company and
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Investors acquiring more than half the aggregate principal amount of the Notes
sold pursuant hereto shall mutually agree in writing (the "Closing").
(b) At the Closing, the Company shall deliver to each
Investor the Note and Warrant that such Investor is purchasing against payment
by check or wire transfer of the Principal Amount of Notes set forth, across
from each Investor's name on attached Exhibit A.
1.3 Allocation of Purchase Price to Warrants. The Company hereby
allocates to the Warrants a purchase price of $0.01 for each share of Exercise
Stock that each Warrant is exercisable into and such purchase price shall be
retained from the interest that accrued on such Investor's Note by the Company
at the time such Investor's Note is paid in full.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to and for the benefit of each Investor, with knowledge
that each Investor is relying thereon in entering into this Agreement and
purchasing the Notes and the Warrants from the Company, that the following are
true and correct:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California and has all requisite corporate power and authority
to carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on the operation of its business or properties.
2.2 Authorization. All corporate action on the part of the Company,
its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Notes and the Warrants has been
taken or will be taken prior to the Closing, and this Agreement, the Notes and
the Warrants constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except (a) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (b) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
2.3 Disclosure. The Company has fully provided each Investor with
all the information which such Investor has requested for deciding whether to
purchase the Notes and the Warrants and all information which the Company
believes is reasonably necessary to enable such Investor to make such decision.
Neither this Agreement nor any other written statements or certificates made or
delivered in connection herewith or therewith contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
in this Agreement or therein not misleading.
3. Representations and Warranties of the Investors. Each Investor hereby
separately and not jointly represents and warrants to and for the benefit of the
Company, with knowledge
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that the Company is relying thereon in entering into this Agreement and issuing
the Notes and Warrants to such Investor, as follows:
3.1 Purchase Entirely for Own Account. By each Investor's execution
of this Agreement, such Investor hereby confirms that the Notes and Warrants to
be received by such Investor, and the capital stock issuable upon exercise of
the Warrants (collectively, and also including any further underlying
securities, the "Securities") shall be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that such investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, each Investor
further-represents that such Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities. Each Investor represents that it has full power and authority to
enter into this Agreement.
3.2 Investment Experience. Each Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment in the Securities.
3.3 Accredited Investor. Each Investor is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D, as now in effect.
3.4 Restricted Securities. Each Investor understands that the
Securities it is and shall be purchasing are characterized as "restricted
securities" under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act of 1933, as amended (the "Act"),
only in certain limited circumstances. In this connection, each Investor
represents that it is familiar with Rule 144 promulgated under the Act, as now
in effect, and understands the resale limitations imposed thereby and by the
Act.
3.5 Legends. Each Investor understands that the certificates
evidencing the Securities may bear one or all of the following legends:
(a) The securities evidenced by this certificate have not
been registered under the Securities Act of 1933, as amended (the "Act") or the
securities laws of any state of the United States. The securities evidenced by
this certificate may not be offered, sold or transferred for value directly or
indirectly, in the absence of such registration under the Act and qualification
under applicable state laws, or pursuant to an exemption from registration under
the Act and qualification under applicable state laws, the availability of which
is to be established to the reasonable satisfaction of the Company.
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(b) Any legend required by the laws of the State of
California, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the California Corporations Code.
(c) A legend giving notice of Section 6.
4. Restrictions on Disposition. Without in any way limiting the
representations set forth in Section 3 above, each Investor further agrees not
to make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of the Company to be bound
by this Section 4, and in addition thereto, one of the following conditions is
satisfied:
4.1 Securities Registered. There is then in effect a registration
statement under the Act covering such proposed disposition and such disposition
is made in accordance with such registration statement.
4.2 Registration Not Required. Such Investor shall have (i)
notified the Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances surrounding the proposed
disposition, and (ii) if reasonably requested by the Company, furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such securities under the Act.
4.3 Other Permitted Transfers. The disposition is by an Investor
which is a partnership to a partner of such partnership or a retired partner of
such partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his spouse or to the siblings, lineal descendants including
adopted children or ancestors of such partner or his spouse, if, prior to such
transfer, the transferee agrees in writing to be subject to the terms hereof to
the same extent as if he were an original Investor hereunder. Notwithstanding
any of the foregoing, transferability of the Notes are further restricted by
their terms.
5. California Commissioner of Corporations.
5.1 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
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6. Market Stand-Off Agreement. During the period of duration (not to
exceed 180 days) specified by the Company and an underwriter of Common Stock or
other securities of the Company, following the effective date of a registration
statement of the Company filed under the Act, each Investor shall not, to the
extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to transferees or donees who agree to be similarly bound) any securities of
the Company held by it at any time during such period except Common Stock
included in such registration; provided, however, that this Section 6 shall be
applicable only to the first such registration statement of the Company pursuant
to which Common Stock (or other securities) of the Company are to be sold on its
behalf to the public in an underwritten offering, and (b) all officers and
directors of the Company enter into similar agreements. In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to the securities of each Investor (and the shares or securities of
every other person subject to the foregoing restriction) until the end of such
period.
7. General Provisions.
7.1 Construction. This Agreement shall be governed, construed and
enforced in accordance with the internal laws of the State of California,
without giving effect to its conflicts of laws principles.
7.2 Entire Agreement. This Agreement, together with the agreements
and documents referred to herein, constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and supersede all prior
and contemporaneous negotiations, agreements and understandings.
7.3 Notices. All payments, notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given at the earlier of (i) the time of actual delivery or (ii) on the
third business day following the date deposited with the United States Postal
Service, postage prepaid, certified with return receipt requested, to the
parties at the following addresses or at such other address as shall be given in
writing by a party to the other parties:
Investors: At the address set forth below their
names on Exhibit A attached hereto.
The Company: 0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: President
7.4 Successors and Assigns. This Agreement, and the rights and
obligations of each of the parties hereunder, may not be assigned by any
Investor without the prior written consent of the Company. Subject to the
foregoing sentence, this Agreement shall inure to the benefit of, and shall be
binding upon, the parties and their successors and assigns.
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7.5 Severability. If any term, covenant or condition of this Agreement
is held to be invalid, void or otherwise unenforceable by any court of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby and
each term, covenant and condition of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
7.6 Modification. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the holders of at least fifty-one percent (51%) of
the aggregate principal amount of the Notes then outstanding. Any amendment or
waiver effected in accordance with this Section 7.6 shall be binding upon all
parties to this Agreement, including, without limitation, any Investors who may
not have executed such amendment or waiver, and each future holder of any
Exercise Stock that the holder of any Warrant is entitled to receive upon the
exercise of such Warrant.
7.7 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to an award of its reasonable attorneys' fees, costs and disbursements
in addition to any other relief to which such party may be entitled.
7.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective as of the date first written above.
COMPANY: DISCOVERY PARTNERS INTERNATIONAL,
INC., a California corporation
By: /s/ Xxxx Xxxxxxxxxxx
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Xxxx Xxxxxxxxxxx, Chief Financial Officer
Address: 0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
INVESTORS: CROSSPOINT VENTURE PARTNERS LS-1997
By: /s/ Xxxxxx X. Xxxxxx
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General Partner
Address: 00000 XxxXxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
[SIGNATURE PAGE TO PROMISSORY
NOTE AND WARRANT PURCHASE AGREEMENT]
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EXHIBIT A
SCHEDULE OF INVESTORS
PRINCIPAL AMOUNT
INVESTOR NAME AND ADDRESS OF NOTES
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Crosspoint Venture Partners LS-1997 $2,000,000
00000 XxxXxxxxx Xxxxxxxxx, Xxxx 000
Xxxxxx, XX 00000
Total: $2,000 000
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