Material Adverse Change or Effect

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Material Adverse Change or Effect

Many mergers and acquisitions contracts include a material adverse change clause that allows a company to renegotiate or walk away from a deal if the other company or its subsidiaries announces a significant event that may negatively affect its stock price or operations. See also materiality.

Material Adverse Change or Effect

A clause in some merger and acquisition contracts allowing the acquiring to cancel a deal before it is finalized if material information is revealed that negatively impacts the target company's stock price. See also: Due diligence.
References in periodicals archive ?
By February 2009 it was announced that employees' bonuses would be reduced by 90%, relying on a material adverse change clause which had been introduced following the announcement of the bonus pool.
The code requires carriers to include a material adverse change clause, which states that carriers cannot modify the terms of a user agreement, especially if the terms are not in the customer's favor, without providing advance notice and at least 14 days for customers to cancel their contracts without incurring a fee.
The material adverse change clause turned out to be the most difficult negotiation in our banking relationships.
The right to tap a line of credit in the wake of a disaster involves amendments to the material adverse change clause normally found in credit agreements.
During weekend negotiations, lasting as late as Sunday night, ORIX continued to resist certain requests of the Special Committee, including that ORIX delete an unacceptable material adverse change clause from its latest proposal to CRIIMI MAE.
The facility includes a material adverse change clause, change of control provision, cross default ($25 million), minimum fixed-charge coverage ratio and maintenance of certain ratios related to the sold receivables.
The committed facility contains a material adverse change clause.
According to testimony by Ken Lewis to the New York Attorney General, he was pressured by Fed Chairman Bernanke and former Treasury Secretary Paulson to not disclose the huge losses at Merrill Lynch and not invoke the material adverse change clause in the agreement in order to get out of the deal.
RJRN's bank credit agreement contains a material adverse change clause that could restrict the company's ability to borrow or obtain a stand-by letter of credit.
There are limited financial covenants and no material adverse change clause.
The revolver does not contain a material adverse change clause.
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