Document:

INNEXUS BIOTECHNOLOGY INC

 INNEXUS BIOTECHNOLOGY INC.

 STOCK OPTION PLAN

 20% PLAN

 APPROVED BY SHAREHOLDERS DECEMBER 20, 2005

 APPROVED AS AMENDED BY SHAREHOLDERS DECEMBER 19, 2006

 APPROVED BY TSX VENTURE EXCHANGE FEBRUARY 2, 2007

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.

1.4

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

1.5

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

1.6

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

1.7

"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.

1.8

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

1.9

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

1.10

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

1.11

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

1.12

"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.

1.13

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

1.14

"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.

1.15

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

1.16

“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.

1.17

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

1.18

"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.

1.19

"Option" means an option to purchase Shares granted pursuant to
this Plan.

1.20

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

1.21

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

1.22

"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.

1.23

"Option Shares" means the aggregate number of Shares which an
Optionee may purchase under an Option.

1.24

"Plan" means this Stock Option Plan.

1.25

"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.

1.26

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

1.27

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

1.28

"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.

1.29

“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 
6,330,603

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,

I
i
f 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, i

I
f 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, i

I
f 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 

ofBoard 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

 TO:

 ______________ , 200__

 Re: Option Agreement

 You have been designated as an Eligible Person under the
 Stock Option Plan, a copy of which is enclosed with this letter (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:

 (a)

 Designated
Number (the aggregate
number of Common Shares which you may
purchase under
the Option):

 _____________

 (b)

 Option
Price (price per Common Share):

 $_____

 (c)

 Expiry
Date:

 ___________
, 200__

 (d)

 Vesting
Date and Designated Quantity
(the quantity of the Designated Number of

Common Shares which you may purchase each
year)

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

				
	
 
	
 Vesting Date

	
 # of Options Vested

	
 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

 HOLD PERIOD EXPIRY DATE
 .

 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 _________________________ by _______________________________ .

 By signing and returning this letter to , 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.

 By:

   

 I have read the  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  and myself (the “Stock Option Agreement”) as to

                         

  Common Shares of  (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 Optionee’s Name)

 (Optionee’s Signature)

 (Date)

 (Address)

 

 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  and myself (the “Stock Option Agreement”) as to

                         

  Common Shares of  (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 Optionee’s Name)

 (Optionee’s Signature)

 (Date)

 (Address)

 

 

 Additional Covenants, Representations and Acknowledgements

 US Optionee

  (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 , 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:

			
	
 SIGNED, SEALED AND DELIVERED by

  

	
 ))))

	

	
 in the presence of:

 )

	
 )))

	
  (s)

	
 Name of Witness

	
 )))

	
 Signature

	
 Address of Witness

 Occupation of Witness

	
 ))))

	
 

 

 SCHEDULE "A"

 Incentive Stock Options

 (US Optionee)

 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:

 Dear Sirs:

 Re:

 Proposed Sale of

            

  common shares of  by  

 In
connection with the proposed sale of

             

  common shares (the "Shares") of
  
 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:

                            

 \Converted by EDGARwiz

SUB-LEASE AGREEMENT

THIS SUBLEASE AGREEMENT ("Sub-Lease") is made, entered into and executed this 1 t day of November, 2007, by and between InNexus Biotechnology, Inc. (hereinafter "Sub-Lessor") and Systems Medicine LLC, a wholly owned subsidiary of Cell Therapeutics, Inc. (hereinafter called "Sub-Lessee"). Sub-Lessor and Sub-Lessee contract and agree as follows:

1.

THIS SUB-LEASE IS SUBJECT TO THE TERMS, CONDITIONS AND RESTRICTIONS CONTAINED IN THE LEASE DATED AUGUST 1, 2005, BETWEEN KAHG, L.L.C. ("LANDLORD") AND SUB-LESSOR ("ORIGINAL LEASE") AND THE GROUND LEASE DATED APRIL 13, 2004 BETWEEN MAYO CLINIC ARIZONA, AN ARIZONA NON-PROFIT CORPORATION ("GROUND LEASE") AND LANDLORD. SUB-LESSEE SHALL COMPLY WITH THE ORIGINAL LEASE AND GROUND LEASE TERMS, CONDITIONS AND RESTRICTIONS, WHICH ARE INCORPORATED BY REFERENCE AND MADE A PART OF THIS SUB-LEASE AS IF FULLY SET FORTH HEREIN.

2.

 The term of this Sub-Lease shall be twenty-four (24) months. (the "Term"). If Sub-Lessee is current on all rent and other obligations in this Sub-Lease, the Term may be extended for not more than one (1) year, nor less than six (6) months, prior to the expiration of the initial Term upon the mutual written agreement of the parties. (the "Extended Term").

3.

 Sub-Lessor hereby subleases to Sub-Lessee 2,465.25 square feet of laboratory and laboratory support space and any improvements thereon (hereinafter referred to as the "Lab Area"). It is agreed that at Sub-Lessee's expense, at any time during the Term, Sub-Lessee may place a removable wall or divider to separate Sub-Lessee's Lab Area from other lab space. Sub-Lessee shall have access to the Lab Area 24 hours per day, seven days per week. Sub-Lessee shall also have the nonexclusive right to use the Common Areas as defined in the Original Lease.

4.

 During the Term, Sub-Lessee shall pay to Sub-Lessor, as Rent, the sum of Ten Thousand Two Hundred Seventy-One and 881100 Dollars ($10,271.88) per month, in advance, on or before the first day of each month. During any agreed to extended term, Sub-Lessee shall pay to Sub-Lessor, as Rent, the sum of Eleven Thousand Seven Hundred Fifty-Three and 65/100 Dollars ($11,753.65) per month, in advance, on or before first day of each month. In addition, Rent shall include and Sub-Lessee shall be required to pay its proportionate share of any increase in real and personal property taxes, insurance, costs of maintaining, operating, repairing and managing the Project and its Common Areas, as set forth in the Original Lease and the Ground Lease. All rental payments shall be made in United States Dollars, without deduction, offset, prior notice or demand, and 

delivered to Sub-Lessor at the address set forth in Section 17 of this Sub-Lease or such other address designated by Sub-Lessor in writing.

5.

The Lab Area may be used for the following purposes and for no other purposes: first class medical research facility and uses ancillary and complementary thereto and for no other business or other purpose whatsoever without the prior written consent of Sub-Lessor. The Sub-Lessee will not perform any act in or about the Lab Area that is unlawful or. prohibited by any federal, state or local law, rule, regulation, or ordinance. In the event of a breach of this covenant, the Sub-Lessee shall pay to the Sub-Lessor any and all fines, or increases in insurance premiums to the extent and resulting from such breach, and actually incurred by Sub-Lessor, upon demand, and Sub-Lessor shall have all additional. remedies provided for herein to redress such breach. The Sub-Lessee shall not commit or allow to be committed any waste upon the Lab Area or other act or thing which disturbs any other tenant in the building. The Sub-Lessee, at its expense, shall comply with all laws relating to its use and occupancy of the Lab Area. In addition, Sub-Lessee shall observe such reasonable rules and regulations as may be adopted and made available to Sub-Lessee by the Sub-Lessor from time to time for the safety, care and cleanliness of the Lab Area and the common areas and/or the building.

6.

SUB LESSOR AND SUB-LESSEE, SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS EACH OTHER FROM ANY AND ALL LOSSES, FINES, SUITS, DAMAGES, EXPENSES, CLAIMS, DEMANDS AND ACTIONS OF ANY KIND AND EXPENSE INCLUDING REASONABLE ATTORNEY'S FEES RESULTING FROM THE OTHER'S NEGLIGENCE, BREACH, OR VIOLATION OR NON-PERFORMANCE OF ANY CONDITION PURSUANT TO THIS SUB-LEASE; PROVIDED HOWEVER, THAT THE INDEMNIFYING PARTY SHALL HAVE NO OBLIGATION TO INDEMNIFY THE OTHER PARTY TO THE EXTENT SUCH LOSS, FINE, SUIT, DAMAGE, CLAIM, DEMAND, ACTION OF ANY KIND OR EXPENSE ARE THE RESULT OF THE OTHER PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

IN ADDITION, SUB-LESSOR SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS SUB-LESSEE FROM AND AGAINST ANY AND ALL THIRD-PARTY CLAIMS, DEMANDS, ACTIONS, SUITS, PROSECUTIONS, AND CAUSES OF ACTION, AND ALL RESULTING JUDGMENTS, LIABILITIES, PENALTIES, DAMAGES, LOSSES, COSTS AND EXPENSES (COLLECTIVELY "DAMAGES") ARISING FROM ANY ACT OR OMISSION RELATING TO THE LAB AREA AND OCCURRING ENTIRELY PRIOR TO THE TERM, BUT DURING THE TERM OF THE ORIGINAL LEASE. NOTWITHSTANDING THE FOREGOING, SUB-LESSOR SHALL NOT HAVE ANY OBLIGATION UNDER THIS SECTION 6 FOR ANY DAMAGES TO THE EXTENT THEY ARISE OUT OF (i) THE NEGLIGENT OR MORE CULPABLE ACT OR OMISSION OF SUB-LESSEE; OR (II) ANY BREACH OF ANY

OF THE OBLIGATIONS OF SUB-LESSEE UNDER THIS SUB-LEASE, THE ORIGINAL LEASE AND THE GROUND LEASE.

7.

 Insurance: Sub-Lessee shall, during the entire term of the Lease keep in full force and effect one or more policies of liability insurance with respect to the Lab Area and the business operated by Sub-Lessee in the Lab Area and which the limits of general liability shall be in the amount of Two Million Dollars ($2,000,000.00) combined single limit, naming Sub-Lessor as additional insured. Such coverage shall include a broad form general liability endorsement. Sub-Lessee shall not cancel or change the insurance without first giving the Sub-Lessor thirty (30) days prior written notice.

Sub-Lessee shall during the term hereof, at its sole expense, provide and keep in force insurance on the Lab Area against loss or damage by fire or any other casualty and extended coverage, in an amount equal to one hundred percent (100%) of the full insurable value thereof, which insurance shall be placed with an insurance company or companies approved by Sub-Lessor and licensed to do business in the State of Arizona. The term "full insurable value" shall mean actual replacement value of the Lab Area. The insurance required under this paragraph shall be carried in the names of the Sub-Lessor, Landlord and Sub-Lessee and shall provide that any proceeds thereunder shall be paid to Sub-Lessor, Landlord and Sub-Lessee and any applicable mortgage holder, according to their respective interests.

Duplicate originals or certificates of insurance of the policies provided shall be furnished by Sub-Lessee and shall contain an agreement by the insurer that such policy or policies shall not be canceled without at least thirty (30) days prior notice to the Sub-Lessor.

Sub-Lessee shall pay all taxes assessed against all personal property located on the premises and shall also pay all privilege, excise and other taxes duly assessed. Sub-Lessee shall pay said taxes when due so as to prevent the assessment of any late fees or penalties.

8.

Sub-Lessee shall pay for all water, electricity, and other utilities used in the Lab Area.

9.

 All repairs, maintenance, replacement or reconstruction to the interior of the portion of the Lab Area leased by Sub-Lessee, including but not limited to replacement of interior glass doors and windows and repair of the plumbing, are to be made by Sub-Lessee at Sub-Lessee's expense. If Sub-Lessee fails to make such repairs or replacements promptly or within a reasonable time, but not more than fifteen (15) days after an occurrence, Sub-Lessor may, at its option, make such repairs or replacements and Sub-Lessee shall repay the costs thereof to Sub-Lessor on demand. 

 Sub-Lessee will comply at all times with all lawful federal, state and local health, environmental and police regulations and the terms, conditions and restrictions contained in the Original Lease and the Ground Lease regarding the condition of the Lab Area.

Sub-Lessee shall promptly comply with all of the ordinances of the City of Scottsdale, Arizona, or of any other governmental body applicable for said premises and to all ordinances and requirements enforced by the state board of health, sanitary, fire or police departments of the City of Scottsdale for the correction, prevention and abatement of nuisances in and about or connected with the Lab Area because of Sub-Lessee's use thereof during the term of this Sub-Lease, all at Sub-Lessee's expense. Sub-Lessee shall provide for the removal of its own waste, including but not limited to trash, waste water, waste paper, boxes and cartons and any other organic or inorganic substances, materials or laboratory animals and shall not permit any accumulation of such items. Sub-Lessee shall not engage in any act which shall constitute a nuisance.

10.

 If Sub-Lessee shall default in the payment of the rent, or any part thereof or any other sums due under the terms hereof, when due as herein provided, or in any of the other material covenants, agreements, conditions or undertakings herein contained, and such default shall continue for thirty (30) days after notice thereof in writing to Sub-Lessee, or if (a) any proceeding under the bankruptcy act of the United States is begun by or against the Sub-Lessee, and an order of adjudication, or order approving the petition, be entered in such proceedings, or (b) a receiver or trustee is appointed for substantially all of the Sub-Lessee's business or assets, or (c) if Sub-Lessee shall make an assignment for the benefit of creditors, or (d) if Sub-Lessee shall vacate or abandon the leased Lab Area, then, and in any such event, it shall be lawful for the Sub-Lessor, at his election, to declare the Term ended and to re-enter the leased Lab Area, and to repossess and enjoy the said premises and any Lab Area and improvements situated thereon without such a re-entry and repossession working a forfeiture of the rents to be paid and the covenants to be performed by the Sub-Lessee during the full term of this agreement. If any default shall be made in any covenant, agreement, condition, or undertaking which cannot with due diligence be cured within a period of thirty (30) days, and if notice thereof in writing shall have been given to the Sub-Lessee, and if the Sub-Lessee, prior to the expiration of thirty (30) days from and after the giving of such notice, shall commence to satisfy the cause of such default and shall proceed diligently and with reasonable dispatch to take all steps and do all work required to cure such default, then the Sub-Lessor shall not have the right to declare Term ended by reason of such default; provided, however, that the curing of any default in such manner shall not be construed to limit or restrict the right of Sub-Lessor to declare the Term ended and enforce all of their rights and remedies hereunder for any other default not so cured.

The foregoing provision for the termination of this lease for any default in any of its covenants shall not operate to exclude or suspend any other remedy of the Sub-

Lessor for breach of any of said covenants, or for the recovery of rent owing for the full term, and in the event of the termination or default in any of the terms of this lease as aforesaid.

12.

 Sub-Lessee shall permit Sub-Lessor and his agents to enter the Lab Area at all reasonable times upon one (1) business day's prior notice to Sub-Lessee for any of the following purposes: (i) to inspect the same: (ii) to maintain the Lab Area in which the said premises are located, (iii) to make repairs to the Property as the Sub-Lessor is obligated or may elect to make, and (iv) to post notices of non-responsibility for alterations or additions or repairs.

13.

 If the Lab Area, including improvements thereon, are damaged or destroyed by fire or other casualty, Sub-Lessee shall have the exclusive right and option to either terminate this Sub-Lease or reconstruct and/or repair the said damaged improvements and continue this Sub-Lease under its terms ad conditions as if no such casualty occurred by giving written notice to Sub-Lessor of Sub-Lessee's intention to so continue this Sub-Lease within thirty (30) days after the date of said damage or casualty. In the event that Sub-Lessee so elects to continue this Sub-Lease, any insurance proceeds payable as a result of said fire or casualty shall be first applied to pay the reconstruction or repair of said improvements, and any balance of such insurance proceeds after payment of said reconstruction or repair shall be paid to whomever owns the insurance policy under which payment is made.

14.

 If, during the term of this Agreement, the Lab Area shall be taken or condemned, either in whole or part, by competent authorities for public or quasi-public use, Sub-Lessee shall have the option to terminate this Sub-Lease within thirty (30) days of the taking without penalty. If Sub-Lessee elects not to terminate this Sub-Lease, then this Sub-Lease shall continue in full force and effect.

Neither party shall do or permit anything to be done which would cause the Original Lease to be terminated or forfeited by reason of any right of termination or forfeiture or default, and each party shall indemnify and hold the other party harmless from and against claims arising out of such party's breach of the foregoing covenant.

 15.

Sub-Lessor represents and warrants to Sub-Lessee the following as of the effective date of this Sub-Lease:

(a)

The Original Lease is in full force and effect and has not been modified, supplemented or amended, except the March 13, 2007 amendment, and except as described in Exhibit A.

(b)

Sub-Lessor has the right to full and complete possession of the Lab Area Subject to Landlord's rights under the Original Lease.

(c)

To Sub-Lessor's knowledge, Landlord has performed or is performing in all material respects all of its duties under the Original Lease.

16.

 It is understood and agreed that the relationship of the parties hereto is strictly that of Sub-Lessor and Sub-Lessee and that the Sub-Lessor has no ownership in the Sub-Lessee's enterprise and the Sub-Lease shall not be construed as a joint venture or partnership. The Sub-Lessee is not and shall not be deemed to be an agent or representative of the Sub-Lessor.

17.

 All covenants, conditions and agreements and undertakings contained in this Sub-Lease shall extend to and be binding on the heirs, successors and assigns of the parties hereto the same as if they were in every case named And expressed.

18.

 It is further understood and agreed by and between the Sub-Lessor and Sub-Lessee that, on account of breach or default by either party of any obligations hereunder, if it shall become necessary for the other party to employ and/or consult with an attorney to give advice, or to enforce or demand any of either party's rights or remedies hereunder, then, and in any such event, the defaulting or breaching party shall pay all attorney fees, court costs and other expenses occasioned by such default(s) or breaches)

19.

Until further written notice to Sub-Lessee, all rent checks and all notices from Sub-Lessee to Sub-Lessor shall be served or sent to:

Jeff Morhet, President and CEO

InNexus Biotechnology, Inc.

placeplace13208 East Shea Blvd, #200

The placeMayo placeClinic placeMCCRB placeBuilding

placeplaceScottsdale, placeArizona place85259

Until further written notice to Sub-Lessor, all notices from Sub-Lessor to Sub-Lessee shall be served or sent to Sub-Lessee at the following address:

Jeff Jacobs, President

Systems Medicine LLC

placeplace4320 N. Campbell Ave., Suite 226

placeTucson, placeAZ place85718

All notices to be given under this Agreement (not including payment of rent) shall be in writing and shall be served personally or sent by placeplaceUnited States certified or registered mail, or by a reputable overnight delivery service.

20.

This Agreement contains all of the agreements and conditions made between the parties hereto and may not be modified orally or in any other manner other than 

by agreement in writing signed by all parties hereto or their respective successors in interest.

21.

 If any section, paragraph, sentence or portion of this Agreement or the application thereof to any party or circumstance shall, to any extent, be or become invalid or illegal, such provision is and shall be null and void, but, to the extent that said null and void provisions do not materially change the overall agreement and intent of this entire agreement, the remainder of this Agreement shall not be affected thereby and each remaining provision of this Agreement shall be valid and enforceable to the fullest extent provided by law.

22.

This Agreement shall be governed by and construed in accordance with the laws of the State of placeplaceArizona.

23.

 This Sub-Lease is executed with the written consent ofle

Endnotes

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3

4

5

6

7

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