DEFINITION OF 'STANDSTILL AGREEMENT'

1. A contract that stalls or stops the process of a hostile takeover. The target firm either offers to repurchase the shares held by the hostile bidder, usually at a large premium, or asks thebidder to limit its holdings. This act will stop the current attack and give the company time to take preventative measures against future takeovers.

2. An agreement between a lender and borrower in which the lender stops demanding therepayment of the loan. A new deal is negotiated, usually altering the loan's original repayment schedule. This is used as an alternative to bankruptcy or foreclosure when the borrower can't repay the loan.