Exclusivity Agreement

by Practical Law Corporate & Securities

A Standard Document for an exclusivity agreement to be used in connection with an M&A transaction. This Standard Document is drafted as a letter from a potential buyer to a target company to establish a binding period of exclusive negotiation for a proposed transaction. It includes key provisions such as a "no-shop" covenant that prohibits the target company from soliciting or participating in discussions regarding an alternative transaction with other parties. This Standard Document addresses the definition of critical terms, the duration of the exclusivity period, and the target's obligation to notify the buyer of any unsolicited offers. It also explores the covenant to negotiate in good faith and the availability of equitable remedies, such as specific performance, in the event of a breach. The drafting of this agreement is informed by key case law, particularly from Delaware, regarding fiduciary outs and the scope of no-shop provisions, providing a framework for managing preliminary deal negotiations.