Common use of Initial Stock Option Clause in Contracts

Initial Stock Option. On the Effective Date, the Employee shall -------------------- be granted a compensatory stock option for 30,000 shares of the Company's Common Stock at an exercise price per share of $2.00 for the first 30,000 shares (the "Initial Option"). The Initial Option shall be vested as to the first 7,500 shares on the Effective Date. As to the remaining 22,500 shares, and provided the Employee continues to be engaged under this Agreement on each of the vesting dates, the remainder of the Initial Option shall vest in the following manner: 7,500 shares on the one year anniversary of the Effective Date (June 6, 2001), and thereafter 1/24 of the remaining shares subject to the Initial Option each month the Employee continues to be engaged under this Agreement. The Initial Option shall be fully vested on the third anniversary of the Effective Date. The Initial Option cannot be transferred by the Employee except in the event of her death, and must be exercised by the Employee (or in the event of her death, by her estate or such other designee) within ten (10) years from the Effective Date or if Employee's employment terminates before that date, within the later of: (a) ninety (90) days following termination of the Employee's engagement under this Agreement for any or no reason and (b) ninety (90) days following the date that the shares subject to the options are freely tradable by Employee on a public market. Forms of permissible consideration to purchase the shares of common stock on exercise of the Initial Option shall be cash, cashless exercise (also called net zero transaction), recourse promissory note and such other forms of consideration with which other executives have or are given the opportunity to purchase shares. In the event that the number of outstanding shares of the Company's common stock is changed by a stock dividend, recapitalization, stock split or similar change in the capital structure of the Company without consideration, then the number of shares (and exercise price) subject to the Initial Option will be proportionately adjusted.