Document:

Filed by Bowne Pure Compliance

Exhibit 4.1

INNEXUS BIOTECHNOLOGY INC.

STOCK OPTION PLAN

20% PLAN

APPROVED BY SHAREHOLDERS DECEMBER 20, 2005

APPROVED AS AMENDED BY SHAREHOLDERS MARCH 17, 2008

APPROVED BY TSX VENTURE EXCHANGE FEBRUARY 2, 2006

 

 

 

INNEXUS BIOTECHNOLOGY INC.

STOCK OPTION PLAN

	1.	 	PURPOSE OF THE PLAN

The Company hereby establishes a stock option plan for directors, senior officers Employees,
Management Company Employees and Consultants (as such terms are defined below) of the Company and
its subsidiaries (collectively “Eligible Persons”), to be known as the “Stock Option Plan” (the
“Plan”). The purpose of the Plan is to give to Eligible Persons, as additional compensation, the
opportunity to participate in the success of the Company by granting to such individuals options,
exercisable over periods of up to five (5) years as determined by the board of directors of the
Company, to buy shares of the Company at a price not less than the Market Price prevailing on the
date the option is granted.

	2.	 	DEFINITIONS

	 
	 	 	In this Plan, the following terms shall have the following meanings:

	2.1	 	“Associate” means an “Associate” as defined in the Exchange Policies.

	 
	2.2	 	“Board” means the Board of Directors of the Company.

	 
	2.3	 	“Change of Control” means the acquisition by any person or by any person and all Joint
Actors, whether directly or indirectly, of voting securities (as defined in the Securities
Act) of the Company, which, when added to all other voting securities of the Company at the
time held by such person or by such person and a Joint Actor, totals for the first time not
less than fifty percent (50%) of the outstanding voting securities of the Company or the votes
attached to those securities are sufficient, if exercised, to elect a majority of the Board of
Directors of the Company.

	 
	2.4	 	“Company” means InNexus Biotechnology Inc. and its successors.

	 
	2.5	 	“Consultant” means a “Consultant” as defined in the TSX Policies.

	 
	2.6	 	“Consultant Company” means a “Consultant Company” as defined in the TSX Policies.

	 
	2.7	 	“Disability” means any disability with respect to an Optionee which the Board, in its sole
and unfettered discretion, considers likely to prevent permanently the Optionee from:

	 	(a)	 	being employed or engaged by the Company, its subsidiaries or another employer,
in a position the same as or similar to that in which he was last employed or engaged
by the Company or its subsidiaries; or

	 
	 	(b)	 	acting as a director or officer of the Company or its subsidiaries.

	2.8	 	“Distribution” means a “Distribution” as defined in the TSX Policies.

	 
	2.9	 	“Eligible Persons” has the meaning given to that term in paragraph 1 hereof.

	 
	2.10	 	“Employee” means an “Employee” as defined in the TSX Policies.

	2.11	 	“Exchanges” means the TSX Venture Exchange and, if applicable, any other stock exchange on
which the Shares are listed.

	 
	2.12	 	“Expiry Date” means the date set by the Board under section 3.1 of the Plan, as the last date
on which an Option may be exercised.

	 
	2.13	 	“Grant Date” means the date specified in an Option Agreement as the date on which an Option
is granted.

	 
	2.14	 	“Insider” means an “Insider” as defined in the TSX Policies, other than a person who is an
insider solely by virtue of being a director or senior officer of a subsidiary of the Company.

	 
	2.15	 	“Investor Relations Activities” means “Investor Relations Activities” as defined in the TSX
Policies.

	 
	2.16	 	“Joint Actor” means a person acting “jointly or in concert with” another person as that
phrase is interpreted in section 96 of the Securities Act.

	 
	2.17	 	“Management Company Employee” means a “Management Company Employee” as defined in the TSX
Policies.

	 
	2.18	 	“Market Price” of Shares at any Grant Date means the last closing price per Share on the
trading day immediately preceding the day on which the Company announces the grant of the
option or, if the grant is not announced, on the Grant Date, or if the Shares are not listed
on any stock exchange, “Market Price” of Shares means the price per Share on the
over-the-counter market determined by dividing the aggregate sale price of the Shares sold by
the total number of such Shares so sold on the applicable market for the last day prior to the
Grant Date.

	 
	2.19	 	“Option” means an option to purchase Shares granted pursuant to this Plan.

	 
	2.20	 	“Option Agreement” means an agreement, in the form attached hereto as Schedule “A”, whereby
the Company grants to an Optionee an Option.

	 
	2.21	 	“Optionee” means each of the Eligible Persons granted an Option pursuant to this Plan and
their heirs, executors and administrators.

	 
	2.22	 	“Option Price” means the price per Share specified in an Option Agreement, adjusted from time
to time in accordance with the provisions of section 5.

	 
	2.23	 	“Option Shares” means the aggregate number of Shares which an Optionee may purchase under an
Option.

	 
	2.24	 	“Plan” means this Stock Option Plan.

	 
	2.25	 	“Shares” means the common shares in the capital of the Company as constituted on the Grant
Date provided that, in the event of any adjustment pursuant to section 5, “Shares” shall
thereafter mean the shares or other property resulting from the events giving rise to the
adjustment.

	 
	2.26	 	“Securities Act” means the Securities Act, R.S.B.C. 1996, c.418, as amended, as at the date
hereof.

 

 

 

	2.27	 	“TSX Policies” means the policies included in the TSX Venture Exchange Corporate Finance
Manual and “TSX Policy” means any one of them.

	 
	2.28	 	“Un-issued Option Shares” means the number of Shares, at a particular time, which have been
reserved for issuance upon the exercise of an Option but which have not been issued, as
adjusted from time to time in accordance with the provisions of section 5, such adjustments to
be cumulative.

	 
	2.29	 	“Vested” means that an Option has become exercisable in respect of a number of Option Shares
by the Optionee pursuant to the terms of the Option Agreement.

	3.	 	GRANT OF OPTIONS

	3.1	 	Option Terms

The Board may from time to time authorize the issue of Options to
Eligible Persons of the Company and its subsidiaries. The Option
Price under each Option shall be not less than the Discounted Market
Price on the Grant Date. The Expiry Date for each Option shall be set
by the Board at the time of issue of the Option and shall not be more
than 5 years after the Grant Date. Options shall not be assignable
(or transferable) by the Optionee.

	 
	3.2	 	Limits on Shares Issuable on Exercise of Options

The maximum number of Shares which may be issuable pursuant to options
granted under the Plan shall be 10,746,923 Shares or such additional
amount as may be approved from time to time by the shareholders of the
Company. The number of Shares which may be issuable under the Plan
and all of the Company’s other previously established or proposed
share compensation arrangements, within a one-year period:

	 	(a)	 	to any one Optionee, shall not exceed 5% of the total number of issued and
outstanding Shares on the Grant Date on a non-diluted basis; and

	 
	 	(b)	 	to Insiders as a group shall not exceed 20% of the total number of issued and
outstanding Shares on the Grant Date on a non-diluted basis.

	 
	 	(c)	 	to any one Consultant shall not exceed 2% in the aggregate of the total number
of issued and outstanding Shares on the Grant Date on a non-diluted basis; and

	 
	 	(d)	 	all Eligible Persons who undertake Investor Relations Activities shall not
exceed 2% in the aggregate of the total number of issued and outstanding Shares on the
Grant Date on a non-diluted basis.

	3.3	 	Option Agreements

Each Option shall be confirmed by the execution of an Option
Agreement. Each Optionee shall have the option to purchase from the
Company the Option Shares at the time and in the manner set out in the
Plan and in the Option Agreement applicable to that Optionee. For
stock options to Employees, Consultants, Consultant Companies or
Management Company Employees, the Company is representing herein and
in the applicable Stock Option Agreement that the Optionee is a bona
fide Employee, Consultant, Consultant Company or Management Company
Employee, as the case may be, of the Company or its subsidiary. The
execution of an Option Agreement shall constitute conclusive evidence
that it has been completed in compliance with this Plan.

	4.	 	EXERCISE OF OPTION

	4.1	 	When Options May be Exercised

Subject to sections 4.3 and 4.4, an Option may be exercised to
purchase any number of Shares up to the number of Vested Un-issued
Option Shares at any time after the Grant Date up to 4:00 p.m. local
time on the Expiry Date and shall not be exercisable thereafter.

	 
	4.2	 	Manner of Exercise

The Option shall be exercisable by delivering to the Company a notice
specifying the number of Shares in respect of which the Option is
exercised together with payment in full of the Option Price for each
such Share. Upon notice and payment there will be a binding contract
for the issue of the Shares in respect of which the Option is
exercised, upon and subject to the provisions of the Plan. Delivery
of the Optionee’s cheque payable to the Company in the amount of the
Option Price shall constitute payment of the Option Price unless the
cheque is not honoured upon presentation in which case the Option
shall not have been validly exercised.

	 
	4.3	 	Vesting of Option Shares

The Directors may determine and impose terms upon which each Option
shall become Vested in respect of Option Shares. Provided the Company
remains a Tier 2 Issuer with the Exchange, the vesting period shall be
no less than 18 months.

 

 

 

	4.4	 	Termination of
Employment

If an Optionee ceases to be a director, officer or Service Provider of
the Company or one of the Company’s subsidiaries, his or her Option
shall be exercisable as follows:

	 	(a)	 	Death or Disability

	 
	 	 	 	If the Optionee ceases to be an Eligible Person, due to his or her death or
Disability or, in the case of an Optionee that is a company, the death or Disability
of the person who provides management or consulting services to the Company or to
any entity controlled by the Company, the Option then held by the Optionee shall be
exercisable to acquire Vested Un-issued Option Shares at any time up to but not
after the earlier of:

	 	(i)	 	365 days after the date of death or Disability; and

	 
	 	(ii)	 	the Expiry Date;

	 	(b)	 	Termination For Cause

	 
	 	 	 	If the Optionee, or in the case of a Management Company Employee or a Consultant
Company, the Optionee’s employer, ceases to be an Eligible Person as a result of
termination for cause, as that term is interpreted by the courts of the jurisdiction
in which the Optionee, or, in the case of a Management Company Employee or a
Consultant Company, of the Optionee’s employer, is employed or engaged; any
outstanding Option held by such Optionee on the date of such termination, whether in
respect of Option Shares that are Vested or not, shall be cancelled as of that date.

	 
	 	(c)	 	Early Retirement, Voluntary Resignation or Termination Other than For Cause

If the Optionee or, in the case of a Management Company Employee or a Consultant
Company, the Optionee’s employer, ceases to be an Eligible Person due to his or her
retirement at the request of his or her employer earlier than the normal retirement
date under the Company’s retirement policy then in force, or due to his or her
termination by the Company other than for cause, or due to his or her voluntary
resignation, the Option then held by the Optionee shall be exercisable to acquire
Vested Un-issued Option Shares at any time up to but not after the earlier of the
Expiry Date and the date which is 90 days (30 days if the Optionee was engaged in
Investor Relations Activities) after the Optionee or, in the case of a Management
Company Employee or a Consultant Company, the Optionee’s employer, ceases to be an
Eligible Person.

	 	 	For greater certainty, an Option that had not become Vested in respect of certain Un-issued
Option Shares at the time that the relevant event referred to in this paragraph 4.4
occurred, shall not be or become vested or exercisable in respect of such Un-issued Option
Shares and shall be cancelled.

	 
	4.5	 	Effect of a Take-Over Bid

Subject to the prior approval of the Exchange, if a bona fide offer (an “Offer”) for Shares is made to the Optionee or to shareholders of
the Company generally or to a class of shareholders which includes the
Optionee, which Offer, if accepted in whole or in part, would result
in the offeror becoming a control person of the Company, within the
meaning of subsection 1(1) of the Securities Act, the Company shall,
immediately upon receipt of notice of the Offer, notify each Optionee
of full particulars of the Offer, whereupon all Option Shares subject
to such Option will become Vested and the Option may be exercised in
whole or in part by the Optionee so as to permit the Optionee to
tender the Option Shares received upon such exercise, pursuant to the
Offer. However, if:

	 	(a)	 	the Offer is not completed within the time specified therein; or

	 
	 	(b)	 	all of the Option Shares tendered by the Optionee pursuant to the Offer are not taken up
or paid for by the offeror in respect thereof, then the Option Shares received upon such
exercise, or in the case of clause (b) above, the Option Shares that are not taken up and
paid for, may be returned by the Optionee to the Company and reinstated as authorized but
Un-issued Shares and with respect to such returned Option Shares, the Option shall be
reinstated as if it had not been exercised and the terms upon which such Option Shares were
to become Vested pursuant to paragraph 4.3 shall be reinstated. If any Option Shares are
returned to the Company under this paragraph 4.5, the Company shall immediately refund the
exercise price to the Optionee for such Option Shares.

	4.6	 	Acceleration of Expiry Date

Subject to the prior approval of the Exchange, if at any time when an Option granted under the Plan remains unexercised
with respect to any Un-issued Option Shares, an Offer is made by an offeror, the Directors may, upon notifying each
Optionee of full particulars of the Offer, declare all Option Shares issuable upon the exercise of Options granted under
the Plan, Vested, and declare that the Expiry Date for the exercise of all unexercised Options granted under the Plan is
accelerated so that all Options will either be exercised or will expire prior to the date upon which Shares must be
tendered pursuant to the Offer. The Directors shall give each Optionee as much notice as possible of the acceleration of
the Options under this section, except that not less than 5 business days and not more that 35 days notice is required.

	 
	4.7	 	Effect of a Change of Control

Subject to the prior approval of the Exchange, if a Change of Control occurs, all Option Shares subject to each outstanding
Option will become Vested, whereupon such Option may be exercised in whole or in part by the Optionee.

	 
	4.8	 	Exclusion From Severance Allowance, Retirement Allowance or Termination Settlement

If the Optionee, or, in the case of a Management Company Employee or a Consultant Company, the Optionee’s employer,
retires, resigns or is terminated from employment or engagement with the Company or any subsidiary of the Company, the loss
or limitation, if any, pursuant to the Option Agreement with respect to the right to purchase Option Shares which were not
Vested at that time or which, if Vested, were cancelled, shall not give rise to any right to damages and shall not be
included in the calculation of nor form any part of any severance allowance, retiring allowance or termination settlement
of any kind whatsoever in respect of such Optionee.

	 
	4.9	 	Shares Not Acquired

Any Un-issued Option Shares not acquired by an Optionee under an Option which has expired may be made the subject of a
further Option pursuant to the provisions of the Plan.

 

 

 

	5.	 	ADJUSTMENT OF OPTION PRICE AND NUMBER OF OPTION SHARES

	5.1	 	Share Reorganization

Whenever the Company issues Shares to all or substantially all holders
of Shares by way of a stock dividend or other distribution, or
subdivides all outstanding Shares into a greater number of Shares, or
combines or consolidates all outstanding Shares into a lesser number
of Shares (each of such events being herein called a “Share
Reorganization”) then effective immediately after the record date for
such dividend or other distribution or the effective date of such
subdivision, combination or consolidation, for each Option:

	 	(a)	 	the Option Price will be adjusted to a price per Share which is the product of:

	 	(i)	 	the Option Price in effect immediately before that effective date or record date;
and

	 
	 	(ii)	 	a fraction, the numerator of which is the total number of
Shares outstanding on that effective date or record date before giving effect
to the Share Reorganization, and the denominator of which is the total number
of Shares that are or would be outstanding immediately after such effective
date or record date after giving effect to the Share Reorganization; and

	 	(b)	 	the number of Un-issued Option Shares will be adjusted by multiplying (i) the
number of Un-issued Option Shares immediately before such effective date or record date
by (ii) a fraction which is the reciprocal of the fraction described in subsection
(a)(ii).

	5.2	 	Special Distribution

Subject to the prior approval of the Exchanges, whenever the Company
issues by way of a dividend or otherwise distributes to all or
substantially all holders of Shares;

	 	(a)	 	shares of the Company, other than the Shares;

	 
	 	(b)	 	evidences of indebtedness;

	 
	 	(c)	 	any cash or other assets, excluding cash dividends (other than cash dividends which the
Board of Directors of the Company has determined to be outside the normal course); or

	 
	 	(d)	 	rights, options or warrants;

	 	 	then to the extent that such dividend or distribution does not
constitute a Share Reorganization (any of such non-excluded events
being herein called a “Special Distribution”), and effective
immediately after the record date at which holders of Shares are
determined for purposes of the Special Distribution, for each Option
the Option Price will be reduced, and the number of Un-issued Option
Shares will be correspondingly increased, by such amount, if any, as
is determined by the Board in its sole and unfettered discretion to be
appropriate in order to properly reflect any diminution in value of
the Option Shares as a result of such Special Distribution.

	5.3	 	Corporate Organization

Whenever there is:

	(a)	 	a reclassification of outstanding Shares, a change of Shares into other shares or securities,
or any other capital reorganization of the Company, other than as described in sections 5.1 or
5.2;

	 
	(b)	 	a consolidation, merger or amalgamation of the Company with or into another corporation
resulting in a reclassification of outstanding Shares into other shares or securities or a
change of Shares into other shares or securities; or

	 
	(c)	 	a transaction whereby all or substantially all of the Company’s
undertaking and assets become the property of another corporation;

(any such event being herein called a “Corporate Reorganization”) the
Optionee will have an option to purchase (at the times, for the
consideration, and subject to the terms and conditions set out in the
Plan) and will accept on the exercise of such option, in lieu of the
Un-issued Option Shares which he would otherwise have been entitled to
purchase, the kind and amount of shares or other securities or
property that he would have been entitled to receive as a result of
the Corporate Reorganization if, on the effective date thereof, he had
been the holder of all Un-issued Option Shares or if appropriate, as
otherwise determined by the Directors.

	 
	5.4	 	Determination of Option Price and Number of Un-issued Option Shares

If any questions arise at any time with respect to the Option Price or
number of Un-issued Option Shares deliverable upon exercise of an
Option following a Share Reorganization, Special Distribution or
Corporate Reorganization, such questions shall be conclusively
determined by the Company’s auditor, or, if they decline to so act,
any other firm of Chartered Accountants in Vancouver, British
Columbia, that the Directors may designate and who will have access to
all appropriate records and such determination will be binding upon
the Company and all Optionees.

	 
	5.5	 	Regulatory Approval

Any adjustment to the Option Price or the number of Un-issued Option
Shares purchasable under the Plan pursuant to the operation of any one
of paragraphs 5.1, 5.2 or 5.3 is subject to the approval of the
Exchanges and any other governmental authority having jurisdiction.

	 
	6.	 	MISCELLANEOUS

	 
	6.1	 	Right to Employment

Neither this Plan nor any of the provisions hereof shall confer upon
any Optionee any right with respect to employment or continued
employment with the Company or any subsidiary of the Company or
interfere in any way with the right of the Company or any subsidiary
of the Company to terminate such employment.

 

 

 

	6.2	 	Necessary Approvals

The Plan shall be effective only upon the approval of the shareholders
of the Company given by way of an ordinary resolution. Any Options
granted under this Plan prior to such approval shall only be exercised
upon
the receipt of such approval. Disinterested shareholder approval (as required by the Exchanges) will be obtained for any reduction
in the exercise price of any Option granted under this Plan if the Optionee is an Insider of the Company at the time of the proposed
amendment. The obligation of the Company to sell and deliver Shares in accordance with the Plan is subject to the approval of the
Exchanges and any governmental authority having jurisdiction. If any Shares cannot be issued to any Optionee for any reason,
including, without limitation, the failure to obtain such approval, then the obligation of the Company to issue such Shares shall
terminate and any Option Price paid by an Optionee to the Company shall be immediately refunded to the Optionee by the Company.

	 
	6.3	 	Administration of the Plan

The Directors shall, without limitation, have full and final authority in their discretion, but subject to
the express provisions of the Plan, to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan and to make all other determinations deemed necessary or advisable in
respect of the Plan. Except as set forth in section 5.4, the interpretation and construction of any
provision of the Plan by the Directors shall be final and conclusive. Administration of the Plan shall be
the responsibility of the appropriate officers of the Company and all costs in respect thereof shall be
paid by the Company.

	 
	6.4	 	Income Taxes

As a condition of and prior to participation in the Plan any Optionee shall on request authorize the
Company in writing to withhold from any remuneration otherwise payable to him or her any amounts required
by any taxing authority to be withheld for taxes of any kind as a consequence of his or her participation
in the Plan.

	 
	6.5	 	Amendments to the Plan

The Directors may from time to time, subject to applicable law and to the prior approval, if required, of
the Exchanges or any other regulatory body having authority over the Company or the Plan, suspend,
terminate or discontinue the Plan at any time, or amend or revise the terms of the Plan or of any Option
granted under the Plan and the Option Agreement relating thereto, provided that no such amendment,
revision, suspension, termination or discontinuance shall in any manner adversely affect any Option
previously granted to an Optionee under the Plan without the consent of that Optionee. Any amendments to
the Plan or options granted thereunder will be subject to the approval of the shareholders.

	 
	6.6	 	Form of Notice

A notice given to the Company shall be in writing, signed by the Optionee and delivered to the head
business office of the Company.

	 
	6.7	 	No representation or Warranty

The Company makes no representation or warranty as to the future market value of any Shares issued in
accordance with the provisions of the Plan.

	 
	6.8	 	Compliance with Applicable Law

If any provision of the Plan or any Option Agreement contravenes any law or any order, policy, by-law or
regulation of any regulatory body or Exchange having authority over the Company or the Plan, then such
provision shall be deemed to be amended to the extent required to bring such provision into compliance
therewith.

	 
	6.9	 	No Assignment

No Optionee may assign any of his or her rights under the Plan or any option granted thereunder.

	 
	6.10	 	Rights of Optionees

An Optionee shall have no rights whatsoever as a shareholder of the Company in respect of any of the
Un-issued Option Shares (including, without limitation, voting rights or any right to receive dividends,
warrants or rights under any rights offering).

	 
	6.11	 	Conflict

In the event of any conflict between the provisions of this Plan and an Option Agreement, the provisions
of this Plan shall govern.

	 
	6.12	 	Governing Law

The Plan and each Option Agreement issued pursuant to the Plan shall be governed by the laws of the
province of British Columbia.

	 
	6.13	 	Time of Essence

Time is of the essence of this Plan and of each Option Agreement. No extension of time will be deemed to
be or to operate as a waiver of the essentiality of time.

	 
	6.14	 	Entire Agreement

This Plan and the Option Agreement sets out the entire agreement between the Company and the Optionees
relative to the subject matter hereof and supersedes all prior agreements, undertakings and
understandings, whether oral or written.

	 	 	Approved by the Board of Directors as at October 17, 2005

 

 

 

SCHEDULE “A”

SAMPLE STOCK OPTION AGREEMENT

			
	 	 	 
	TO:
	 	Effective Date:

Re: Option Agreement

You have been designated as an Eligible Person under the INNEXUS BIOTECHNOLOGY INC. Stock Option
Plan, a copy of which is attached to this document (the “Plan”). All capitalised terms in this
Agreement defined in the Plan shall have the same meaning herein as therein. Assuming that you
become a Participant by signing this letter, the details of the Options which have been granted to
you under the Plan are as follows:

	 	 	 	 	 
	 

	 	Designated Number (the aggregate	 	 
	 

	 	number of Common Shares which you may
	 	 
	 

	 	purchase under the Option):

	 	number of shares
	 
	 	 	 	 
	 

	 	Option Price (price per Common Share):
	 	$Exercise Price
	 
	 	 	 	 
	 

	 	Expiry Date:
	 	Expiry Date
	 
	 	 	 	 
	 

	 	Vesting Date and Designated
Quantity	 	 
	 

	 	(the quantity of the Designated
Number of Common Shares which
you may purchase each
year)
	 	 

Vesting Date Vesting shall take place equally on a quarterly basis over a period of 18
months from the date of grant as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Vesting Date	 	 	Designated Quantity	 	 	Balance of Options	 
	FIRST QUARTER
	 	 	 	 	 	 	 	 	 	 	 	 
	SECOND QUARTER
	 	 	 	 	 	 	 	 	 	 	 	 
	THIRD QUARTER
	 	 	 	 	 	 	 	 	 	 	 	 
	FOURTH QUARTER
	 	 	 	 	 	 	 	 	 	 	 	 
	FIFTH QUARTER
	 	 	 	 	 	 	 	 	 	 	 	 
	SIXTH QUARTER
	 	 	 	 	 	 	 	 	 	 	 	 

HOLD PERIOD

THE SECURITIES DELIVERABLE UPON EXERCISE OF THESE OPTIONS, may be subject to certain resale
restrictions under the Securities Act and the Securities Rules thereunder and the rules of
the TSX Venture Exchange, including a requirement that the Optionee hold the Securities for
a period of four months plus one day from the grant date. The certificates representing the
Shares which may be issued upon conversion of the Options will contain a legend denoting the
restrictions on transfer imposed by the Act and the Exchange;

WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE
SECURITIES LEGISLATION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON OR THROUGH THE FACILITIES OF THE TSX VENTURE
EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL XXXX.

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT, (C) IN COMPLIANCE WITH THE
EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE 144A
THEREUNDER, IF AVAILABLE, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE
U.S. SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE SELLER FURNISHES TO THE
COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY TO SUCH EFFECT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN
SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

 

 

 

If you accept the Options and agree to participate in the Plan and be bound by and comply with the
terms and conditions of the Plan which are hereby specifically incorporated by reference into this
Agreement and the terms and conditions set out herein, please sign one copy of this letter and
return it to the Company by close of business, XXXXX .

By signing and returning this letter to INNEXUS BIOTECHNOLOGY INC., you hereby covenant, represent,
warrant and agree that:

	 	(a)	 	you shall not, directly or indirectly in any manner whatsoever, sell, transfer, assign,
mortgage, charge, pledge, grant a security interest in or otherwise dispose of or encumber
all or any part of the Options granted to you by this Option Agreement;

	 
	 	(b)	 	you are an individual which is an Eligible Person with respect to the Corporation or a
Subsidiary at the date hereof;

	 
	 	(c)	 	if you are a company, you have prepared, executed and delivered herewith a TSX-V form
4F Certification and Undertaking, a copy of which is attached hereto, which is true and
correct in every material respect, for further filing by the Corporation with the TSX-V in
conjunction with its seeking TSX-V approval to the Option; and

	 
	 	(d)	 	if you are a U.S. Person, you have prepared, executed and delivered herewith a
supplemental Acknowledgment and Agreement for US Optionees substantially in the form
provided by the Corporation, which is true and correct in every material respect.

This Option Agreement shall be governed by and construed in accordance with the laws of the
Province of British Columbia and the laws of Canada applicable therein.

INNEXUS BIOTECHNOLOGY INC.

	 	 	 	 	 
	 	By:  	
 	 
	 	 	Signatory & Position 	 
	 	 	 	 
	 

I have read the INNEXUS BIOTECHNOLOGY INC. Stock Option Plan and agree to comply with, and agree
that my participation is subject in all respect to, its terms and conditions:

SIGNED in the presence of:

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	SIGNATURE:	 	 	 	 
	 

(Signature of Witness)

	 	 	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	NAME:	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 
	
(Address of Witness)	 	 	 	(Date)	 	 

 

 

 

SCHEDULE “B”

NOTICE AND AGREEMENT

OF EXERCISE OF OPTION (CASH TRANSACTION)

I, the undersigned, hereby exercise the Stock Option granted to me pursuant to an agreement dated
as of
                                         between INNEXUS BIOTECHNOLOGY INC. and myself (the “Stock Option Agreement”) as to
                                         Common Shares of INNEXUS BIOTECHNOLOGY INC. (collectively, the
“Option Shares”).

Enclosed is the full payment specified in the Stock Option Agreement.

I hereby agree to assist the Company in the filing of, and will timely file, all reports that I may
be required to file under applicable securities laws.

The number of Option Shares specified above are to be issued in the following registration:

	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	
(Print Corporate Optionee’s Name)

	 	 	 	
(Optionee’s Signature)
	 	 
	By its authorized signatory(ies)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

Optionee complete address
	 	 
	 
	 	 	 	 	 	 
	 

(Date)

	 	 	 	 	 	 

 

 

 

SCHEDULE “C”

NOTICE AND AGREEMENT

OF EXERCISE OF OPTION (CASHLESS TRANSACTION)

I, the undersigned, hereby exercise the Stock Option granted to me pursuant to an agreement dated
as of                                          between INNEXUS BIOTECHNOLOGY INC. and myself (the “Stock Option Agreement”) as to
                                         Common Shares of INNEXUS BIOTECHNOLOGY INC. (collectively, the
“Option Shares”).

Upon receipt of a cheque from my broker for full payment as specified in the Stock Option
Agreement, I request the issuance of shares in my name and instruct the transfer agent to deliver
the share certificate to my broker, at the address listed below, representing the common shares as
soon as reasonably practical after receipt of the cash consideration:

	 	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Tel:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Fax:	 	 	 	 
	 

	 	 	 	 

	 	 

I hereby agree to assist the Company in the filing of, and will timely file, all reports that I may
be required to file under applicable securities laws.

	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	(Print Corporate Optionee’s Name)

	 	 	 	(Optionee’s Signature)
	 	 
	By its authorized signatory(ies)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

Optionee complete address
	 	 
	 
	 	 	 	 	 	 
	 

(Date)

	 	 	 	 	 	 

 

 

 

Additional Covenants, Representations and Acknowledgements

US Optionee

INNEXUS BIOTECHNOLOGY INC. (the “Corporation”)

	1.	 	Application and Effect of Appendix

	 	1.1	 	This Appendix is incorporated by reference and forms a part of the agreement (the
“Option Agreement”) granting an incentive stock option (the “Option”) to the undersigned
optionee (the “Optionee”) pursuant to the Stock Option Plan of the Corporation in effect as
of the date of grant of the Option (the “Plan”)

	 
	 	1.2	 	The Optionee acknowledges that:

	 	(a)	 	This Appendix is delivered together with and forms part of the Option Agreement
and each subscription for Option Shares made upon subsequent exercise
of the Option;

	 
	 	(b)	 	A copy of this Appendix is required to be signed and delivered to the
Corporation together with the exercise form (“Option Exercise Form”) provided for under
the Plan at the time of each exercise of the Option;

	 
	 	(c)	 	The representations, warranties and covenants of the Optionee contained herein
shall be true and correct at the Date of Grant of the Option and upon each exercise
thereof.

	2.	 	Definitions and Interpretation of Appendix

	 	2.1	 	Where used herein,

	 	(a)	 	“1933 Act” means the United States Securities Act of 1933, as amended;

	 
	 	(b)	 	“Accredited Investor” has the meaning set out in Regulation D promulgated by
the SEC;

	 
	 	(c)	 	“Date of Grant” means «EffectiveDate», being the effective date the Option is
granted;

	 
	 	(d)	 	“Exchange” means the TSX Venture Exchange;

	 
	 	(e)	 	“Option Shares” means Common Shares issued upon exercise of the Option;

	 
	 	(f)	 	“SEC” means the United States Securities and Exchange Commission;

	 
	 	(g)	 	“State Act” means the applicable securities legislation of any political
subdivision of the United States;

	 	2.2	 	Any capitalized term herein which is defined in the Plan and is not otherwise expressly
defined herein shall have the meaning set out in the Plan.

	 
	 	2.3	 	Where any provision herein
conflicts with the terms of the Plan, the Plan shall prevail.

 

 

 

	3.	 	Covenants, Representations and Warranties of Optionee

	 	3.1	 	The Optionee covenants, represents and warrants that:

	 	(a)	 	the Option Shares set out in any Option Exercise Form delivered herewith are
being purchased as an investment and not with a view to distribution

	 
	 	(b)	 	the Optionee is either:

	 	(i)	 	an Accredited Investor by virtue of the fact that the Optionee meets
one or more of the items selected on the Accredited Investor Questionnaire, a duly
completed and executed copy of which is delivered herewith, which is true and
correct in all respects; or -

	 
	 	(ii)	 	a person who, by virtue of the Optionee’s relationship with the
Corporation, and access to information pertaining to an investment in Common
Shares, would not be considered to be a member of the public within the meaning of
section 4(2) of the 1933 Act with respect to the offer and sale of Common Shares to
the Optionee contemplated herein; or

	 
	 	(iii)	 	has provided herewith a letter from legal counsel acceptable to the
Corporation confirming that, upon issuance, the Option Shares set out in the Option
Exercise Form delivered herewith will either be registered or be exempt from
registration under the 1933 Act and any applicable State Act.

	4.	 	Restrictions on Resale

	 	4.1	 	The Optionee acknowledges and agrees as follows:

	 	(a)	 	The Option has been granted on the condition that any Option Shares which may
be issued are subject to transfer restrictions may be imposed by the Corporation should
the Corporation deem it necessary or appropriate to do so in order to comply with the
requirements of applicable law or of any regulatory authorities having jurisdiction
over the securities of the Corporation;

	 
	 	(b)	 	the Optionee is a U.S. Person and accordingly the granting and exercise of this
Option may be subject to certain regulatory requirements of the SEC;

	 
	 	(c)	 	this Option has not been registered under the 1933 Act nor does the Corporation
does not intend to so register it or any of the Common Shares and any Optioned Shares
issuable upon exercise of the Option may only be re sold in the absence of such
registration in the United States in compliance with Rule 144 and any applicable State
Act or outside the United States in compliance with Regulation S promulgated by the SEC
or by compliance with other applicable exemptions from the registration requirements of
the 1933 Act and any applicable State Act;

	 
	 	(d)	 	a legend may (if so directed by legal counsel for the Corporation) be placed on
the certificates evidencing any Optioned Shares issued upon exercise of this Option in
the form attaches as schedule “A” or such other form as legal counsel for the
Corporation may require, having regard to the requirements of the 1933 Act and any
applicable State Act.

	 	4.2	 	the Optioneee covenants and agrees that he:

	 	(a)	 	will refrain from selling any Optioned Shares issuable upon exercise of this
Option except pursuant to and in full compliance with the requirements of Regulation S
unless the Optionee has first delivered to the Corporation a written opinion of legal
counsel in form and substance acceptable to the Corporation that such transaction is
exempt from the registration requirements of the 1933 Act and any applicable State Act;

 

 

 

	 	(b)	 	will not, upon exercise of this Option, sell any of the Optioned Shares to or
purchase any of them for the account of any U.S. Person other than the Optionee;

	 
	 	(c)	 	will, if he sells or intends to sell any Optioned Shares in reliance on
Regulation S:

	 	(i)	 	comply fully with the requirements Regulation S;

	 
	 	(ii)	 	sell or offer to sell the Optioned Shares only

	 	(A)	 	outside of the United States to purchasers who are not a US
Person; or

	 
	 	(B)	 	through the facilities of the Exchange in a regular brokerage
transaction; and

	 	(iii)	 	will, with respect to any Optioned Shares sold through the Exchange,
deliver to the Corporation a copy of a broker’s representation letter,
substantially in the form set out in Schedule “B” or such other form as may be
required by legal counsel for the Corporation, duly executed by or on behalf of the
broker dealer through whom the trade will be effected on the Exchange prior to any
such sale.

Acknowledged and Agreed to as of                                         , 20                    .

OPTIONEE SIGNATURE:

	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	
(Print Corporate Optionee’s Name)

	 	 	 	(Optionee’s Signature)
	 	 
	By its authorized signatory(ies)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

Optionee complete address
	 	 
	 
	 	 	 	 	 	 
	 

(Date)

	 	 	 	 	 	 

 

 

 

SCHEDULE “A”

Incentive Stock Options

(US Optionee)

INNEXUS BIOTECHNOLOGY INC.

FORM OF LEGEND

To be placed on Share Certificates

“These securities have not been registered under the United States Securities Act of 1933,
as amended (the “1933 Act”), and may not be offered for sale, sold or otherwise transferred,
directly or indirectly, in the United States or be delivered to or for the benefit of a U.S. person
(as defined in Rule 9.02 of Regulation S under the 1933 Act) unless:

	 	(i)	 	such securities are duly registered under the 1933 Act and sold in accordance
with the securities law of any applicable political subdivision of the United States (a
“State Act”); or

	 
	 	(ii)	 	an exemption from registration under the 1933 Act is available and the
requirements of any applicable State Act are met and the Company has received an opinion
of legal counsel reasonably satisfactory to it to the effect such registration is not
required and the sale will be in compliance with any applicable State Act; or

	 
	 	(iii)	 	the holder of such securities is not a “distributor” or an “affiliate” of either
the Company or a “distributor” (as defined in the 1933 Act and Regulation S thereunder)
and such securities are sold through the facilities of the TSX Venture Exchange in one
or more brokerage transactions conducted in accordance with the approved procedures of
the TSX Venture Exchange and without directed selling efforts or solicitations of
purchasers in the United States in compliance with Rule 904 of Regulation S under the
1933 Act.

This legend may be removed upon delivery to the Company and its registrar and transfer agent of
this certificate and a declaration in form satisfactory to the Company that the sale of the
securities represented hereby is being made in compliance with Rule 904 of Regulation S under the
1933 Act.”

 

 

 

Schedule “B”

[To be completed by Broker/Dealer]

			
	TO:	 	INNEXUS BIOTECHNOLOGY INC.

Suite 2760 — 200 Granville Street,

Vancouver, BC, V6C 1S4

Dear Sirs:

	 	 	 
	Re:	 	Proposed Sale of
____________ common shares of
INNEXUS BIOTECHNOLOGY INC. by ____________________

In connection with the proposed sale of                                          common shares (the “Shares”) of
INNEXUS BIOTECHNOLOGY INC. by                                                                    
              (the “Shareholder”), the undersigned hereby confirms that the Shares
will be sold only in regular brokerage transactions on the TSX Venture Exchange (the “Exchange”) in
accordance with the procedures of the Exchange, the rules and regulations of the Exchange regarding
the sale and resale of securities issued under transactions of the type under which the Shares were
issued and subject to any required holding period in British Columbia.

The undersigned further confirms that in connection with such proposed sale it:

	 	(i)	 	will do no more than execute the order to sell the Shares as agent for the
Shareholder in transactions directly with a member of the Exchange and in connection
therewith will not receive any more than the usual and customary broker’s commission;

	 
	 	(ii)	 	will neither solicit nor arrange for the solicitation of orders from any “U.S.
Person” or in the “United States” (each as defined below) to buy such shares in
anticipation of or in connection with the transaction;

	 
	 	(iii)	 	will conduct such diligent inquiry as is required in connection with the
proposed sale of the Shares including:

	 	(a)	 	The length of time the Shares have been held by the
Shareholder for whose account they are to be sold;

	 
	 	(b)	 	The nature of the transaction in which the Shares were
acquired by the Shareholder;

	 
	 	(c)	 	Whether the Shareholder intends to sell additional
securities of the same class through any other means;

	 
	 	(d)	 	Whether the Shareholder has solicited or made any
arrangement for the solicitation of buy orders in connection with the
proposed sale of the Shares; and

	 
	 	(e)	 	Whether the Shareholder has made any payment to any other
person in connection with the proposed sale of the Shares;

	 	 	 	to confirm that the restrictions, rules, regulations and requirements of the
Exchange regarding the Shares and the sale thereof have been fulfilled, and that
it is not aware of circumstances indicating that the Shareholder is engaged in a
transaction which is part of a distribution of such Shares in the United States
or to U.S. Persons; and

	 
	 	(iv)	 	will otherwise comply with the provisions of the Exchange with respect to the
sale of the Shares.

As used herein, “United States” means the United States of America, its territories and
possessions, and any area subject to the jurisdiction of the United
States, and “U.S. Person” means any citizen, national or resident of the United States or any corporation,
partnership or other entity organized in or under the laws of the United States or any political
subdivision thereof or any estate or trust that is subject to United States federal income taxation
regardless of source of income.

DATED at                                          the                      day of   
                                      , 20  .

	 	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Name of Broker/Dealer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Its:Filed by Bowne Pure Compliance

Exhibit 4.6

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (“Agreement”) made and entered into as of the 17th day of
March, 2008, by and between InNexus Biotechnology, Inc.(the “Company”), a Canadian
corporation, and Jeff Morhet (the “Executive”);

WHEREAS, the Company desires to secure the long-term employment of the Executive as its
President and Chief Executive Officer;

WHEREAS, the Executive is willing to commit himself to be employed by the Company on the terms
and conditions herein set forth and thus to forego opportunities elsewhere; and

WHEREAS, the parties desire to enter into this Agreement, as of the Effective Date, as
hereinafter defined, setting forth the terms and conditions for the employment relationship of
the Executive with the Company during the Employment Period (as hereinafter defined).

NOW, THEREFORE, IN CONSIDERATION of the premises, and the covenants and agreements set
forth below, it is hereby agreed as follows:

1. Employment and Term.

(a) Employment. The Company agrees to employ the Executive, and the Executive agrees to be
employed by the Company, in accordance with the terms and provisions of this Agreement during the
term hereof (as described below).

(b) Term. The term of this Agreement shall commence as of February 16, 2008 (the “Effective
Date”) and shall continue for a period of four years or until terminated in accordance with
Section 4 hereof (the “Employment Period”).

2. Duties of Executive.

(a) The Executive shall serve as President and Chief Executive Officer of the Company and
shall report to the Company Board of Directors (the “Board”). The Executive shall perform such
duties and services pertaining to such position as reasonably consistent with the duties and
authority of officers holding comparable positions in similar businesses of similar size in the
United States. The Executive shall have management responsibility in connection with the selection,
retention and termination of Company employees and outside consultants, contractors, professionals
and service providers and the development of scientific research projects and the sale of products,
subject to the overall authority of the Board. The Executive shall use his best efforts to carry
out such responsibilities faithfully and efficiently. The Executive’s services shall be performed
primarily at the Company’s headquarters located at the Mayo Clinic “MCCRB” Research Facility in
Scottsdale, Arizona.

(b) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive shall devote substantially all of his business time,
energy and best efforts to the business and affairs of the Company. The Executive may not engage,
directly or indirectly, in any other business, investment or activity that interferes with the
Executive’s performance of his duties hereunder, is contrary to the interests of the Company, or
requires any significant portion of the Executive’s business time. It shall not be considered a
violation of the foregoing for the Executive to serve on corporate, industry, civic or charitable
boards or committees, so long as such activities do not materially interfere with the performance
of the Executive’s responsibilities as an employee of the Company in accordance with this
Agreement. The Executive may serve on boards of directors of up to three non-competing for-profit
businesses which do not materially interfere with his duties hereunder.

 

 

 

3. Compensation.

(a) Salary. The Executive’s annual base salary (the “Annual Base Salary”), payable in
accordance with the Company’s general payroll practices shall be at the annual rate of
$333,683. The Board shall review such base salary at least annually and may from time to
time direct such upward adjustments in Annual Base Salary as the Board deems to be
necessary or desirable, including, without limitation, adjustments in order to reflect
surveys of compensation for comparable positions at other companies. The Annual Base
Salary shall not be reduced after any increase thereof. Any increase in the Annual Base
Salary shall not serve to limit or reduce any other obligation of the Company under this
Agreement.

(b) Incentive Compensation. During the Employment Period, the Executive shall be
eligible to receive an annual cash bonus under an incentive plan to be developed by the
Compensation Committee of the Board (“Incentive Plan”). Such incentive compensation will
be payable upon the achievement of performance goals determined in advance by mutual
agreement of the Board and the Executive. The target opportunity under the Incentive
Plan is to be calculated at seventy percent (70%) of the Annual Base Salary. Written
performance goals under the Incentive Plan shall be determined within the first thirty
(30) days of the beginning of each fiscal year.

(c) Retirement and Welfare Benefit Plans. In addition to the compensation under
this Section, during the Employment Period and for so long as the Executive is employed
by the Company, he shall be immediately eligible to participate in all other savings,
retirement and welfare plans, practices, policies and programs applicable generally to
employees and/or senior executive officers of the Company in accordance with the terms
of such plans, all on a basis no less favorable than for any other senior executive of
the Company. The Company reserves the right to modify, eliminate or add to its
retirement and welfare benefit plans, practices and policies at any time in its sole
discretion.

(d) Stock options. The Company shall grant the Executive 333,683 stock options of
Company common stock on the Effective Date, pursuant to the terms of the Company’s Stock
Option Plan (the “Option Plan”). The options shall vest ratably over the eighteen months
following the Effective Date, provided that Executive remains employed by the Company on
such dates. In addition, the Company shall grant the Executive options for not less than
333,683 shares of the Company’s common stock on the first, second, third and fourth
anniversaries of the Effective Date. For purposes of this Section, the “Grant Date” will
be the “Effective Date” of this agreement and on the “first, second, third and fourth
anniversary” of the Effective Date. The options shall vest ratably over the eighteen
months following the Grant Date, provided that Executive remains employed by the Company
on such dates, subject to any limitations under the Option Plan. Option grants following
the first, second, third and fourth anniversary of the Effective Date shall be made in
the discretion of the Board. The exercise price for each option granted pursuant to this
Section will be per the Company’s Stock Option Plan.

 

 

 

(e) Expenses. The Company shall reimburse the Executive for all expenses, including
those for travel and entertainment and for the use of his vehicle, including payment of
vehicle lease, properly incurred by him in the performance of his duties hereunder,
subject to any reasonable policies established from time to time by the Board.

(f) Fringe Benefits. During the Employment Period and so long as the Executive is
employed by the Company, he shall be entitled to receive vacation and fringe benefits in
accordance with Company plans, practices, programs and policies, commensurate with his
position, which benefits shall be at least the same as those received by any senior
executive officer of the Company; provided, however, the Company reserves the right to
modify, eliminate or add to its fringe benefits at any time in its sole discretion. For
purposes of the Company’s sick leave policy, medical and life insurance benefits and
participation in retirement programs, the Executive’s years of service shall be deemed
to have four years as of October 1, 2006.

(g) Continuing Education Benefit. During the Employment Period and for sixty (60)
months following termination of employment by the Company with or without cause or by
the Executive, the Company will sponsor the Executive in the Harvard Business School’s
Advanced Management Program (AMP) or a program of the Executive’s choice equivalent or
better than AMP and shall be entitled to receive full reimbursement, within ten (10)
days of payment by Executive for all tuition, supplies, travel and related costs and
expenses.

4. Termination of Employment.

(a) Death. The Executive’s employment shall terminate automatically upon the Executive’s
death during the Employment Period.

(b) Disability. The Executive shall be relieved of his position as President and Chief
Executive Officer of the Company automatically upon the Executive being unable to
perform the material duties of his position due to physical or mental illness or injury
for a period of 60 consecutive days, or for 90 days within any one-year time period and
his employment shall terminate automatically 120 days after the date that he is relieved
of his position.

(c) By the Company for Cause. For purposes of this Agreement, “Cause” shall mean (i)
conduct which is a material breach of this Agreement and is not cured within 30 days
after written notice to Executive or willfully repeated thereafter, (ii) conduct which
is a material violation of Company policies; (iii) willful failure to perform
substantially all of Executive’s duties as lawfully delineated by the Board; (iv)
conduct that constitutes fraud, gross negligence of willful misconduct; or (v) the
Executive is convicted of, or enters a plea of guilty to any felony or other criminal
offense involving moral turpitude. The Company, by action of the Board, may terminate
the Executive’s employment during the Employment Period for Cause.

(d) By the Company without Cause. During the term of this Agreement, the Company, by
action of the Board, may terminate the Executive’s employment for any reason other than
for Cause during the Employment Period upon 120 days advance written notice.

(e) By the Executive. The Executive may terminate his employment during the
Employment Period for any reason upon 60 days advance written notice to the Board.

 

 

 

5. Obligations of the Company upon Termination.

(a) Obligations upon Termination by the Company or the Executive. If, during the Employment
Period, the Executive’s employment shall terminate for any reason, the Company shall pay to the
Executive a lump sum amount in cash equal to the sum of (A) the Executive’s salary at the rate of
the Annual Base Salary earned through the date of Termination to the extent not theretofore paid,
(B) any earned but unpaid annual cash bonus or other incentive award, and (C) accrued but unpaid
vacation pay. In addition, the Company shall provide benefit continuation or conversion rights
(including COBRA) as provided under Company benefit plans and vested benefits under Company benefit
plans. The amounts specified in this Section shall be paid within 10 days after the date of
Termination.

(b) Obligations upon Termination by the Company without Cause. In the event of Termination by
the Company without cause, in addition to the amounts and benefits set out in Section 5(a), the
Company shall pay to the Executive (A) Annual Base Salary and annual cash bonus described in
Section 3 of this Agreement at the target level payable monthly for forty-eight (48) months
following the termination date; (B) a lump sum amount, in cash, equal to the annual cash bonus
described in Section 3(b) of this Agreement at the target level for the calendar year that includes
the termination date multiplied by a fraction the numerator of which shall be the number of days
from the beginning of such year to and including the termination date and the denominator of which
shall be 365, which calculation shall be based on the terms of the Company’s incentive compensation
plan, assuming that all performance goals in effect on the termination date have been met at the
target level for such year, such amount to be paid within 10 days of such termination date; (C)
executive level career transition assistance services by a firm designated by the Executive (up to
a maximum of $15,000); (D) full vesting of any unvested stock options with such options to be
exercisable for the remaining term of the option or one year from the termination date, whichever
occurs first; (E) full vesting of any shares of restricted stock and/or warrants and elimination of
any restrictions, and (F) continuation of medical benefits to the Executive and/or the Executive’s
family at least equal to those which would have been provided had the Executive remained employed
for forty-eight (48) months after the termination date, such benefits to be in accordance with the
most favorable medical benefit plans, practices, programs or policies of the Company as in effect
and applicable to any senior executive officer of the Company and his or her family immediately
preceding the termination date, provided, however, that if the Executive becomes employed with
another employer and is eligible to receive medical benefits under another employer-provided plan,
the benefits under the Company’s medical benefits plans shall be secondary to those provided under
such other plan during such applicable period of eligibility.

(c) Termination Following a Change of Control. In the event that Executive’s employment is
terminated by the Company without cause or the Executive terminates his employment within 24 months
of a change of control of the Company, or if Executive voluntarily terminates his employment within
the 120-day period commencing on the first anniversary of a change of control of the Company, in
addition to any amounts that Executive is entitled to receive under Section 5(a) and in lieu of any
amounts Executive would been entitled to receive under Section 5(b), Executive shall receive: (A)
the Applicable Percentage (as defined below) of his Annual Base Salary and annual cash bonus
described in Section 3 of this Agreement at target level payable in an immediate single lump sum
payment; (B) a lump sum amount, in cash, equal to the annual cash bonus described in Section 3 of
this Agreement at target level for the calendar year that includes the date of Termination
multiplied by a fraction,

 

 

 

the numerator of which shall be the number of days from the beginning of such calendar year to and
including the date of termination and the denominator of which shall be 365, which calculation
shall be based on the terms of the Company’s incentive compensation plans, assuming that all
performance goals in effect on the date of termination have been met at the target level for such
year, such amount to be paid within 10 days of such termination date; (C) continued medical
benefits to the Executive and/or the Executive’s family for forty-eight (48) months, such benefits
to be in accordance with the most favorable medical benefit plans, practices, programs or policies
of the Company as in effect and applicable to any senior executive officer of the Company and his
or her family immediately preceding the termination date, provided, however, that if the Executive
becomes employed with another employer and is eligible to receive medical benefits under another
employer-provided plan, the benefits under the Company’s health insurance plans shall be secondary
to those provided under such other plan during such applicable period of eligibility; (D) executive
level career transition assistance services by a firm designated by the Executive (up to a maximum
of $15,000); (E) full vesting of any unvested stock options with such options to be exercisable for
the remaining term of the stock options or one year from the termination date, whichever occurs
first; and (F) full vesting of all stock options, shares of restricted stock and/or warrants and
elimination of any restrictions. As used in this Section, with respect to a change of control
occurring prior to the fourth anniversary of the Effective Date, the “Applicable Percentage” shall
be 400 percent and the “Applicable Time Period” shall be forty-eight (48) months.

A “change of control” of the Company shall be deemed to have occurred as of the first day
that any one or more of the following conditions shall have been satisfied:

(i) Except as provided herein, any person and/or entity (as such term is defined in
Section 3(a)(9) of the Securities and Exchange Act 1934, as amended (the “Exchange
Act”), and used in Sections 13(d) and 14(d) thereof, including a “group” as defined
in Section 13(d) thereof) (a “Person”) is or becomes the beneficial owner (as such
term is described in
Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of the Company not including in
the securities beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates, other than in connection with the acquisition by
the Company or its affiliates of a business, representing twenty percent (20%) or
more of either the then outstanding shares or the combined voting power of the
Company’s then outstanding securities; or

(ii) The consummation (i.e., closing) of an agreement in which the Company agrees to
merge or consolidate with any other entity, other than a merger or consolidation
which would result in the voting securities of the Company outstanding immediately
prior to such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity or
any parent thereof), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, greater
than twenty percent (20%) of the combined voting power of the voting securities of
the Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation; or a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
Person is or becomes the beneficial owner, directly or indirectly, of securities of
the Company (not including in the securities beneficially owned by such Person any
securities acquired directly from
the Company or its affiliates, other than in connection with the acquisition by the
Company or its affiliates of a business) representing twenty percent (20%) or more
of either the then outstanding shares of the Company or the combined voting power of
the Company’s then outstanding securities; or

 

 

 

(iii) The consummation of a plan of complete liquidation or dissolution of the Company; or an
agreement for the sale or disposition by the Company of all or substantially all of the Company’s
assets, other than a sale or disposition by the Company of all or substantially all of the
Company’s assets to an entity, greater than thirty percent (30%) of the combined voting power of
the voting securities of which are owned by Persons in substantially the same proportions as their
ownership of the Company immediately prior to such sale or disposition.

Notwithstanding the foregoing, a change of control of the Company shall not be deemed to have
occurred if there is consummated any transaction or series of integrated transactions immediately
following which the record holders of the voting securities of the Company immediately prior to
such transaction or series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.

6. Non exclusivity of Rights.

Except as provided in Section 6 and the last sentence of this Section, nothing in this
Agreement shall prevent or limit the Executive’s continuing or future participation in any benefit,
plan, program, policy or practice provided by the Company and for which the Executive may qualify
(except with respect to any benefit to which the Executive has waived his rights in writing), nor,
except as provided in Sections 5 and 16(d), shall anything herein limit or otherwise affect such
rights as the Executive may have under any other contract or agreement entered into after the
Effective Date with the Company. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any benefit, plan, policy, practice or program of, or any
contract or agreement entered into with, the Company shall be payable in accordance with such
benefit, plan, policy, practice or program or contract or agreement except as explicitly modified
by this Agreement. Notwithstanding the foregoing, the benefits payable upon Termination hereunder
shall be in lieu of any severance pay or benefits under any other severance plan, policy or
practice of the Company.

7. Indemnification.

The Company shall indemnify the Executive pursuant to the Company’s bylaws and the articles of
incorporation. In addition, the Company shall maintain directors and officers’ liability insurance
coverage of not less than $15,000,000 covering the Executive during the term of employment and
thereafter, so long as the Company elects to continue such coverage for its active officers and
directors. Failure by the Company to maintain not less than $15,000,000 directors and officers’
insurance will constitute a material breach under this Agreement.

 

 

 

8. Confidential Information.

The Executive agrees not to disclose during the term hereof or thereafter any of the Company’s
confidential or trade secret information, except as required by law. The Executive recognizes that
the Executive shall be employed in a sensitive position in which, as a result of a
relationship of trust and confidence, the Executive will have access to trade secrets and
other highly confidential and sensitive information. The Executive further recognizes that the
knowledge and information acquired by the Executive concerning the Company’s intellectual property,
materials regarding employer/employee contracts, customers, pricing schedules, advertising and
interviewing techniques, manuals, systems, procedures and forms represent the most vital part of
the Company’s business and constitute by their very nature, trade secrets and confidential
knowledge and information. The Executive hereby stipulates and agrees that all such information and
materials shall be considered trade secrets and confidential information. If it is at any time
determined that any of the information or materials identified in this paragraph 8 are, in whole or
in part, not entitled to protection as trade secrets, they shall nevertheless be considered and
treated as confidential information in the same manner as trade secrets, to the maximum extent
permitted by law. The Executive further agrees that all such trade secrets or other confidential
information, and any copy, extract or summary thereof, whether originated or prepared by or for the
Executive or otherwise coming into the Executive’s knowledge, possession, custody, or control,
shall be and remain the exclusive property of the Company.

9. Conflict of Interest.

The Executive acknowledges and agrees that he owes a fiduciary duty of loyalty, fidelity and
allegiance to act at all times in the best interests of the Company and to do no act which would
injure the Company’s business, its interests or its reputation. It is agreed that any direct or
indirect interest in, connection with, or benefit from any outside activities, particularly
commercial activities, which interest might in any way adversely affect the Company or any of its
affiliates, involves a possible conflict of interest. In keeping with the Executive’s fiduciary
duty to the Company, the Executive agrees that he shall not knowingly become involved in a conflict
of interest with the Company affiliates, or upon discovery there of, allow such a conflict to
continue. Moreover, the Executive agrees that he shall disclose to the Board any facts which might
involve such a conflict of interest that has not been approved by the Board. The Executive and the
Company recognize that it is impossible to provide an exhaustive list of actions or interests which
constitute a conflict of interest. Moreover, the Executive and the Company recognize there are many
borderline situations. In some instances, full disclosure of facts by the Executive to the Board
may be all that is necessary to enable the Executive, the Company or its affiliates to protect its
interests. In other situations, if no improper motivation appears to exist and the interests of the
Company or its affiliates have not suffered damage, prompt elimination of the outside interest will
suffice. In still others, it may be necessary for the Company to terminate the employment
relationship. The Company and the Executive agree that the Company’s determination as to whether a
conflict of interest exists shall be conclusive. The Company reserves the right to take such action
as, in its judgment, will end the conflict.

10. Non solicitation.

During the period of his business affiliation with, or employment by, the Company and for a
period of one year after the Executive’s termination of employment for any reason whatsoever, the
Executive will not directly or indirectly, individually or as a consultant to, or as employee,
officer, director, stockholder, partner or other owner or participant in any business entity other
than the Company, solicit or endeavor to entice away from the Company, or otherwise materially
interfere with the business relationship of the Company with, (i) any person who is, or was within
the 12-month period immediately prior to the termination of the Executive’s business affiliation
with or employment by the Company, employed by or associated with the Company or (ii) any person or
entity who is, or was within the 12-month period
immediately prior to the termination of the Executive’s business affiliation with or
employment by the Company, a customer or client of the Company.

 

 

 

11. Assignment by Executive Barred.

(a) Assignment by Executive. This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives. Without the prior written consent of the
Executive, no assignment of this Agreement by the Company or any successor of the Company shall
relieve the assignor of its financial responsibility for performance of the Company’s obligations
hereunder.

12. Successors and Assigns of Company.

This Agreement shall inure to the benefit of and be binding upon the Company, its successors
and assigns.

13. Disputes.

(a) Arbitration. The Company and the Executive agree that if a dispute arises out of or is
related to this Agreement or Executive’s employment by the Company, such dispute shall, if not
earlier resolved by negotiations of the parties, be submitted to binding arbitration by a single
arbitrator under the American Arbitration Association National Rules for Resolution of Employment
Disputes in Maricopa County, Arizona. Either party may provide written notice to the other party
that the dispute is not able to be resolved by negotiation and such notifying party shall then
contact the American Arbitration Association for appointment of an arbitrator to resolve such
dispute. Attorneys’ fees and costs shall be awarded to the prevailing party as determined by the
arbitrator.

(b) Mitigation. In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts (including amounts for damages for breach)
payable to the Executive under any of the provisions of this Agreement and, except as provided in
Section 6, such amounts shall not be reduced whether or not the Executive obtains other employment.

14. Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of
Arizona, without reference to its principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended, rescinded, modified, repealed, waived, extended or revoked except by an agreement in
writing signed by the party against whom enforcement of such amendment, rescission, modification,
repeal, waiver, extension or revocation is sought. No person, other than pursuant to a resolution
of the Board or a committee there of, shall have authority on behalf of the Company to agree to
amend, modify, repeal, waive, extend or revoke any provision of this Agreement or anything in
reference thereto.

 

 

 

15. Notices.

All notices and other communications hereunder shall be in writing and shall be given by hand
delivery to the other party or by registered or certified mail, return-receipt requested, postage
prepaid, addressed, in either case, at the Company’s headquarters or to such other address as
either party shall have furnished to the other in writing in accordance herewith. Notices and
communications shall be effective when actually received by the addressee.

16. Miscellaneous.

(a) Severability. The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this Agreement.

(b) Withholding. The Company may withhold from any amounts payable under this Agreement such
taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(c) No Waiver. The Executive’s or the Company’s failure to insist upon strict compliance with
any provision hereof or any other provision of this Agreement or the failure to assert any right
the Executive or the Company may have hereunder, including, without limitation, the right of the
Executive to terminate this Agreement, or the right of the Company to terminate the Executive’s
employment for Cause pursuant to this Agreement shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.

(d) Entire Agreement. This instrument contains the entire agreement of the Executive, the
Company or any predecessor or subsidiary thereof with respect to the subject matter hereof,
and may be modified only by a writing signed by the parties hereto. All promises,
representations, understandings, arrangements and prior agreements, are merged herein and
superseded hereby. Any agreement with regard to severance benefits entered into after the
Effective Date shall be effective only if it expressly references this Agreement.

(e) Conflicts. In the event of any difference between the terms of this Agreement and the
terms of any Company benefit, option or other plan or policy, the terms of this Agreement
shall control, unless such terms violate applicable law, or would require shareholder
approval or would cause the Company to be in material breach of its obligations under such
other benefit, option or other plan or policy. The Company shall not amend any benefit,
option or other plan or policy in a manner that would cause the agreements set forth herein
to be nullified, provided that nothing herein shall limit the Company’s discretion in
establishing, maintaining and amending its generally applicable welfare benefit programs
such as health coverage.

(f) Survivorship. The respective rights and obligations of the parties hereunder shall survive
any termination of this Agreement to the extent necessary to the intended preservation of such
rights and obligations.

(g) Headings. All descriptive headings of sections and paragraphs in this Agreement are
intended solely for convenience, and no provision of this Agreement is to be construed by reference
to the heading of any section or paragraph.

(h) Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.

 

 

 

(i) Construction. The parties acknowledge that this Agreement is the result of arm’s-length
negotiations between sophisticated parties each afforded representation by legal counsel. Each and
every provision of this Agreement shall be construed as though both parties participated equally in
the drafting of same, and any rule of construction that a document shall be construed against the
drafting party shall not be applicable to this Agreement.

IN WITNESS WHEREOF, the Executive and, pursuant to due authorization from its Board of
Directors, the Company have caused this Agreement to be executed as of the day and year first above
written.

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Jeff Morhet, Chief Executive Officer
	 	 
	 
	 	 	 	 
	INNEXUS BIOTECHNOLOGY INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Wade Brooksby, Chief Financial Officer

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