BACKGROUND INFORMATION

On August 30, 2017, Richard and Eric formed New Co. (NEW CO.) as a Delaware corporation. On that date NEW CO. issued 2,400,000 shares of common stock to Eric and 2,400,000 shares of common stock to Richard. Eric and Richard each paid $0.0001 per share for their stock (which equaled the fair market value FMV on August 30, 2017). Their stock is subject to a Repurchase Option (at the lower of cost or FMV) in favor of NEW CO. Each Repurchase Option lapses over a 48-month vesting period (which includes a 12-month cliff), provided that Richard and Eric continue to provide services to NEW CO. That is, for example, if Eric quits NEW CO. before August 30, 2021, NEW CO. can repurchase Erics unvested shares for $0.0001 each (even if the FMV value is much higher on that date). Specifically, each Restricted Stock Purchase Agreement includes the following language:

2,400,000 shares of the Stock (the Restricted Stock) are subject to the Repurchase Option as of the date of this Agreement. On the date 12 months from August 30, 2017 (the Vesting Anniversary Date), 12/48th of the Restricted Stock shall vest and be released from the Repurchase Option; thereafter, 1/48th of the Restricted Stock shall vest and be released from the Repurchase Option on a monthly basis measured from the Vesting Anniversary Date, until all the Restricted Stock is released from the Repurchase Option (provided in each case that Purchaser remains a Service Provider as of the date of such release).

In 2017, NEW CO.s total income exceeded its total deductions by $500,000. NEW CO. has never paid any dividends. Despite NEW CO.s success, assume that Eric will resign from NEW CO. on September 7, 2018. Assume further that NEW CO.s common stock has a FMV value of $2.0001 per share on both August 30, 2018 and September 7, 2018.

1. NEW CO. is contemplating hiring Dinesh, Gilfoyle, Jared and Monica as employees on September 7, 2018. Assume further that NEW CO. would like to grant each of them incentive stock options (ISOs) on September 7, 2018. What is the lowest (per share) exercise price the ISOs can have?