Standstill Agreement Bond
A company pressured by an aggressive bidder or activist investor believes that a standstill agreement is useful in weakening the unsolicited approach. The deal gives the target company greater control over the deal process, by imposing on the offeror or investor the ability to buy or sell the company`s shares or launch proxy competitions. A status quo agreement is an agreement that preserves the status quo. It is an agreement between the objective and the bidder that prevents the bidder from making an offer to purchase the targeted company without first obtaining the bidder`s consent. It can be included in the confidentiality agreement as a provision and is executed before receipt of the due diligence material. The agreement is particularly important because the bidder had access to the confidential financial information of the targeted entity. The concept of standstill agreement refers to different forms of agreements that companies may enter into to delay measures that might otherwise take place. A standstill agreement prohibits subordinated lenders from taking action against a borrower who is late in a loan. The standstill agreement generally states that junior lenders are prohibited from taking action up to six months after the borrower`s late payment. This period allows the priority lender to take action in the event of default and gives the borrower time to make other arrangements, for example.B.