Collaboration Agreement Dated March 1, 1998

EXHIBIT 10.8


COLLABORATION AGREEMENT


This COLLABORATION AGREEMENT (the "Agreement"), effective as of March 1, 1998 (the "Effective Date"), is made by and between Symyx Technologies, a California corporation, having a principal place of business at 3100 Central Expressway, Santa Clara, California 95051 ("Symyx"), and Bayer AG, a German corporation, having a principal place of business at D-51368 Leverkusen, Germany (the principal contributor and participant within Bayer) and its Affiliates (collectively, "Bayer").


BACKGROUND


A. Symyx owns and is developing novel, proprietary methods for the
combinatorial preparation and screening of novel materials;


B. Bayer is a worldwide-represented German chemical and pharmaceutical
corporation with diversified business units across multiple industry
segments and interests in actively developing and utilizing novel
technologies and materials;


C. Symyx and Bayer desire to collaborate to conduct materials discovery
research and development focused on specific catalysts, polymers,
luminescent materials, and x-ray phosphors, as well as such additional
materials and activities as may be agreed upon by the parties;


D. Symyx and Bayer have entered into that certain Interim Research Funding
Agreement effective as of September 1, 1997, as amended by that certain
Amendment to Interim Research Funding Agreement effective as of December
1, 1997 (as amended, the "Interim Research Funding Agreement"); and


E. On or before March 31, 1998, Bayer and Symyx may enter into a Preferred
Stock Purchase Agreement pursuant to which Bayer would agree to
purchase, and Symyx would agree to sell, shares of Symyx Series D
Preferred Stock, and Symyx would grant Bayer an option to acquire
additional shares of Symyx Preferred Stock at the time of Symyx's
initial public offering.


NOW, THEREFORE, for and in consideration of the covenants, conditions and undertakings set forth herein, it is agreed by and between the parties as follows:


ARTICLE 1


DEFINITIONS


As used herein, the terms in this Agreement shall have the meanings set forth in Exhibit A.


ARTICLE 2


RESEARCH PROGRAM


2.1 Research Activities. Subject to the terms and conditions set forth herein, the parties shall conduct collaborative research in connection with the Research Program. The parties intend to conduct the Research Program on a collaborative basis, and agree to cooperate in the identification of Lead Compounds.


2.1.1 Symyx Responsibilities. During the term of the Research Program, Symyx


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2 shall use its reasonable efforts to identify Lead Compounds in accordance with applicable Project Plans and, in that regard, to prepare and screen Libraries in the Research Program, one or more of which Libraries may, in Symyx's discretion, be prepared by Symyx outside the Research Program but used for screening in the course of performing the Research Program. Symyx shall keep the RFC responsible for a particular Field fully informed of its activities in respect of each Project within such Field. Notwithstanding any other provision of this Agreement, Symyx shall not, without its consent, be required to perform research activities other than in accordance with the Project Plans, or utilize a total number of Symyx Full-Time Equivalent ("FTE") research positions in excess of the number of FTE's funded in the Research Expenses and paid for by Bayer.


2.1.2 Bayer Responsibilities. During the term of the Agreement, Bayer shall use its reasonable efforts to (i) provide Symyx with background information and technical information available to Bayer that is necessary to Symyx in setting up and conducting the Projects within the Research Program, and (ii) provide other support and assistance necessary for the conduct of the Research Program as set forth in the Project Plans or as mutually agreed by the parties, including but not limited to providing chemical reagents, characterization protocols, and other relevant information for the conduct of the Research Program. Bayer shall keep Symyx fully informed of Bayer's testing and development of Agreement Compounds and/or Program Technology, during the term of the Research Program, Bayer shall keep the RFC responsible for each Project apprised of the progress and technical issues relating to the development of Agreement Compounds and commercialization of Products, or commercial exploitation of Program Technology, resulting from such Project.


2.1.3 Interim Research. It is understood and agreed that research activities performed under the Interim Agreement shall be considered to be work performed in the Research Program for all purposes of this Agreement, including without limitation royalty obligations set forth herein; provided, however, that payments made from Bayer to Symyx under the Interim Research Funding Agreement shall not offset or reduce the payments provided under Article 6 of this Agreement.


2.2 Fields and Projects.


2.2.1 Initial Fields. The Research Program shall initially include the following Fields: (i) [******] (ii) the Catalysis Field, which shall be defined as catalysts for conversion of [******]; and (iii) the X-Ray Phosphors Field, which shall be defined as x-ray phosphors for general radiography applications.


(a) Addition of [******] Field. Upon written agreement of the parties, including approval by Prof. Dr. Rudolf Casper representing the Bayer Rubber Business Group, on or before May 1, 1998 setting forth mutually agreeable terms which may include amendments to sections of this Agreement, the Research Program may be expanded to include the [******] Field, which shall be defined as [******]. It is understood that upon addition of the [******] Field to the Research Program, Symyx will dedicate [******] FTEs to research activities in the [******] Field during the period from May 1, 1998 to March 1, 1999, and will dedicate [******] FTEs to research activities in the [******] Field during the period from March 1, 1999 to March 1, 2000.


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(b) Bayer Election to Reduce Catalysis Field. In the event that the Research Program has not been expanded to include one or more Projects concerning catalysts for selective oxidation reactions (including without limitation the Projects described in Section 2.3) on or before June 1, 1998, then Bayer may elect to reduce the number of Symyx FTEs within the Catalysis Field from [******] FTEs to [******] FTEs for the period from the effective date of such reduction to March 1, 1999, and from [******] FTEs to [******] FTEs for the period from March 1, 1999 to March 1, 2000. In the event that Bayer so elects to reduce the Catalysis Field, (i) the funding payments from Bayer to Symyx will be reduced as set forth in Section 6.2.1(a), and (ii) Symyx shall not be obligated to utilize more than an average of [******] FTEs per year in the Catalysis Field from the effective date of such election to March 1, 1999 and [******] FTEs per year in the Catalysis Field from March 1, 1999 to March 1, 2000.


2.2.2 Addition and Expansion of Fields. Upon mutual written agreement of the parties, the Initial Fields may be expanded to include additional Projects or the Research Program may be expanded to include one or more additional Fields. In conjunction with expansion of the Research Program to include a new Field, it is understood that the parties will need to reach agreement regarding the description or definition of the Field, funding for research in the Field, identification of one or more Projects to be conducted within the Field, and the term of such Projects, among other things. It is understood that the parties may agree to reallocate or rebudget resources when the parties agree to add a new Field or Project to the Research Program, and that if the parties agree to such reallocation, the addition of a new Field or Project will not necessarily require an increase in total funding from Bayer.


2.2.3 Projects; Project Plans. A brief description of the initial Projects in each Field and the Project Plans for each of these initial Projects have been agreed in writing prior to the Effective Date.


2.2.4 Identification of Lead Compounds. The procedure for the identification of Lead Compounds by Symyx is set forth on Exhibit B hereto.


2.2.5 Termination of Fields. Fields may be terminated by unanimous agreement of the Executive Committee. The RFC for a particular Field may recommend to the Executive Committee that the research activities with respect to such Field should be terminated. At the request of either party, the Executive Committee will discuss possible reallocation of resources consistent with maintained funding by Bayer at the levels set forth in Section 6.2.1; provided, it is understood that if the Executive Committee does not agree upon such reallocation and still terminates a Field, the funding payments from Bayer to Symyx will decrease proportionally to the number of FTE's no longer being used for such Field. The parties will attempt to implement a smooth transition in connection with any such termination or reallocation, including provision of reasonable resources and time frames for wind-down or scale-back of the Project in such Field.


2.3 Option to Expand Catalysis Field. It is understood that existing obligations of Symyx prevent Symyx from including within the Catalysis Field certain research projects concerning (i) [******] and (ii) [******] (each project a "Catalyst Option Project"). If Symyx obtains the right to include one or both Catalyst Option Projects within the Catalysis Field, Symyx will give Bayer written notice (the "Availability Notice") identifying the Catalyst Option


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Project(s) available and shall, for the period commencing with delivery of the Availability Notice and ending three (3) months after the Availability Notice was sent (the "Negotiation Period"), negotiate with Bayer in good faith concerning terms upon which such projects may be included within the Catalysis Field. Symyx may, in its discretion, continue to conduct such Catalyst Option Project and perform related research activities during the Negotiation Period, but Symyx will not enter into an agreement to conduct such Catalyst Option Project for another party during the Negotiation Period. It is understood that neither party is obligated to agree to include either or both such Projects within the Catalysis Field, and that if the parties do not mutually agree upon terms for including one or both Catalyst Option Projects during the Negotiation Period described above, Symyx shall be free to perform the Option Projects on its own or with third parties without obligation to Bayer. It is further understood that the parties may agree to reallocate resources among the various Projects within the Research Program if either or both Catalyst Option Projects are to be included within the Catalysis Field, and that the parties will attempt to implement a smooth transition in connection with any such reallocation, including provisions of reasonable resources and time frames for wind-down or scale-back of other Projects within the Catalysis Field.


2.4 Research Program Term.


2.4.1 Initial Term. The Research Program shall commence on the Effective Date and, unless extended pursuant to Section 2.4.2, terminate two (2) years from the Effective Date of this agreement, (the "Initial Research Term"). The "Research Program Term" shall mean the Initial Research Term and any Extended Research Term set forth in Section 2.4.2.


2.4.2 Extension of Research Program Term. Both parties intend to identify and propose additional Projects (including appropriate product driven targets) that will justify the extension of the Research Program, and agree that not less than six (6) months before expiration of the Initial Research Term and any Extended Research Term, the Executive Committee will meet to discuss possible Projects for extension of the Research Program. Upon written agreement of the parties, the Research Program Term may be extended up to three (3) years (the "Extended Research Term"). Except as the parties may otherwise agree, the funding for the Extended Research Term, if any, shall be not less than [******] from March 1, 2000 to February 28, 2001, not less than [******] from March 1, 2001 to February 28, 2002, and not less than [******] from March 1, 2002 to February 28, 2003.


2.5 Field Exclusivity. Subject to Bayer's continuing payment to Symyx of Research Expenses for a Field, Symyx will not conduct research in such Field for any third party or on its own behalf, during the Research Program Term, other than under this Agreement. During the period for which Bayer originally committed to make Research Funding Payments for a given Field (as set forth in this Agreement for Initial Fields and as agreed by the parties for any additional Fields), Symyx will give Bayer thirty (30) days written notice in the event exclusivity set forth in this Section 2.5 no longer applies for such Field due to Bayer discontinuing payment, and on request of Bayer, the parties will discuss what payments, if any, are needed to maintain exclusivity; provided, however, that Symyx shall not be required to provide such notice to Bayer if the parties have agreed in writing that the exclusivity set forth in this Section 2.5 no longer applies for such Field.


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2.6 [******]


2.7 Records. Symyx and Bayer shall maintain records of the Research Program (or cause such records to be maintained) in sufficient detail and in good scientific manner as will properly reflect all work done and results achieved in the performance of the Research Program (including information sufficient to establish dates of conception and reduction to practice of inventions).


2.8 Activities Following Research Program. Except as expressly provided otherwise under the terms of this Agreement, Bayer shall, at Bayer's or its Sublicensees' expense, be responsible for conducting all development of Agreement Compounds and Products within the Field following the completion of the Research Program and all commercialization of Products in the Field to which Bayer retains rights under this Agreement, and, subject to and in accordance with the licenses, rights and obligations set forth in this Agreement, Bayer shall have the right in its exclusive discretion to conduct such development and commercialization.


ARTICLE 3


MANAGEMENT AND INFORMATION


3.1 Executive Committee.


3.1.1 Responsibility. Symyx and Bayer shall establish a committee (the "Executive Committee") to (i) oversee and to direct the overall relationship between Symyx and Bayer, (ii) add, modify and terminate Fields and Projects within such Fields, (iii) approve budgets for conduct of the Research Program, (iv) identify and recommend additional fields for potential expansion or extension of the Research Program, and (v) resolve any issues which a Research Field Committee is unable or not authorized to resolve, and (vi) review and modify as necessary the Lead Compound identification and approval process.


3.1.2 Membership. The Executive Committee shall be comprised of three (3) representatives from each party, with each party's representatives selected by the party. Either party may replace their respective Executive Committee members at any time, upon written notice to the other party. It is understood that Bayer's representatives on the Executive Committee may include one representative from Central Research and each business group and Affiliate of Bayer participating in a Project, up to a total of three (3) persons.


3.1.3 Meetings. The Executive Committee shall meet at least twice per year at locations agreed by the parties, or more frequently as decided by the Executive Committee. With the consent of the parties, other representatives of Symyx or Bayer may attend Executive Committee meetings as nonvoting observers. Each party shall be responsible for all of its own expenses associated with attendance of such meetings. Executive Committee members may participate in any such meeting in person, by telephone, or by televideo conference. Symyx shall prepare minutes of each Executive Committee meeting, which minutes shall be approved and signed by Executive Committee representatives of each party.


3.1.4 Decision Making. Decisions of the Executive Committee shall be made by unanimous approval. In the event the Executive Committee is unable to resolve an issue, it will


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be referred to the responsible representative of the Board of Directors of Bayer and the Chairman of the Board of Symyx for resolution, and such persons shall discuss such matter within thirty (30) days.


3.1.5 Additional Fields and Projects. The Executive Committee shall consider and evaluate proposed additional fields and projects for the potential expansion or extension of the Research Program proposed by representatives of either party. If the Executive Committee determines that the addition of a given field or Project or extension of an existing Field is appropriate and desirable, the Executive Committee will recommend such additional field or project, or such extension of a Field, to the parties and the parties will negotiate in good faith the terms and conditions upon which such additional field or Project may be added or extended; however, it is understood that neither party shall be obligated to agree to or accept such terms and conditions. It is understood that Symyx shall not be obligated to perform any additional research activities without its prior consent.


3.2 Research Field Committees.


3.2.1 Responsibilities. Bayer and Symyx will establish a committee for each Field to oversee and review the technical direction of research activities within a Field (the "Research Field Committee," or "RFC"). The responsibilities of each Research Field Committee shall include: (i) establishing and modifying the Lead Criteria for each Project in the applicable Field, (ii) determining whether a particular compound identified in a Project in that Field meets the Lead Criteria, in accordance with the procedure set forth in Exhibit B to this Agreement, (iii) defining the activities and milestones for each Project in the Field, (iv) monitoring and reporting research progress for the Field for which it is responsible, and ensuring open exchange between both parties, (v) preparing and prioritizing lists of potential additional Projects for the Field, (vi) evaluating results of Projects in the Field and potential modifications to Project Plans, (vii) making recommendations regarding the approval of budgets for Projects in the Field, and (viii) coordinating all patent activities arising from Projects in the Field. From time to time, a RFC may invite additional non-voting experts and establish subcommittees, such as a patent committee, to oversee particular tasks or activities. The RFC may, by unanimous agreement, amend the Project Plans of Projects within the applicable Field, provided, however, that the RFC shall not alter the funding for any Project without the prior agreement of the Executive Committee.


3.2.2 Membership. Each RFC shall include an equal number of representatives from Bayer and Symyx, up to three (3) persons from each, each party's representatives selected by that party. The parties will each designate one of their own representatives as the leader of their representatives on the RFC to help coordinate activities of the RFC. Symyx and Bayer may each replace its RFC representatives and leaders at any time, upon written notice to the other party. Each RFC shall be chaired as agreed by the parties.


3.2.3 Meetings. During the term of the applicable Project, each RFC shall meet quarterly at regular intervals, or more frequently as agreed by the RFC, at such locations as the parties agree. With the consent of the parties, other representatives of Symyx or Bayer may attend RFC meetings as nonvoting observers. Each party shall be responsible for all of its own expenses associated with attendance of such meetings. RFC members may participate in any


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such meeting in person, by telephone, or by televideo conference. Symyx shall prepare minutes of each RFC meeting, which minutes shall be approved and signed by RFC representatives of each party, and will prepare a list of action items determined by the RFC in each formal meeting for submission to the Executive Committee.


3.2.4 Decision Making. Decisions of each RFC shall be made by unanimous approval. In the event that unanimous agreement on any matter is not achieved within the RFC, the matter will be referred to the Executive Committee for resolution.


ARTICLE 4


INTELLECTUAL PROPERTY


4.1 Program Technology. Subject to 4.3, title to all inventions and other intellectual property made by employees or agents of Bayer and Symyx in the course of and in connection with the Research Program shall be deemed owned jointly by Symyx and Bayer, excluding Combinatorial Chemistry Technology. It is understood that, except as otherwise expressly provided in this Agreement, both Bayer and Symyx may use, sublicense, commercialize, or otherwise exploit all such jointly-owned technology without the consent of, or obligation to account to, the other party.


4.2 Law. Inventorship of inventions and other intellectual property rights conceived and/or reduced to practice pursuant to this Agreement shall be determined in accordance with applicable law in the country where the invention is made, subject to the express provisions of this Agreement regarding rights of ownership and grant of licenses.


4.3 Combinatorial Chemistry Technology. Symyx shall retain sole ownership of, and all rights to, Combinatorial Chemistry Technology, and any inventions or discoveries conceived or reduced to practice or otherwise developed by Symyx and/or Bayer relating to Combinatorial Chemistry Technology, developed in connection with the conduct of the Research Program.


4.4 Reserved Rights. Symyx shall not have any right to combinatorial technologies developed by Bayer outside the Research Program, and Bayer shall not have any obligation to disclose the same to Symyx. Bayer shall not have any right in or to any Combinatorial Chemistry Technology or to Symyx Technology or any intellectual property developed by Symyx outside the Research Program, except as expressly set forth in this Agreement, and Symyx shall not have any obligation to disclose the same to Bayer.


4.5 Notice of Inventions. Symyx and Bayer shall promptly report to the RFC of each Field any inventions relating to Lead Compounds or Program Technology or Combinatorial Chemistry Technology made in the course of performing the Research Program.


4.6 Cooperation. Each of Bayer and Symyx shall keep the other informed as to the status of patent and patent prosecution matters defined in this Article 4, including without limitation, by providing the other the opportunity to fully review and comment on any documents as far in advance as possible of filing dates and prosecution deadlines, and providing the other copies of any substantive documents that such party receives from such patent offices promptly after receipt, including notice of all official actions, interferences, reissues, re-examinations,


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oppositions, potential litigation, or requests for patent term extensions. Bayer and Symyx shall each reasonably cooperate with and assist the other at its own expense in connection with such activities, at the other party's request.


4.7 Patent Prosecution.


4.7.1 Patent Committee. The Executive Committee may establish a committee (the "Patent Committee") to facilitate the filing, prosecution, and maintenance of patent applications and patents within the Program Technology. The Patent Committee shall be comprised of an equal number of representatives from each party, and each party shall designate one person to serve as the Patent Committee Leader for that party. The Patent Committee shall be responsible to discuss issues of patent strategy, including without limitation, issues of where to file patent applications, whether to abandon patent applications, and how the costs of such prosecution and maintenance will be funded. The Patent Committee shall also endeavor to open and facilitate appropriate lines of communication between the parties, the Executive Committee, and the RFC's regarding the filing, prosecution, and maintenance of patent applications and patents within the Program Technology. Decisions of the Patent Committee shall be made by unanimous approval. In the event the Patent Committee cannot resolve an issue by unanimous agreement, the matter will be referred to the Executive Committee for resolution.


4.7.2 Responsibilities.


(a) Inventions by Symyx. Except as provided in Section 4.7.3, Symyx shall, in its discretion, be responsible for preparing, filing, prosecuting and maintaining patent applications and patents relating to inventions within the Program Technology made by employees or agents of Symyx, but not Bayer, in the course of performing the Research Program, and conducting any interferences, re-examinations, reissues and oppositions relating to such patent applications and patents, as it deems appropriate, at Symyx's expense.


(b) Inventions Made Jointly.


(i) The parties will cooperate to file, prosecute and maintain patent applications covering inventions with the Program Technology made jointly by employees or agents of Bayer and employees or agents of Symyx in countries agreed by the parties. The parties shall agree which parties shall be responsible for conducting such activities with respect each such invention. Except as otherwise expressly provided in this Agreement, the parties will share equally all expenses and fees associated with the filing, prosecution, issuance and maintenance of any patent application and resulting patent for each such invention in the agreed countries.


(ii) In the event that either party wishes to seek patent protection with respect to any inventions with the Program Technology made jointly by employees or agents of Bayer and employees or agents of Symyx in a country the other is not interested in pursuing patent protection, it shall notify the other party hereto. If the other party wishes to seek patent protection with respect to such a jointly-made invention in such country or countries, it may file, prosecute and maintain patent applications and patents with respect ...