Standstill Language Confidentiality Agreement
The first clause is the “standstill clause”, which effectively prohibits any party from making an offer or acquisition hostile to the other party and, in particular, prohibiting the use of confidential information for that purpose. This clause is typical of a certification body in which listed companies participate. However, even in the absence of the clause, the court may read it in the certification body on the basis of the other conditions of the certification body and the previous operations of the parties. In Martin Marietta Materials, Inc. vs. Vulcan Materials Co.2, the Delaware Chancery Court interpreted a CA initially entered into as part of a potential friendly acquisition to prohibit the use of confidential information in a hostile offer by one party (Martin Marietta) for the other (Vulcan), although the CA does not contain an explicit standstill provision. and requested the hostile offer for a period of four months. The moral of the story is this: insert a status quo settlement into your board from the beginning and save the trial costs and sleepless nights that Vulcan is experiencing in this case. In the banking world, a status quo agreement between a lender and a borrower terminates the contractual repayment plan of a borrower in difficulty and forces the borrower to take certain steps that the borrower must take.
In this context, what are the fiduciary duties of the directors of the target company? Can they maintain their recommendation in favor of the acquirer A transaction? Established case law suggests that it would be difficult for the objective to maintain its recommendation on The Offer of Purchaser A without disclosing the higher offer of Purchaser B, although it was filed after the signing of the Merger Agreement.  Given this and the board`s desire (and commitment) to get the best reasonably available price, Acquirer B earns at $13.50/share, plus break fees, an amount greater than Acquirer A`s offer, but still less than what Acquirer B would have offered if it hadn`t had another bite in the apple.  See z.B. Arnold v. Society for Savings Bancorp, Inc., 650 A.2d 1270, 1280-81 (Del. 1994) (notes before agreement). During the standstill period, a new agreement is negotiated, which usually changes the initial repayment plan of the loan. This is used as an alternative to bankruptcy or enforcement if the borrower cannot repay the loan.
The status quo agreement allows the lender to save a certain value from the loan. In case of enforcement, the lender cannot receive anything. By cooperating with the borrower, the lender can improve its chances of recovering some of the outstanding debt. Glencore plc, a Swiss-based commodity trader, and Bunge Ltd., a US agricultural commodities trader, is a recent example of two companies that have signed such an agreement. In May 2017, Glencore undertook an informal approach to buying bears. Shortly thereafter, the parties agreed on a standstill agreement preventing Glencore from accumulating shares or making a formal bunge offer until a later date. Ancestry.com. Ancestry.com was a going-private transaction in which Ancestry.com entered into a confidentiality agreement also containing a “Don`t ask, don`t waive” provision… . .