Option Clauses

Read the short text about options clauses, then select the correct option from the list to complete (1) ….. to (10) ….. .

An options clause in a contract provides one or both parties with the ___1___, but not the ___2___, to take certain actions in the future. This clause typically outlines specific conditions, terms, and procedures under which the options can be ___3___. A typical example is the renewal option, which allows one or both parties to renew the contract for an additional term after the initial term ___4___, subject to specified conditions. Another common type is the technology upgrade option permitting the buyer or client to upgrade or update technology, software, or equipment ___5___ the contract term.

In company law, on the other hand, an options clause typically refers to a provision in a company’s ___6___ or a separate share option plan that ___7___ employees, directors, or other individuals the right to purchase shares in the company at a ___8___ price within a specified period. Options in company law provide a mechanism for aligning the interests of employees or other stakeholders with the company’s ___9___. This is a common practice to incentivise and ___10___ key personnel by giving them a stake in the company’s performance and success. The options clause usually outlines the terms and conditions of the stock options. Main types include employee stock options (ESOs), and share option plans.

Now, press the START button to select the correct option from the list to complete (1) ….. to (10) ….. .