ARTICLE XII:
OPTION CLAUSES
INDEX
Section 1. Team Options
Section 2. Player Options
Section 3. No Conditional Options
Section 4. Exercise Period
Section 5. Option Buy-Outs
Section 6. Inapplicability to
Prior Player Contracts
Section 7. Option Exercise Notices
Section
1. Team Options.
Except as provided by Article VIII, Section 1, a Player
Contract shall not contain any option in favor of the
Team, except an Option (as defined in Article I, Section
1(ll)) that: (i) is specifically negotiated between
a Veteran or a Rookie (other than a First Round Pick)
and a Team; (ii) authorizes the extension of such Contract
for no more than one (1) year beyond the stated term;
(iii) is exercisable only once; and (iv) provides that
the Salary (excluding Incentive Compensation), Likely
Bonuses and Unlikely Bonuses payable with respect to
the Option Year are no less than 100% of the Salary
(excluding Incentive Compensation), Likely Bonuses and
Unlikely Bonuses, respectively, payable with respect
to the last year of the stated term of such Contract
and that all other terms and conditions in the Option
Year shall be unchanged from those that applied to the
last year of the stated term of such Contract (including,
but not limited to, the percentage of Base Compensation
that is protected or insured).
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Section 2. Player
Options.
A Player Contract shall not contain any option in favor
of the player, except:
(a) an Option that: (i) is specifically negotiated between
a Veteran or a Rookie (other than a First Round Pick)
and a Team; (ii) authorizes the extension of such Contract
for no more than one (1) year beyond the stated term;
(iii) is exercisable only once; and (iv) provides that
the Salary (excluding Incentive Compensation), Likely
Bonuses and Unlikely Bonuses payable with respect to
the Option Year are no less than 100% of the Salary
(excluding Incentive Compensation), Likely Bonuses and
Unlikely Bonuses, respectively, payable with respect
to the last year of the stated term of such Contract
and that all other terms and conditions in the Option
Year shall be unchanged from those that applied to the
last year of the stated term of such Contract (including,
but not limited to, the percentage of Compensation that
is protected or insured). If a Player Contract contains
an Option in favor of the player and provides, in whole
or in part, for Compensation protection or insurance
in the Option Year, such Contract must also contain,
in Exhibit 2 of the Contract under the heading “Additional
Conditions or Limitations,” either the language
set forth in subsection (A) below or the language set
forth in subsection (B) below, but not both, and such
language shall define the respective rights and obligations
of the player and Team with respect to the subject matter
thereof:
(A) “If this Contract is terminated by Team
prior to Player’s exercise of the Option described
in Exhibit 1 of the Contract, then Player shall be
entitled to benefit from the Base Compensation protection
or insurance provisions of this Exhibit 2 to the same
extent as if the exercise of the Option by Player
had occurred prior to Team’s termination of
the Contract.”
(B) “If this Contract is terminated by Team
prior to Player’s exercise of the Option described
in Exhibit 1 of the Contract, then Team shall be relieved
of any obligation to pay Player any Compensation with
respect to the Option Year.”
No Player Contract that contains the language set
forth in subsection (B) above may provide for the
Option in favor of the player to be exercisable earlier
than the day following the date of the Team’s
last game of the Season prior to the Option Year;
and/or
(b) an Early Termination Option (or “ETO”)
(as defined in Article I, Section 1(r)), provided that
such ETO is exercisable only once and takes effect no
earlier than the end of the fourth Season of the Contract.
A Contract that does not provide for an ETO when signed
may not be amended to provide for an ETO during the
original term of the Contract. If a Team and a player
enter into an Extension (other than an Extension of
a Rookie Scale Contract), the Contract may simultaneously
be amended to provide for an ETO, provided that such
ETO is exercisable only once and takes effect no earlier
than the end of the fourth Season following (i) the
Season during which the Extension is signed, or (ii)
if the Extension is signed between Seasons, the date
on which the Extension is signed (and, whether or not
such an ETO is added, any previously-existing ETO must
be eliminated). If a Team and player enter into an Extension
of a Rookie Scale Contract, the Contract may simultaneously
be amended to provide for an ETO, provided that such
ETO is exercisable only once and takes effect no earlier
than the end of the fourth Season of the extended term
of the Contract.
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Section 3. No Conditional
Options.
If a Contract contains any Option or ETO, the right
of the Team or player to exercise such Option or ETO
must be fixed at the time the Contract (or Extension)
is entered into and may not be contingent upon the satisfaction
of any individually-negotiated condition. In the case
of an ETO, the Effective Season of such ETO also must
be fixed at the time the Contract (or Extension) is
entered into and may not be contingent upon the satisfaction
of any individually-negotiated condition.
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Section 4. Exercise
Period.
Any ETO must be exercised prior to the July 1 immediately
prior to the Effective Season of such ETO. Any Option
must be exercised prior to the July 1 immediately prior
to the Season covered by the Option, except that an
Option in favor of a player who would become a Restricted
Free Agent if the Option were not exercised must be
exercised prior to the June 25 immediately prior to
the Season covered by such Option.
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Section 5. Option
Buy-Outs.
Subject to the rules set forth in Article VII, a Player
Contract that contains an Option or an ETO may provide
for an Option Buy-Out Amount; provided, however, that
in no event may an Option Buy-Out Amount exceed, in
the case of an Option, 50% of the Salary called for
in the Option Year or, in the case of an ETO, 50% of
the Salary in the first Effective Season of the ETO.
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Section 6. Inapplicability
to Prior Player Contracts.
The provisions of this Article XII that differ from
the provisions of Article XII of the parties’
prior collective bargaining agreement shall not apply
to any Player Contract entered into prior to the date
of this Agreement, except to the extent that any such
Contract is extended following the date of this Agreement.
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Section 7. Option
Exercise Notices.
The NBA shall provide the Players Association with copies
of any Option or ETO exercise or non-exercise notice
received by the NBA within two (2) business days of
the NBA’s receipt of such notice from the Team.
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