This document is a standstill agreement for a firm that considering merger with another firm. It assures that the status quo remains while the partners pursue various alternatives.
Delaware Standstill Agreements are legal agreements commonly used in business transactions, particularly in the context of mergers, acquisitions, and hostile takeovers. These agreements are designed to temporarily halt or limit certain actions that may have an adverse impact on the target company during negotiations or discussions between the parties involved. By establishing a "standstill" period, all parties agree to maintain a status quo, preventing any drastic actions that could potentially disrupt ongoing negotiations. The primary objective of a Delaware Standstill Agreement is to provide a breathing space and foster an environment conducive to productive negotiations. These agreements serve to protect the interests of both the target company and the potential acquirer while ensuring that they maintain a level playing field. Some key provisions commonly found in Delaware Standstill Agreements include: 1. No Acquisition Attempts: The potential acquirer agrees not to initiate any hostile or unsolicited acquisition attempts, such as a tender offer or proxy fight, during the standstill period. 2. No Solicitation: The target company agrees not to actively seek alternative offers or engage in discussions with any other potential acquirers during the standstill period. 3. Confidentiality: Both parties commit to maintaining the confidentiality of all information shared during the negotiations and refrain from disclosing any sensitive information to third parties. 4. Voting Restrictions: The potential acquirer agrees to restrict its voting rights to a certain percentage of outstanding shares or may agree to vote in favor of certain proposals recommended by the target company's board of directors. Different types of Delaware Standstill Agreements may vary in duration and specific terms. For example: 1. Short-Term Standstill: A short-term standstill agreement typically lasts from a few weeks to a few months, providing a limited period for negotiations to take place before the parties reassess the situation or pursue alternative strategies. 2. Mutual Standstill: In a mutual standstill agreement, both the potential acquirer and the target company agree to abide by the same restrictions and obligations during the standstill period, ensuring a balanced approach. 3. One-Way Standstill: In contrast to mutual standstill agreements, a one-way standstill agreement may only impose restrictions on one party, usually the potential acquirer. This ensures that the target company has the freedom to explore other potential deals while preventing the acquirer from taking substantial actions. Delaware Standstill Agreements are a useful tool in managing negotiations during critical business transactions. By establishing clear boundaries and obligations for all parties involved, these agreements help maintain a stable and orderly negotiation process, ultimately contributing to the overall success of the transaction.
