- change of control clause
A contractual provision which gives a party to an agreement enhanced protection if the controlling shareholding of the other party is transferred. In commercial contracts a change of control clause will often give the party who is not subject to a change in ownership the right to terminate the agreement in the event of a change of control of the other party. In employment contracts, a change of control clause entitles the employee to a specified payment or enhanced notice period if their employer is taken over and the takeover results in dismissal by their employer or a material reduction in the employee's responsibilities leading to constructive dismissal within a specified time.USAAlso known as change of control.A provision in an agreement giving a party certain rights (such as consent, payment or termination) in connection with a change in ownership or management of the other party to the agreement. Not all change of control provisions are triggered by the same action. For example, a change of control may be triggered by a sale of more than 50% of a party's stock, a sale of substantially all the assets of a party or a change in a majority of the board members of a party.Related links
Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010.