A standstill agreement is generally signed between two parties and the nature of this legal document can be explained in the simplest terms as one that calls for the instantaneous closure of any deal or transaction that had been operating between the above two concerned parties, until recently. That is to say, any contract that binds two organizations or groups legally and is subject to a certain set of terms and conditions can be brought to a “standstill” position by this particular agreement.
The most general cause for signing such an agreement is to handle a “hostile takeover bid”, wherein the party [company or organization] that stands the risk of being taken over is allowed a grace period to build up a defense mechanism against the problem as the bidder [second party] agrees to limit all holdings of the firm for the given span of time.Another condition wherein a standstill agreement is signed is when two companies are likely to strike a deal or contract and agrees upon the sole factor or non-interference by any third party.
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