Although unlikely to ever be at the center of a J&J-Guidant-like merger termination drama, I figured the MAC clause in the AT&T-BellSouth merger might be interesting. Here it is, courtesy of the filing at Edgar:
(ii) the term "Company Material Adverse Effect" means
(x) an effect that would prevent or materially delay or impair the ability of the Company to consummate the Merger or (y) a material adverse effect on the financial condition, properties, assets, liabilities, business or results of operations of the Company and its Subsidiaries, including its interest in Cingular, YP.com and their respective Subsidiaries, taken as a whole, excluding any such effect resulting from or arising in connection with changes or conditions (A) generally affecting (I) the United States economy or financial or securities markets, (II) political conditions in the United States or (III) the United States telecommunications industry or any generally recognized business segment of such industry, (B) generally affecting the telecommunications industry (or any generally recognized business segment of such industry) in the Company Region, taken as a whole, (C) resulting from any hurricane, earthquake, or other natural disasters in the Company Region, (D) resulting from the execution, announcement or performance of this Agreement, or (E) resulting from or arising in connection with the financial condition, properties, assets, liabilities, business or results of operations of Cingular, YP.com or any of their respective Subsidiaries; and (iii) the "Company Region" means the states of Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.
This is pretty straightforward (the AT&T MAC clause mirrors this, only with different regions), and obviously doesn't provide a lot of room to exercise. The interesting part is that problems at Cingular - which is at the center of this deal - can't be the cause of a MAC, no matter how bad such problems might be. Furthermore, problems at the non-Cingular parts of BLS have to be measured against the entire BLS entity in determining if a MAC has occurred. Since Cingular represents something like 60-70% of overall BLS revenue (and growing), problems in the BLS business would have to be awfully dire to constitute a MAC.
Knowing the lawyers involved, I'm quite sure a lot of time and energy went into negotiating this clause, but it's something BLS absolutely had to have (and it's only fair they got it, since AT&T owns 60% of Cingular and effectively runs it already). Closing risk isn't always a major factor in mergers, particularly in small deals with no real regulatory conditions. Here, where closing will take 12-15 months and countless hours spent dealing with the DOJ and FCC, BLS needed to mitigate as much closing risk as possible. Looks like they did so in the MAC at least.