A clause in a law, contract, agreement, etc, that limits or reverses a payment or profit distribution for particular reasons. For example, in a convertible asset swap, the parties may stipulate a clawback provision that shall guarantee to the buyer of the swap to receive the spread of at least the minimum equivalent of a specified period of time (e.g. one year). The specified period is negotiable and commonly known as the lockout period. Most investors demand a lockout period of at least six months.
The clawback is also known as a make whole provision.
