A standstill agreement is a legal contract between two or more parties in which one or all parties agree to refrain from taking certain actions for a specified period. These agreements are often used in mergers and acquisitions, financial negotiations, and other business transactions to provide time for negotiations, due diligence, or to prevent hostile actions. The purpose is to create a period of stability and to protect the interests of the parties involved while they work towards a mutually beneficial outcome.

Key Elements of a Standstill Agreement

1. Parties Involved

   • Clearly identify all parties to the agreement, including their roles and responsibilities.

2. Purpose of the Agreement

   • Define the specific reason for the standstill, whether it’s to facilitate negotiations, prevent a takeover, or delay certain actions while a deal is being finalized.

3. Duration

   • Specify the period during which the standstill agreement will be in effect. This includes both the start and end dates, along with any conditions that could lead to an extension.

4. Restricted Actions

   • Detail the specific actions that are prohibited during the standstill period. This might include:
     • Acquisitions: Preventing one party from acquiring additional shares or assets.
     • Hostile Takeovers: Prohibiting aggressive or unsolicited acquisition attempts.
     • Litigation: Suspending ongoing or potential legal actions.
     • Disclosure: Restricting the release of sensitive information.

5. Obligations of the Parties

   • Outline the obligations each party has during the standstill period, such as maintaining confidentiality, cooperating in negotiations, and refraining from certain business activities.