Cross License Agreement

Exhibit 2.1.1

Certain information in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

Intellectual Property

Cross License Agreement

By and Among

Maxygen, Inc.

Maxygen Holdings Ltd.

Maxygen ApS

AND

Bayer HealthCare LLC

Dated July 1, 2008

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INTELLECTUAL PROPERTY CROSS LICENSE AGREEMENT

     This Intellectual Property Cross License Agreement (this “Agreement”) is made and entered into on this 1st day of July 2008, by and between Maxygen, Inc. (“Maxygen”), a Delaware corporation, Maxygen Holdings Ltd. (“Holdings”), a wholly owned subsidiary of Maxygen and a company organized under the laws of the Cayman Islands, Maxygen ApS, a wholly owned subsidiary of Holdings and a company organized under the laws of the Kingdom of Denmark (“ApS”), and Bayer HealthCare LLC (“Bayer”), a Delaware limited liability company.

W I T N E S S E T H :

     Whereas, concurrently with the execution of this Agreement, Maxygen, Bayer, Holdings and ApS have executed the Technology Transfer Agreement;

     Whereas, Maxygen and its Affiliates own or Control certain rights, title and interest in the UCOE Technology and Licensed Retained IP which relate to Compounds;

     Whereas, pursuant to the Technology Transfer Agreement, Bayer will acquire ownership of the Acquired Assets;

     Whereas, in connection with its acquisition of the Acquired Assets, Bayer desires to obtain certain licenses under the UCOE Technology and the Licensed Retained IP, and Maxygen and its Affiliates are willing to grant such licenses, all on the terms and conditions set forth herein;

     Whereas, Maxygen desires to obtain a license back under the Licensed-Back Acquired IP, and Bayer is willing to grant such license, all on the terms and conditions set forth herein;

     Now, therefore, in consideration of the mutual promises and obligations hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto stipulate and agree as follows:

ARTICLE 1
DEFINITIONS

     The terms used and not otherwise defined herein shall have the meanings ascribed to them in the Technology Transfer Agreement.

      1.1 “Control” and/or “Controlled” shall mean, with respect to Patent Rights, Know-How or Materials, ownership by or possession by a Party of the ability to grant the licenses or sublicenses to the other Party as provided for herein, and/or to transfer Materials to the other Party as provided for herein, without (i) violating the terms of any agreement or other arrangement with any Third Party, and/or (ii) incurring a contractual payment obligation to a Third Party for the grant and/or practice of such license or sublicense, as the case may be.

      1.2 “Dispute ” shall have the meaning set forth in Section 10.1.

      1.3 “Field Exclusivity Period” shall mean the period during which Maxygen is subject to the obligations set forth in Section 3.1 of the Technology Transfer Agreement.

      1.4 “Licensed-Back Acquired IP” means the Patent Rights and Know-How within the Acquired Assets that have utility outside the Field. With respect to Patent Rights, Licensed-Back Acquired IP shall include future patent applications and patents issuing thereon to the extent they have utility outside the Field and claim priority to any Patent Rights within the scope of the foregoing sentence (provided, however, that with respect to continuation-in-part applications, only those claims thereof which claim priority to a date on or before the Closing Date shall be included in the license hereunder). Notwithstanding the foregoing, Licensed-Back Acquired IP shall not include: (a) the Patent Rights listed on Schedule 4.1(g) of the Technology Transfer Agreement or the future patent applications filed and patents issuing thereon which claim priority to any Patent Rights within Schedule 4.1(g), and (b) any Patent Rights and Know-How within the Assigned Third Party Agreements.

      1.5 “Licensed Retained IP” means the Retained Intellectual Property owned by Maxygen, Holdings or their Affiliates as of the Closing Date. With respect to Patent Rights, Licensed Retained IP shall include future patent applications and patents issuing thereon to the extent they have utility in the manufacture, use or sale of Compounds and claim priority to any Patent Rights within the scope of the foregoing sentence (provided, however, that with respect to continuation-in-part applications, only those claims thereof which claim priority to a date on or before the Closing Date shall be included in the license hereunder).

      1.6 “Materials” shall mean any chemical or biological substances including, without limitation, any: (i) organic or inorganic chemical element or compound; (ii) nucleic acid; (iii) vector of any type (e.g., cosmid, plasmid, spore, phage, virus, or virus-like particle), and subunits of the foregoing; (iv) host organism, including, without limitation, prokaryotic cells, eukaryotic cells or animals; (v) eukaryotic cell line, prokaryotic cell line or expression system; (vi) protein, including, without limitation, any peptide or amino acid sequence, enzyme, antibody or protein conferring targeting properties and any fragment of any of the foregoing; (vii) genetic material, including, without limitation, any genetic nucleic acid construct, marker gene and genetic control element (e.g., promoter, termination signal), gene, genome or variant of any of the foregoing; and/or (viii) assay or reagent.

      1.7 “ML Laboratories Agreement” shall mean that certain Research and Commercial UCOE License Agreement entered into between ML Laboratories PLC (together with its successors-in-interest, referred to herein as “ML Laboratories”) and Maxygen, Holdings and ApS on May 27, 2005.

      1.8 “Owner ” shall have the meaning set forth in Section 7.1.

      1.9 “Recipient ” shall have the meaning set forth in Section 7.1.

      1.10 “Technology Transfer Agreement” shall mean that certain Technology Transfer Agreement between Maxygen, Holdings and Bayer of even date herewith.

      1.11 “Territory” shall mean worldwide.

      1.12 “UCOE-Licensed Compounds” shall mean the two Factor VII variant Compounds designated by Maxygen as [****] and [****] , with the [****] described in Schedules 1.14 and 1.62 of the Technology Transfer Agreement.

      1.13 “UCOE Technology” shall mean any and all Patent Rights and Know-How licensed to Maxygen under the ML Laboratories Agreement, and any and all Materials provided by ML Laboratories to Maxygen under the ML Laboratories Agreement (including any modification, derivatives or improvements thereof in Maxygen’s possession as of the Closing Date).

      1.14 Interpretation. The usage and construction of the terms in this Agreement shall be subject to the construction rules set forth in Section 1.124 of the Technology Transfer Agreement.

ARTICLE 2
UCOE TECHNOLOGY

      2.1 Grant. Subject to the terms and conditions herein (including, without limitation, Section 2.4), effective as of the Closing Date, Maxygen and its Affiliates hereby grant to Bayer, and Bayer hereby accepts, a fully-paid (except for payments pursuant to Section 2.4), royalty-free, irrevocable (except as provided in Section 2.5) sublicense under Maxygen’s and its Affiliates’ interest in the UCOE Technology to research, develop, make, have made, use, sell, offer for sale, import and have imported the UCOE-Licensed Compounds in the Territory. Such license for the UCOE-Licensed Compounds shall be exclusive as to Maxygen’s rights and interest in the UCOE Technology pursuant to the ML Laboratories Agreement.

      2.2 Limited Maxygen Rights. Bayer acknowledges that the license to Maxygen with respect to the UCOE Technology under the ML Laboratories Agreement is non-exclusive and limited to the Field of Use (as defined in the ML Laboratories Agreement). Accordingly, the license provided in Section 2.1 with respect to the UCOE-Licensed Compounds shall be limited to the scope of the rights licensed to Maxygen under the ML Laboratories Agreement.

      2.3 Sublicensing. Bayer shall have the right to further sublicense the rights sublicensed to Bayer pursuant to Section 2.1 to the full extent permitted under the terms of the ML Laboratories Agreement. Any such sublicense shall be (i) in writing, (ii) consistent with the terms and conditions of this Agreement, and (iii) consistent with the terms and conditions of the ML Laboratories Agreement (including without limitation Section 4.1 thereof). Bayer shall notify Maxygen and ML Laboratories in writing of the identity of the applicable sublicensee within thirty (30) days following each grant of such a sublicense, and shall be responsible for ensuring the compliance of each of its sublicensees with respect to the UCOE Technology with the applicable terms and conditions of the ML Laboratories Agreement.

      2.4 Compliance with Obligations; Payments; Notices. Bayer hereby covenants that, with respect to the exercise of the licenses and rights with respect to the UCOE Technology that are sublicensed to Bayer hereunder, Bayer shall comply, and shall ensure that its Affiliates

and the sublicensees of Bayer and its Affiliates comply, in each case for the lesser of the term of the ML Laboratories Agreement and the term of the sublicense to Bayer under Section 2.1 of this Agreement, with all restrictions and obligations set forth in the ML Laboratories Agreement (other than payment of annual research fees pursuant to section 6.1 of that agreement) with respect to the use of the licenses and rights with respect to the UCOE Technology that are sublicensed to Bayer hereunder, throughout the term of Bayer’s sublicense under the ML Laboratories Agreement. With respect to payment obligations, Bayer agrees to timely pay ML Laboratories, according to the terms specified in the ML Laboratories Agreement, all amounts required to be paid under the ML Laboratories Agreement for the activities of Bayer and its Affiliates and their sublicensees and to supply concurrent written notification of such payment to Maxygen; provided, however, that Bayer shall not be obligated to pay any portion of the annual research fees that Maxygen is required to pay pursuant to section 6.1 of the ML Laboratories Agreement. Bayer shall notify ML Laboratories and Maxygen in writing within thirty (30) days after achievement of any of the milestone events indicated in Section 6.2 of the ML Laboratories Agreement, by or under authority of Bayer and/or its Affiliate, or any sublicensee of either Bayer and/or its Affiliate, with respect to any UCOE-Licensed Compound.

      2.5 Breach of ML Laboratories Agreement.

          (a) Notice. In the event that Maxygen receives any written notice of breach under the ML Laboratories Agreement, Maxygen shall promptly notify Bayer, and each of Bayer (to the extent such breach is attributed to Bayer and/or its Affiliate or a sublicensee of Bayer and/or its Affiliate) and Maxygen shall provide such information as is reasonably available to it, or its Affiliates, regarding the breach or alleged breach (subject to confidentiality obligations to Third Parties). The Parties shall promptly confer and discuss the nature of the breach or alleged breach, and appropriate steps to cure such breach to avoid termination of the ML Laboratories Agreement.

          (b) Cooperation and Cure. Bayer shall have the first obligation to cure any breach attributable to Bayer’s action or inaction (or that of Bayer’s Affiliate, or of a sublicensee of Bayer or its Affiliate), and Bayer and Maxygen each shall have the right to cure any such breach or alleged breach under the ML Laboratories Agreement in order to avoid termination of the ML Laboratories Agreement. Maxygen and Bayer shall each use all reasonable efforts, as requested by the other Party, to cooperate to effect such cure, which cooperation shall be at Bayer’s expense to the extent the breach or alleged breach is attributable to action or inaction of Bayer and/or its Affiliate or any sublicensee of either of Bayer and/or its Affiliate, and at Maxygen’s expense to the extent the breach or alleged breach is attributable to action or inaction of Maxygen and/or its Affiliate or any sublicensee of Maxygen and/or its Affiliate.

          (c) Termination. In the event that Bayer or any of its Affiliates or any sublicensee of Bayer or its Affiliate has materially breached, or otherwise materially failed to comply with, any material terms or conditions of the ML Laboratories Agreement with respect to the UCOE Technology sublicensed to Bayer hereunder, and provided that either (i) Maxygen has notified Bayer within [****] Business Days of Maxygen’s receipt of notice of breach from ML

Laboratories or (ii) ML Laboratories has provided notice of such breach directly to Bayer, then if such material breach or material failure is not cured on or before the date [****] Business Days prior to the last day of Maxygen’s cure period under the ML Laboratories Agreement, Maxygen may terminate the sublicense to Bayer hereunder with respect to the UCOE Technology upon written notice to Bayer. In the event that Maxygen’s license to the UCOE Technology under the ML Laboratories Agreement is terminated in whole or part, Maxygen shall not be liable to Bayer to the extent such termination is based upon (i) Bayer’s or its Affiliate’s (or Bayer’s or its Affiliate’s sublicensee’s) breach of, or failure to comply with, the terms and conditions of the ML Laboratories Agreement or (ii) Maxygen’s failure to pay any amounts due under the ML Laboratories Agreement in respect of Bayer’s or any of its Affiliates’ activities, or any of their sublicensees’ activities, (other than annual research fees pursuant to Section 6.1 of such agreement) if Bayer has not paid such amounts to ML Laboratories on or before the date the applicable payment is due.

      2.6 Maxygen Exercise of Retained Rights. Bayer acknowledges and agrees that Maxygen retains the right to practice, and to grant to Maxygen’s Affiliates and/or to any Third Party rights to practice, the UCOE Technology for any or all uses (i) outside the Field during the Field Exclusivity Period, and (ii) outside of the sublicense granted hereunder following the Field Exclusivity Period, and nothing in this Agreement shall restrict, or be construed to restrict, Maxygen’s right to practice and grant licenses to practice the UCOE Technology (i) outside the Field during the Field Exclusivity Period, and (ii) outside of the sublicense granted hereunder following the Field Exclusivity Period.

      2.7 Negotiation for Direct License. Maxygen agrees that Bayer may approach Maxygen’s licensor under the ML Laboratories Agreement (or such licensor’s successor-in-interest) for the purpose of obtaining a direct license to Bayer with respect to the rights in the UCOE Technology sublicensed to Bayer hereunder, and Maxygen agrees that it shall facilitate such contact, on Bayer’s request after the Closing Date, and not object to such a direct sublicense, provided that (i) Maxygen’s rights under the ML Laboratories Agreement are not diminished, (ii) Maxyge