This week I read two client memos that together offer a useful primer on contractual change in control definitions.
In “Change of Control – Is It or Isn’t It?” Weil Gotshal offers an overview of the change in control definition you typically see in a debt instrument’s change in control put, highlighting some of the key drafting challenges.
In “Court Decision Raises Questions as to Interpretation and Validity of ‘Continuing Director’ Change in Control Provisions,” Cleary Gottlieb discusses the recent Amylin case in which the continuing director prong of a change in control definition put a company’s board in the awkward position of, at the same time, actively opposing a dissident slate and having to approve that same slate. The board approved the slate in order to avoid triggering the continuing director prong of its change in control definition. But in order to avoid a contractual change in control the board may have fostered a real change in control.
Together these two memos illustrate the complexity that lurks beneath ostensibly simple provisions.