MAC or MAE Clause (Arrangement Agreement)

Summary

This clause is a "Material Adverse Change" or "Material Adverse Effect" (often referred to as a "MAC" or "MAE") qualifier from a friendly acquisition of a public company by plan of arrangement. This clause includes practical guidance and drafting notes. The parties may choose to employ materiality qualifiers using the defined term "Material Adverse Change" or "Material Adverse Effect". For example, the target may represent that there is no pending litigation against it, other than litigation that would not constitute a Material Adverse Change. MAC definitions are heavily negotiated in public company transactions, and the definition used in any transaction will reflect the circumstances of the target's business and the transaction, as well as the parties' bargaining power. The standard MAC definition, however, is formulated as any event, change or condition that is materially adverse to the financial condition, business or results of operations of the target. An acquiror-favourable ...