Lock-up Agreement

An agreement between a company or the underwriters (www.practicallaw.com/7-382-3888) on the one hand, and a stockholder on the other hand, that is executed in the course of a registered securities offering. In the lock-up agreement, the stockholder agrees that it will not sell its shares of the company for a specified period of time after the effective date of the registration statement (www.practicallaw.com/4-382-3743) or after the date of the underwriting agreement. The typical lock-up period in an initial public offering (www.practicallaw.com/2-382-3541) is for 180 days; in a follow-on offering (www.practicallaw.com/5-382-3479), the lock-up period is usually 90 days. See also overhang analysis (www.practicallaw.com/7-382-3666).

For more information on lock-up agreements, see Underwriting Agreement Commentary: Covenants (www.practicallaw.com/7-380-7925).

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