Exhibit 10.7

CYTODYN INC.

2012 EQUITY INCENTIVE PLAN

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TABLE OF CONTENTS

 

          Page  

ARTICLE 1

   ESTABLISHMENT AND PURPOSE      1  

1.1

   Establishment      1  

1.2

   Purpose      1  

ARTICLE 2

   DEFINITIONS      1  

2.1

   Defined Terms      1  

2.2

   Gender and Number      5  

ARTICLE 3

   ADMINISTRATION      5  

3.1

   Administration by Board      5  

3.2

   Delegation to Committee      5  

3.3

   Authority of the Committee      5  

3.4

   Action by the Committee      6  

3.5

   Further Delegation      6  

ARTICLE 4

   DURATION; SHARES SUBJECT TO THE PLAN; ELIGIBILITY      6  

4.1

   Duration of the Plan      6  

4.3

   Shares Subject to the Plan      6  

4.5

   Eligibility      7  

ARTICLE 5

   AWARDS      7  

5.1

   Types of Awards      7  

5.2

   General      7  

5.3

   Nonuniform Determinations      7  

5.4

   Award Agreements      7  

5.5

   Provisions Governing All Awards      7  

ARTICLE 6

   OPTIONS      11  

6.1

   Types of Options      11  

6.2

   General      11  

6.3

   Option Price      11  

6.4

   Option Term      11  

6.5

   Time of Exercise      12  

6.6

   Special Rules for Incentive Stock Options      12  

6.7

   Restricted Shares      12  

 

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TABLE OF CONTENTS

(continued)

 

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6.8

   Limitation on Number of Shares Subject to Options      12   ARTICLE 7   
STOCK APPRECIATION RIGHTS      12  

7.1

   General      12  

7.2

   Nature of Stock Appreciation Right      12  

7.3

   Exercise      13  

7.4

   Form of Payment      13  

7.5

   Limitation on Number of Stock Appreciation Rights      13   ARTICLE 8   
RESTRICTED AWARDS      13  

8.1

   Types of Restricted Awards      13  

8.2

   General      14  

8.3

   Restriction Period      14  

8.4

   Forfeiture      14  

8.5

   Settlement of Restricted Awards      14  

8.6

   Rights as a Shareholder      15  

8.7

   Limitation in Number of Restricted Awards      15   ARTICLE 9    OTHER
STOCK-BASED AND COMBINATION AWARDS      15  

9.1

   Other Stock-Based Awards      15  

9.2

   Combination Awards      15   ARTICLE 11    ADJUSTMENTS UPON CHANGES IN
CAPITALIZATION, ETC.      15  

11.1

   Plan Does Not Restrict the Corporation      15  

11.2

   Mandatory Adjustment      16  

11.3

   Adjustments by the Committee      16   ARTICLE 12    AMENDMENT AND
TERMINATION      16   ARTICLE 13    MISCELLANEOUS      16  

13.1

   Tax Withholding      16  

13.2

   Unfunded Plan      17  

13.3

   Fractional Shares      17  

13.4

   Annulment of Awards      17  

13.5

   Engaging in Competition With the Corporation      17  

13.6

   Other Corporation Benefit and Compensation Programs      17  

 

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TABLE OF CONTENTS

(continued)

 

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13.7

   Securities Law Restrictions      18  

13.8

   Continuing Restriction Agreement      18  

13.9

   Governing Law      18  

 

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2012 EQUITY INCENTIVE PLAN

ARTICLE 1

ESTABLISHMENT AND PURPOSE

1.1 Establishment. CytoDyn Inc., a Colorado corporation (the “Corporation”),
hereby establishes the CytoDyn Inc. 2012 Equity Incentive Plan (the “Plan”),
effective as of December 12, 2012 (the “Effective Date”).

1.2 Purpose. The purpose of the Plan is to promote and advance the interests of
the Corporation and its shareholders by enabling the Corporation to attract,
retain, and reward employees, directors, and outside consultants of the
Corporation and its subsidiaries. It is also intended to strengthen the
mutuality of interests between such employees, directors, and consultants and
the Corporation’s shareholders. The Plan is designed to serve these purposes by
offering stock options and other equity-based incentive awards, thereby
providing a proprietary interest in pursuing the long-term growth,
profitability, and financial success of the Corporation.

ARTICLE 2

DEFINITIONS

2.1 Defined Terms. For purposes of the Plan, the following terms have the
meanings set forth below:

“Affiliate” means any parent corporation or subsidiary corporation of the
Corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

“Award” means an award or grant made to a Participant of Options, Stock
Appreciation Rights, Restricted Awards, or Other Stock-Based Awards pursuant to
the Plan.

“Award Agreement” means an agreement as described in Section 5.4.

“Board” means the Board of Directors of the Corporation.

“Change in Control” means:

(i) Any one person or entity, or more than one person or entity acting as a
group (as defined in Treasury Regulation Section 1.409A-3), acquires ownership
of stock of the Corporation that, together with stock previously held by the
acquiror, constitutes more than fifty (50%) percent of the total fair market
value or total voting power of the Corporation’s stock. If any one person or
entity, or more than one person or entity acting as a group, is considered to
own more than fifty (50%) percent of the total fair market value or total voting
power of the Corporation’s stock, the acquisition of additional stock by the
same person or entity or persons or entities acting as a group does not cause a
Change in Control. An increase in the percentage of stock owned by any one
person or entity, or persons or entities acting as a group, as a result of a
transaction in which the Corporation acquires its stock in exchange for
property, is treated as an acquisition of stock; or

 

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(ii) A majority of the members of the Corporation’s board of directors is
replaced during any twelve (12) month period by directors whose appointment or
election is not endorsed by a majority of the members of the board of directors
prior to the date of appointment or election; or

(iii) Any one person or entity, or more than one person or entity acting as a
group, acquires (or has acquired during the twelve (12) month period ending on
the date of the most recent acquisition by that person or entity or persons or
entities acting as a group) assets from the Corporation that have a total gross
fair market value equal to at least forty (40%) percent of the total gross fair
market value of all the Corporation’s assets immediately prior to the
acquisition or acquisitions. Gross fair market value means the value of the
Corporation’s assets, or the value of the assets being disposed of, without
regard to any liabilities associated with these assets.

In determining whether a Change in Control occurs, the attribution rules of Code
Section 318 apply to determine stock ownership. The stock underlying a vested
option is treated as owned by the individual who holds the vested option, and
the stock underlying an unvested option is not treated as owned by the
individual who holds the unvested option.

“Change in Control Date” means the date a Change in Control actually occurs.

“Code” means the Internal Revenue Code of 1986, as amended and in effect from
time to time, or any successor statute, together with rules, regulations, and
interpretations promulgated thereunder.

“Committee” means the committee appointed by the Board, if any, to administer
the Plan as provided in Article 3 of the Plan. If no separate committee has been
appointed to administer the Plan, the term “Committee” will refer to the full
Board as administrator of the Plan.

“Common Stock” means the common stock of the Corporation.

“Consultant” means any consultant or adviser to the Corporation or an Affiliate
selected by the Committee, who is not an employee of the Corporation or an
Affiliate.

“Continuing Restriction” means a Restriction contained in Sections 5.5(d),
5.5(g), 13.4, 13.5, 13.7 and 13.8 of the Plan and any other Restrictions
expressly designated by the Committee in an Award Agreement as a Continuing
Restriction.

“Continuous Service” means that the Participant’s service with the Corporation,
or an Affiliate whether as an Employee, Non-Employee Director or Consultant, is
not interrupted or terminated. The Committee may in its sole discretion
determine whether Continuous Service shall be considered interrupted in the case
of (i) any leave of absence approved by the Corporation, including sick leave,
maternity leave, military leave or any other personal leave, or (ii) a change in
the capacity in which the Participant renders services to the Corporation or an
Affiliate.

 

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“Corporation” means CytoDyn Inc., a Colorado corporation, or any successor
corporation.

“Disability” means the condition of being “disabled” within the meaning of
Section 22(e)(3) of the Code.

“Exchange Act” means the Securities Exchange Act of 1934, as amended and in
effect from time to time, or any successor statute, together with rules and
interpretations promulgated thereunder.

“Fair Market Value” means, on any given day, the fair market value per share of
the Common Stock determined as follows:

(a) If the Common Stock is traded on an established securities exchange,
including without limitation The Nasdaq Stock Market or any successor market
thereto, the closing sale price of Common Stock as reported for such day by the
principal exchange on which the Common Stock is traded (as determined by the
Committee) or, if Common Stock was not traded on such day, on the next preceding
day on which the Common Stock was traded;

(b) If trading activity in the Common Stock is reported on an established
over-the-counter market, including without limitation the OTC Markets or any
successor market thereto, the closing sale price of Common Stock as reported for
such day by the principal market on which the Common Stock is traded (as
determined by the Committee) or, if Common Stock was not traded on such day, on
the next preceding day on which the Common Stock was traded;

(c) If there is no market for the Common Stock or if trading activities for the
Common Stock are not reported in one of the manners described above, the Fair
Market Value will be as determined by the Committee, including valuation by an
independent appraisal that satisfies the requirements of Code
Section 401(a)(28)(C) as of a date that is no more than twelve (12) months
before the date of the transaction for which the appraisal is used (e.g., the
date of grant of an Award) or such other reasonable valuation method acceptable
under Treasury Regulation Section 1.409A-1(b)(5)(iv).

“Incentive Stock Option” or “ISO” means any Option intended to be an “incentive
stock option” within the meaning of Section 422 of the Code.

“Non-Employee Director” means a member of the Board who is not an employee of
the Corporation or any Affiliate.

“Nonqualified Option” or “NQO” means any Option granted pursuant to the Plan
that is not an Incentive Stock Option.

“Option” means an ISO or an NQO.

 

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“Other Stock-Based Award” means an Award as defined in Section 9.1.

“Participant” means an employee of the Corporation or an Affiliate, a Consultant
or a Non-Employee Board Director who is granted an Award under the Plan.

“Plan” means this CytoDyn Inc. 2012 Equity Incentive Plan, as set forth herein
and as it may be amended from time to time.

“Reporting Person” means a Participant who is subject to the reporting
requirements of Section 16(a) of the Exchange Act.

“Restricted Award” means a Restricted Share or a Restricted Unit granted
pursuant to Article 8 of the Plan.

“Restricted Share” means an Award described in Section 8.1(a) of the Plan.

“Restricted Unit” means an Award of units representing Shares described in
Section 8.1(b) of the Plan.

“Restriction” means a provision in the Plan or in an Award Agreement which
limits the exercisability or transferability, or which governs the forfeiture or
required sale, of an Award or Shares, cash, or other property payable pursuant
to an Award.

“Share” means a share of Common Stock.

“Stock Appreciation Right” or “SAR” means an Award to benefit from the
appreciation of Common Stock granted pursuant to the provisions of Article 7 of
the Plan.

“Vest,” “Vesting,” or “Vested” means:

(a) In the case of an Award that requires exercise, to be or to become
immediately and fully exercisable and free of all Restrictions (other than
Continuing Restrictions);

(b) In the case of an Award that is subject to forfeiture, to be or to become
nonforfeitable, freely transferable, and free of all Restrictions (other than
Continuing Restrictions);

(c) In the case of an Award that is required to be earned by attaining specified
performance goals, to be or to become earned and nonforfeitable, freely
transferable, and free of all Restrictions (other than Continuing Restrictions);
or

(d) In the case of any other Award as to which payment is not dependent solely
upon the exercise of a right, election, or option, to be or to become
immediately payable and free of all Restrictions (except Continuing
Restrictions).

 

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2.2 Gender and Number. Except where otherwise indicated by the context, any
masculine or feminine terminology used in the Plan also includes the opposite
gender; and the definition of any term in Section 2.1 in the singular also
includes the plural, and vice versa.

ARTICLE 3

ADMINISTRATION

3.1 Administration by Board. The Board shall administer the Plan unless and
until the Board delegates administration to a Committee, as provided in
Section 3.2. The body administering the plan from time to time is referred to
herein as the “Committee.”

3.2 Delegation to Committee. The Board may delegate administration of the Plan
to a Committee or Committees of one (1) or more members of the Board, and the
term “Committee” shall apply to any person or persons to whom such authority has
been delegated. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to further delegate
administrative powers, subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time by the
Board. The Board may abolish the Committee at any time and re-vest in the Board
the administration of the Plan.

3.3 Authority of the Committee. The Committee has full power and authority
(subject to such orders or resolutions as may be issued or adopted from time to
time by the Board in the event of delegation to a board committee) to administer
the Plan in its sole discretion, including the authority to:

(a) Construe and interpret the Plan and any Award Agreement;

(b) Promulgate, amend, and rescind rules and procedures relating to the
implementation of the Plan;

(c) Select the employees, Non-Employee Directors, and Consultants who will be
granted Awards;

(d) Determine the number and types of Awards to be granted to each Participant;

(e) Determine the number of Shares, or Share equivalents, to be subject to each
Award;

(f) Determine the Fair Market Value of Shares if no public market exists for
such Shares;

(g) Determine the option price, purchase price, base price, or similar feature
for any Award

(h) Accelerate Vesting of Awards and waive any Restrictions; and

 

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(i) Determine all the terms and conditions of all Award Agreements, consistent
with the requirements of the Plan.

Decisions of the Committee, or any delegate as permitted by the Plan, will be
final, conclusive, and binding on all Participants.

3.4 Action by the Committee. A majority of the members of the Committee will
constitute a quorum for the transaction of business. Action approved by a
majority of the members present at any meeting at which a quorum is present, or
action in writing by all of the members of the Committee, will be the valid acts
of the Committee.

3.5 Further Delegation. Notwithstanding the foregoing, the Committee may
delegate to one or more officers of the Corporation the authority to determine
the recipients, types, amounts, and terms of Awards granted to Participants who
are not Reporting Persons.

ARTICLE 4

DURATION; SHARES SUBJECT TO THE PLAN; ELIGIBILITY

4.1 Duration of the Plan. The Plan is effective as of the Effective Date. The
Plan will terminate ten years after the Effective Date or, if earlier, when
Awards have been granted covering all available Shares or the Plan is otherwise
terminated by the Board. Termination of the Plan will not affect outstanding
Awards.

4.2 Prior Plans. The Plan is separate from the CytoDyn Inc. 2004 Stock Incentive
Plan (the “Prior Plan”). The adoption of the Plan neither affects nor is
affected by the continued existence of the Prior Plan except that no further
Awards will be granted under the Prior Plan after the Effective Date.

4.3 Shares Subject to the Plan. The Shares which may be made subject to Awards
under the Plan are Shares of Common Stock, which may be either authorized and
unissued Shares or reacquired Shares. Subject to adjustment pursuant to
Article 11, the maximum number of Shares for which Awards may be granted under
the Plan is 7,000,000, and the maximum aggregate number of Shares that may be
issued under the Plan through Incentive Stock Options is 6,500,000. If an Award
under the Plan is canceled or expires for any reason prior to having been fully
Vested or exercised by a Participant, is settled in cash in lieu of Shares or is
exchanged for other Awards, or is otherwise forfeited or terminated, all Shares
covered by such Awards will be added back into the number of Shares available
for future Awards under the Plan. In addition, if the exercise price of any
Option granted under the Plan is satisfied by tendering Shares to the
Corporation, only the number of Shares issued net of Shares tendered to the
Corporation shall be deemed delivered for purposes of determining the maximum
number of Shares available under the Plan.

4.4 Reservation of Shares. The Corporation, during the term of the Plan and
outstanding Awards, will at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Plan.

 

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4.5 Eligibility. Employees of the Corporation and any subsidiary (including
employees who may also be directors of the Corporation or a subsidiary),
Consultants, and Non-Employee Directors are eligible to receive Awards under the
Plan.

ARTICLE 5

AWARDS

5.1 Types of Awards. The types of Awards that may be granted under the Plan are:

(a) Options governed by Article 6 of the Plan;

(b) Stock Appreciation Rights governed by Article 7 of the Plan;

(c) Restricted Awards governed by Article 8 of the Plan; and

(d) Other Stock-Based Awards or combination awards governed by Article 9 of the
Plan.

In the discretion of the Committee, any Award may be granted alone, in addition
to, or in tandem with other Awards under the Plan.

5.2 General. Subject to the limitations of the Plan, the Committee may cause the
Corporation to grant Awards to such Participants, at such times, of such types,
in such amounts, for such periods, with such option prices, purchase prices, or
base prices, and subject to such terms, conditions, limitations, and
restrictions as the Committee, in its discretion, deems appropriate. Awards may
be granted as additional compensation to a Participant or in lieu of other
compensation to such Participant. A Participant may receive more than one Award
and more than one type of Award under the Plan.

5.3 Nonuniform Determinations. The Committee’s determinations under the Plan or
under one or more Award Agreements, including, without limitation, (a) the
selection of Participants to receive Awards, (b) the type, form, amount, and
timing of Awards, (c) the terms of specific Award Agreements, and (d) elections
and determinations made by the Committee with respect to exercise or payments of
Awards, need not be uniform and may be made by the Committee selectively among
Participants and Awards, whether or not Participants are similarly situated.

5.4 Award Agreements. Each Award will be evidenced by a written agreement (an
“Award Agreement”) between the Corporation and the Participant. Award Agreements
may, subject to the provisions of the Plan, contain any provision approved by
the Committee.

5.5 Provisions Governing All Awards. All Awards are subject to the following
provisions:

(a) Alternative Awards. If any Awards are designated in their Award Agreements
as alternative to each other, the exercise of all or part of one Award will
automatically cause an immediate equal (or pro rata) corresponding termination
of the other alternative Award or Awards.

 

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(b) Rights as Shareholders. No Participant will have any rights of a shareholder
with respect to Shares subject to an Award until such Shares are issued in the
name of the Participant.

(c) Employment Rights. Neither the adoption of the Plan nor the granting of any
Award confers on any person the right to continued employment with the
Corporation or any Affiliate or the right to remain as a director of or a
Consultant to the Corporation or any Affiliate, as the case may be, nor does it
interfere in any way with the right of the Corporation or an Affiliate to
terminate such person’s employment or to remove such person as a Consultant or
as a director at any time for any reason, with or without cause.

(d) Restriction on Transfer. Unless otherwise expressly provided in an
individual Award Agreement, each Award (other than Restricted Shares after they
Vest) will not be transferable other than by will or the laws of descent and
distribution and will be exercisable (if exercise is required), during the
lifetime of the Participant, only by the Participant or, in the event the
Participant becomes legally incompetent, by the Participant’s guardian or legal
representative. Notwithstanding the foregoing, any Award may be surrendered to
the Corporation pursuant to Section 5.5(h) in connection with the payment of the
purchase or option price of another Award or the payment of the Participant’s
federal, state, or local tax withholding obligation with respect to the exercise
or payment of another Award.

(e) Termination of Employment. The terms and conditions under which an Award may
be exercised, if at all, after a Participant’s termination of employment or
service as a Non-Employee Board Director or Consultant will be determined by the
Committee and specified in the applicable Award Agreement.

(f) Change in Control. In connection with a Change in Control, the Committee, in
its sole discretion, may, unless otherwise provided in an Award Agreement:

(i) Provide that, upon the occurrence of a Change in Control Date, each
outstanding Award will become immediately Vested to the full extent not
previously Vested. Any such acceleration of Award Vesting must comply with
applicable regulatory requirements and any Participant will be entitled to
decline the accelerated Vesting of all or any portion of his or her Award, if he
or she determines that such acceleration may result in adverse tax consequences
to him or her; and

 

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(ii) In the event the Board approves a proposal that will result in a Change in
Control or a Change in Control Date occurs (each, a “Transaction”), the
Committee may, in its sole discretion, and to the extent possible under the
structure of the Transaction, select one of the following alternatives for
treating outstanding Awards under the Plan:

(A) The Committee may provide that outstanding Awards will be converted into or
replaced by Awards of a similar type in the stock of the surviving or acquiring
corporation in the Transaction. The amount and type of securities subject to and
the exercise price (if applicable) of the replacement or converted Awards will
be determined by the Committee based on the exchange ratio, if any, used in
determining shares of the surviving corporation to be issued to holders of
Shares of the Corporation. If there is no exchange ratio in the Transaction, the
Committee will, in making its determination, take into account the relative
values of the companies involved in the Transaction and such other factors as
the Committee deems relevant. Such replacement or converted Awards will continue
to Vest over the period (and at the same rate) as the Awards which the
replacement or converted Awards replaced, unless determined otherwise by the
Committee; or

(B) The Committee may provide a 10-day period prior to the consummation of the
Transaction during which all outstanding Awards will tentatively become fully
Vested, and upon consummation of such Transaction, all outstanding and
unexercised Awards will immediately terminate. If the Committee elects to
provide such 10-day period for the exercise of Awards, the Committee must
provide written notice (a “Proposal Notice”) to all Participants at least 15
days prior to the commencement of such 10-day period and must so state its
intention to terminate all unexercised Awards. Participants, by written notice
to the Corporation, may exercise their Awards and, in so exercising the Awards,
may condition such exercise upon, and provide that such exercise will become
effective immediately prior to, the consummation of the Transaction, in which
event Participants need not make payment for any Common Stock to be purchased
upon exercise of an Award until five days after written notice by the
Corporation to the Participants that the Transaction has been consummated. If
the Transaction is consummated, each Award, to the extent not previously
exercised prior to the consummation of the Transaction, will terminate and cease
being exercisable as of the effective date of such Transaction. If the
Transaction is abandoned, (1) all outstanding Awards not exercised will continue
to be Vested and exercisable, to the extent such Awards were Vested and
exercisable prior to the date of a Proposal Notice, and (2) to the extent that
any Awards not exercised prior to such abandonment have become Vested and
exercisable solely by operation of this Section 5.5(f)(ii), such Vesting and
exercisability will be deemed annulled, and the Vesting and exercisability
provisions otherwise in effect will be reinstituted, as of the date of such
abandonment; or

 

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(C) The Committee may provide that outstanding Awards that are not fully Vested
will become fully Vested subject to the Corporation’s right to pay each
Participant a cash amount (determined by the Committee and based on the amount,
if any, being received by the Corporation’s shareholders in the Transaction) in
exchange for cancellation of the applicable Award.

Unless the Committee specifically provides otherwise in a Change in Control
provision for a specific Award Agreement, Awards will become Vested as of a
Change in Control Date only if, or to the extent, such acceleration in the
Vesting of the Awards does not result in an “excess parachute payment” within
the meaning of Section 280G(b) of the Code. The Committee, in its discretion,
may include specific Change in Control provisions in some Award Agreements and
not in others, may include different Change in Control provisions in different
Award Agreements, and may include Change in Control provisions for some Awards
or some Participants and not for others.

(g) Conditioning or Accelerated Benefits. The Committee, in its discretion, may
include in any Award Agreement a provision conditioning or accelerating the
Vesting of an Award or the receipt of benefits pursuant to an Award, either
automatically or in the discretion of the Committee, upon the occurrence of
specified events, including without limitation, a Change in Control of the
Corporation (subject to the foregoing), a sale of all or substantially all of
the property and assets of Corporation, or an event of the type described in
Article 11 of this Plan.

(h) Payment of Purchase Price and Withholding. The Committee, in its discretion,
may include in any Award Agreement a provision permitting the Participant to pay
the purchase or option price, if any, for Shares or other property issuable
pursuant to the Award, in whole or in part by any one or more of the following
methods; provided, however, that the availability of any one or more methods of
payment may be suspended from time to time if the Committee determines that the
use of such payment method would result in adverse financial accounting
treatment for the Corporation or a violation of laws or regulations applicable
to the Corporation:

(i) By delivering cash or a check;

(ii) By delivering previously owned Shares (including Restricted Shares, whether
or not Vested);

(iii) By reducing the number of Shares or other property otherwise Vested and
issuable pursuant to the Award;

(iv) Unless specifically prohibited by any applicable statute or rule,
including, without limitation, the provisions of the Sarbanes-Oxley Act of 2002,
by delivering to the Corporation a promissory note on such terms and over such
period as the Committee may determine;

(v) In the event Shares are publicly traded, by delivery (in a form approved by
the Committee) of an irrevocable direction to a securities broker acceptable to
the Committee (subject to the provisions of the Sarbanes-Oxley Act of 2002 and
any other applicable statute or rule); or

 

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(vi) In any combination of the foregoing or in any other form approved by the
Committee.

If Restricted Shares are surrendered in full or partial payment of the purchase
or option price of Shares issuable under an Award, a corresponding number of the
Shares issued upon exercise of the Award will be Restricted Shares subject to
the same Restrictions as the surrendered Restricted Shares. Shares withheld or
surrendered as described above will be valued based on their Fair Market Value
on the date of the transaction. Any Shares withheld or surrendered with respect
to a Reporting Person will be subject to such additional conditions and
limitations as the Committee may impose to comply with the requirements of the
Exchange Act.

(i) Service Periods. At the time of granting an Award, the Committee may
specify, by resolution or in the Award Agreement, the period or periods of
service performed or to be performed by the Participant in connection with the
grant of the Award.

ARTICLE 6

OPTIONS

6.1 Types of Options. Options granted under the Plan may be in the form of
Incentive Stock Options or Nonqualified Options. The grant of each Option and
the Award Agreement governing each Option will identify the Option as an ISO or
an NQO. In the event the Code is amended to provide for tax-favored forms of
stock options other than or in addition to Incentive Stock Options, the
Committee may grant Options under the Plan meeting the requirements of such
forms of options. ISOs may not be awarded unless the Plan is approved by
shareholders within 12 months of adoption of the Plan.

6.2 General. All Options will be subject to the terms and conditions set forth
in Article 5 and this Article 6 and Award Agreements governing Options may
contain such additional terms and conditions, not inconsistent with the express
provisions of the Plan, as the Committee deems desirable.

6.3 Option Price. Each Award Agreement for Options will state the option
exercise price per Share of Common Stock purchasable under the Option, which may
not be less than 100 percent of the Fair Market Value of a Share on the date of
grant for all Options.

6.4 Option Term. The Award Agreement for each Option will specify the term of
each Option, which may be unlimited or may have a specified period during which
the Option may be exercised, as determined by the Committee, provided, however,
that no ISO may be exercisable after the expiration of 10 years from the date
such ISO is granted.

 

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6.5 Time of Exercise. The Award Agreement for each Option will specify, as
determined by the Committee:

(a) The time or times when the Option becomes exercisable and whether the Option
becomes exercisable in full or in graduated amounts based on: (i) continuation
of employment over a period specified in the Award Agreement, (ii) satisfaction
of performance goals or criteria specified in the Award Agreement, or (iii) a
combination of continuation of employment and satisfaction of performance goals
or criteria; and

(b) Such other terms, conditions, and restrictions as to when the Option may be
exercised as determined by the Committee.

(c) The extent, if any, to which the Option will remain exercisable after the
Participant ceases to be an employee, Consultant, or director of Corporation or
an Affiliate.

An Award Agreement for an Option may, in the discretion of the Committee,
provide whether, and to what extent, the time when an Option becomes exercisable
may be accelerated or otherwise modified (i) in the event of the death,
Disability, or retirement of the Participant or (ii) upon the occurrence of a
Change in Control. The Committee may, at any time in its discretion, accelerate
the time when all or any portion of an outstanding Option becomes exercisable.

6.6 Special Rules for Incentive Stock Options. In the case of an Option
designated as an Incentive Stock Option, the terms of the Option and the Award
Agreement will conform with the statutory and regulatory requirements specified
pursuant to Section 422 of the Code, as in effect on the date such ISO is
granted. ISOs may be granted only to employees of the Corporation or an
Affiliate. ISOs may not be granted under the Plan after ten years following the
date specified in Section 1.1, unless the ten-year limitation of
Section 422(b)(2) of the Code is removed or extended.

6.7 Restricted Shares. In the discretion of the Committee, the Shares issuable
upon exercise of an Option may be Restricted Shares if so provided in the Award
Agreement for the Option.

6.8 Limitation on Number of Shares Subject to Options. In no event may Options
for more than 1,000,000 Shares be granted to any individual under the Plan
during any calendar year. To the extent required by Section 162(m) of the Code,
if any Option is canceled, the canceled Option shall continue to be counted
against the maximum number of Shares for which Options may be granted to an
individual under the Plan.

ARTICLE 7

STOCK APPRECIATION RIGHTS

7.1 General. Stock Appreciation Rights are subject to the terms and conditions
set forth in Article 5 and this Article 7 and Award Agreements governing Stock
Appreciation Rights may contain such additional terms and conditions, not
inconsistent with the express terms of the Plan, as the Committee deems
desirable.

7.2 Nature of Stock Appreciation Right. A Stock Appreciation Right is an Award
entitling a Participant to receive an amount equal to the excess (or, if the
Committee

 

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determines at the time of grant, a portion of the excess) of the Fair Market
Value of a Share of Common Stock on the date of exercise of the SAR over the
base price, as described below, on the date of grant of the SAR, multiplied by
the number of Shares with respect to which the SAR is being exercised. The base
price will be designated by the Committee in the Award Agreement for the SAR and
may be the Fair Market Value of a Share on the grant date of the SAR or such
other higher price as the Committee determines. The base price may not be less
than the Fair Market Value of a Share on the grant date of the SAR.

7.3 Exercise. A Stock Appreciation Right may be exercised by a Participant in
accordance with procedures established by the Committee. The Committee may also
provide that a SAR will be automatically exercised on one or more specified
dates or upon the satisfaction of one or more specified conditions.

7.4 Form of Payment. Payment upon exercise of a Stock Appreciation Right may be
made in cash, in Shares, in other property, or in any combination of the
foregoing, or in any other form as the Committee may determine.

7.5 Limitation on Number of Stock Appreciation Rights. The maximum number of
Shares with respect to which Stock Appreciation Rights may be granted to any
individual under the Plan during any calendar year is 1,000,000. To the extent
required by Section 162(m) of the Code, if any SAR is canceled, the canceled SAR
shall continue to be counted against the maximum number of Shares for which SARs
may be granted to an individual under the Plan.

ARTICLE 8

RESTRICTED AWARDS

8.1 Types of Restricted Awards. Restricted Awards granted under the Plan may be
in the form of either Restricted Shares or Restricted Units.

(a) Restricted Shares. A Restricted Share is an Award of Shares to a Participant
subject to such terms and conditions as the Committee deems appropriate,
including, without limitation, a requirement that the Participant forfeit such
Restricted Shares back to the Corporation upon termination of Participant’s
employment (or service as a Non-Employee Board Director or Consultant) for
specified reasons within a specified period of time or upon other conditions,
including failure to achieve performance goals, as set forth in the Award
Agreement for such Restricted Shares. Each Participant receiving a Restricted
Share will be issued a stock certificate in respect of such Shares, registered
in the name of such Participant, and will execute a stock power in blank with
respect to the Shares evidenced by such certificate. The certificate evidencing
such Restricted Shares and the stock power will be held in custody by the
Corporation until the Restrictions have lapsed.

(b) Restricted Units. A Restricted Unit is an Award of units (with each unit
having a value equivalent to one Share) granted to a Participant subject to such
terms and conditions as the Committee deems appropriate, and may include a
requirement that the Participant forfeit such Restricted Units upon termination
of Participant’s employment (or

 

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service as a Non-Employee Board Director or Consultant) for specified reasons
within a specified period of time or upon other conditions, as set forth in the
Award Agreement for such Restricted Units. The Committee will set the terms and
conditions of the Award Agreement so that the Restricted Unit Award will comply
with or be exempt from Code Section 409A.

8.2 General. Restricted Awards are subject to the terms and conditions of
Article 5 and this Article 8 and Award Agreements governing Restricted Awards
may contain such additional terms and conditions, not inconsistent with the
express provisions of the Plan, as the Committee deems desirable.

8.3 Restriction Period. Award Agreements for Restricted Awards will provide that
Restricted Awards, and the Shares subject to Restricted Awards, may not be
transferred, and may provide that, in order for a Participant to Vest in such
Restricted Awards, the Participant must remain in the employment (or remain as a
Non-Employee Board Director or Consultant) of the Corporation or its Affiliates,
subject to relief for reasons specified in the Award Agreement, for a period
commencing on the grant date of the Award and ending on such later date or dates
as the Committee may designate at the time of the Award (the “Restriction
Period”). During the Restriction Period, a Participant may not sell, assign,
transfer, pledge, encumber, or otherwise dispose of Shares received under or
governed by a Restricted Award grant. The Committee, in its sole discretion, may
provide for the lapse of restrictions in installments during the Restriction
Period. In addition, the Committee, in its discretion, may condition Vesting of
Restricted Awards on continued employment (or service as a Non-Employee Board
Director or Consultant) or attainment of performance goals, or both.

8.4 Forfeiture. If a Participant ceases to be an employee (or Consultant or
Non-Employee Director) of the Corporation or an Affiliate during the Restriction
Period for any reason other than reasons which may be specified in an Award
Agreement, the Award Agreement may require that all non-Vested Restricted Awards
previously granted to the Participant be forfeited and returned to the
Corporation.

8.5 Settlement of Restricted Awards.

(a) Restricted Shares. Upon Vesting of a Restricted Share Award, the restrictive
stock legend on certificates for such Shares covering applicable Restrictions
will be removed, the Participant’s stock power will be returned, and the Shares
will no longer be Restricted Shares.

(b) Restricted Units. Upon Vesting of a Restricted Unit Award, a Participant is
entitled to receive payment for Restricted Units in an amount equal to the
aggregate Fair Market Value of the Shares covered by such Restricted Units at
the expiration of the Applicable Restriction Period. Payment in settlement of a
Restricted Unit will be made as soon as practicable following the conclusion of
the applicable Restriction Period in cash, in installments, in Restricted Shares
or unrestricted Shares equal to the number of Restricted Units or in any other
manner or combination as the Committee, in its sole discretion, determines.

 

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8.6 Rights as a Shareholder. A Participant has, with respect to unforfeited
Shares received under a grant of Restricted Shares, all the rights of a
shareholder of the Corporation, including the right to vote the shares and the
right to receive any cash dividends. Stock dividends issued with respect to
Restricted Shares will be treated as additional Shares covered by the grant of
Restricted Shares and will be subject to the same Restrictions. A Participant
will have no rights as a shareholder with respect to a Restricted Unit Award
until Shares are issued to the Participant in settlement of the Award.

8.7 Limitation in Number of Restricted Awards. The aggregate number of Shares
subject to Restricted Share Awards and Restricted Unit Awards that may be
granted under the Plan may not exceed 2,500,000 Shares.

ARTICLE 9

OTHER STOCK-BASED AND COMBINATION AWARDS

9.1 Other Stock-Based Awards. The Committee may grant other Awards under the
Plan pursuant to which Shares are or may in the future be acquired, or Awards
denominated in or measured by Share equivalent units, including Awards valued
using measures other than the market value of Shares. Other Stock-Based Awards
are not restricted to any specific form or structure and may include, without
limitation, Share purchase warrants, other rights to acquire Shares, and
securities convertible into or redeemable for Shares. Such Other Stock-Based
Awards may be granted either alone, in addition to, or in tandem with, any other
type of Award granted under the Plan.

9.2 Combination Awards. The Committee may also grant Awards under the Plan in
tandem or combination with other Awards or in exchange of Awards, or in tandem
or combination with, or as alternatives to, grants or rights under any other
employee plan of the Corporation, including the plan of any acquired entity. No
action authorized by this section will reduce the amount of any existing
benefits or change the terms and conditions thereof without the Participant’s
consent.

ARTICLE 10

DIVIDEND EQUIVALENTS

Any Awards may, at the discretion of the Committee, earn dividend equivalents.
In respect of any such Award which is outstanding on a dividend record date for
Common Stock, the Participant may be credited with an amount equal to the amount
of cash or stock dividends that would have been paid on the Shares covered by
such Award, had such covered Shares been issued and outstanding on such dividend
record date. The Committee will establish such rules and procedures governing
the crediting of dividend equivalents, including the timing, form of payment,
and payment contingencies of such dividend equivalents, as it deems appropriate
or necessary.

ARTICLE 11

ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC.

11.1 Plan Does Not Restrict the Corporation. The existence of the Plan and the
Awards granted under the Plan will not affect or restrict in any way the right
or power of the

 

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Board or the shareholders of the Corporation to make or authorize any
adjustment, recapitalization, reorganization, or other change in the
Corporation’s capital structure or its business, any merger or consolidation of
the Corporation, any issue of bonds, debentures, preferred or prior preference
stocks ahead of or affecting the Corporation’s capital stock or the rights
thereof, the dissolution or liquidation of the Corporation or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding.

11.2 Mandatory Adjustment. In the event of any stock dividend, stock split,
reverse stock split, recapitalization, reclassification, or other distribution
of the Corporation’s securities without the receipt of consideration by the
Corporation, of or on the Common Stock, the Committee shall make proportionate
adjustments or substitution to the aggregate number and type of Shares for which
Awards may be granted under the Plan, the maximum number and type of Shares
which may be sold or awarded to any Participant, the number and type of Shares
covered by each outstanding Award, and the base price or purchase price per
Share in respect of outstanding Awards.

11.3 Adjustments by the Committee. In the event of any change in capitalization
affecting the Common Stock of the Corporation not described in Section 11.2
above, such proportionate adjustments, if any, as the Committee, in its sole
discretion, may deem appropriate to reflect such change, will be made with
respect to the aggregate number of Shares for which Awards in respect thereof
may be granted under the Plan, the maximum number of Shares which may be sold or
awarded to any Participant, the number of Shares covered by each outstanding
Award, and the base price or purchase price per Share in respect of outstanding
Awards. The Committee may also make such adjustments in the number of Shares
covered by, and price or other value of, any outstanding Awards in the event of
a spin-off or other distribution (other than normal cash dividends), of the
Corporation assets to shareholders.

ARTICLE 12

AMENDMENT AND TERMINATION

The Board may amend, suspend, or terminate the Plan or any portion of the Plan
at any time, provided that no amendment may be made without shareholder approval
if such approval is required by applicable law or the requirements of an
applicable stock exchange or registered securities association.

ARTICLE 13

MISCELLANEOUS

13.1 Tax Withholding. The Corporation has the right to deduct from any
settlement of any Award under the Plan, including the delivery or Vesting of
Shares or Awards, any federal, state, or local taxes of any kind required by law
to be withheld with respect to such payments or to take such other action as may
be necessary in the opinion of the Corporation to satisfy all obligations for
the payment of such taxes. The recipient of any payment or distribution under
the Plan has the obligation to make arrangements satisfactory to the Corporation
for the satisfaction of any such tax withholding obligations. The Corporation
will not be required to make any such payment or distribution under the Plan
until such obligations are satisfied.

 

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13.2 Unfunded Plan. The Plan will be unfunded and the Corporation will not be
required to segregate any assets that may at any time be represented by Awards
under the Plan. Any liability of the Corporation to any person with respect to
any Award under the Plan will be based solely upon any contractual obligations
that may be effected pursuant to the Plan. No such obligation of the Corporation
will be deemed to be secured by any pledge of, or other encumbrance on, any
property of the Corporation.

13.3 Fractional Shares. No fractional Shares of Common Stock will be issued or
delivered under the Plan or any Option, Options granted under the Plan will not
be exercisable with respect to fractional Shares. In lieu of such fractional
Shares, the Corporation will pay an amount in cash equal to the same fraction
using the current market value of a Share of Common Stock.

13.4 Annulment of Awards. Any Award Agreement may provide that the grant of an
Award payable in cash is revocable until cash is paid in settlement thereof or
that grant of an Award payable in Shares is revocable until the Participant
becomes entitled to the certificate in settlement thereof. In the event
Participant’s employment (or services as a Non-Employee Director or Consultant)
terminates for cause (as defined below), any Award which is revocable will be
annulled as of the date of such termination for cause. For the purpose of this
Section 13.4, the term “for cause” has the meaning set forth in the
Participant’s employment agreement, if any, or otherwise means any discharge (or
removal) for material or flagrant violation of the policies and procedures of
the Corporation or for other performance or conduct which is materially
detrimental to the best interests of the Corporation, as determined by the
Committee.

13.5 Engaging in Competition With the Corporation. Any Award Agreement may
provide that, if a Participant terminates employment (or service as a
Non-Employee Board Director or Consultant) with the Corporation or an Affiliate
for any reason whatsoever, and within a period of time (as specified in the
Award Agreement) after the date thereof accepts employment with any competitor
of (or otherwise engages in competition with) the Corporation, the Committee, in
its sole discretion, may require such Participant to return to the Corporation
the economic value of any Award that is realized or obtained (measured at the
date of exercise, Vesting, or payment) by such Participant at any time during
the period beginning on the date that is one year prior to the date of such
Participant’s termination of employment (or service as a Non-Employee Board
Director or Consultant) with the Corporation.

13.6 Other Corporation Benefit and Compensation Programs. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan are
not to be deemed a part of a Participant’s regular, recurring compensation for
purposes of the termination indemnity or severance pay law of any state or
country and will not be included in, or have any effect on, the determination of
benefits under any other employee benefit plan or similar arrangement provided
by the Corporation or an Affiliate unless expressly so provided by such other
plan or arrangements, or except where the Committee expressly determines that an
Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of cash compensation. Awards under the Plan may be made in
combination with or in tandem with, or as alternatives to, grants, awards, or
payments under any other Corporation or Affiliate plans, arrangements, or
programs. The Plan notwithstanding, the Corporation or any Affiliate may adopt
such other

 

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compensation programs and additional compensation arrangements as it deems
necessary to attract, retain, and reward employees and directors for their
service with the Corporation and its Affiliates.

13.7 Securities Law Restrictions. No Shares may be issued under the Plan unless
counsel for the Corporation is satisfied that such issuance will be in
compliance with applicable federal and state securities laws. Certificates for
Shares delivered under the Plan may be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange or registered securities association upon which the Common
Stock is then listed or quoted, and any applicable federal or state securities
laws. The Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

13.8 Continuing Restriction Agreement. Each Participant will, if requested by
the Corporation and as a condition to issuance of Shares under the Plan upon an
Award or exercise of an Award granted under the Plan that results in the
issuance of Shares, become a party to and be bound by a stock restriction or
other agreement with the Corporation containing restrictions on transfer of
Shares, including a right of first refusal for the benefit of the Corporation, a
market stand-off provision, and such other terms as the Corporation may
reasonably require.

13.9 Governing Law. Except with respect to references to the Code or federal
securities laws, the Plan and all actions taken thereunder will be governed by
and construed in accordance with the laws of the state of Oregon, without regard
to principles of conflict of laws.

As approved by the shareholders of CytoDyn Inc. on December 12, 2012; and
amended upon approval of the shareholders of CytoDyn Inc. on February 27, 2015;
and further amended upon approval of the shareholders of CytoDyn Inc. on
March 18, 2016

 

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