Material adverse change, definition, carve-outs and the closing condition

MATERIAL ADVERSE CHANGE

1. Definition. “Material Adverse Change” means any event, change, circumstance, effect, development or state of facts occurring or arising after the date of this Agreement which, individually or together with any other, has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, financial condition, results of operations or prospects of the Company taken as a whole. For this purpose an effect is material if it results or would reasonably be expected to result in (a) a reduction in the consolidated earnings before interest, tax, depreciation and amortisation of the Company for any period of 12 months of more than [EBITDA fall treated as material (%)]% compared with the corresponding period, or (b) a liability, loss or diminution in the value of the assets of the Company exceeding Rs [Loss or fall in asset value treated as material (Rs)], in each case net of any amount recovered or recoverable under any policy of insurance.

Drafting note: the quantified limb is the firm’s standard. A purely qualitative MAC is very difficult to establish in India in the time available before a long-stop date, and no reported Indian decision permits a buyer to walk away on one. Specific performance has been the rule rather than the exception since the amendment of the Specific Relief Act 1963 in 2018, which cuts against an exit.