Lockup Agreement

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Lockup Agreement

Where the purchaser of securities agrees not to sell the securities for a certain period of time (the lockup time).

Lockup Agreement

1. See: Crown jewel lockup agreement.

2. During an IPO, a contract prohibiting executives, underwriters, and/or venture capitalists from selling their shares in the company for a certain period of time. The period of time is usually about six months, but may be longer or shorter. A lockup agreement exists to reduce the pressure for volatility as the company goes through its first few months of public trade.

lockup agreement

A contractual offer of valuable assets or stock made by a takeover target to the suitor deemed most acceptable to management. A lockup agreement tends to discourage unwanted suitors, but it may penalize the target firm's stockholders because it eliminates counteroffers. Also called crown jewel lockup agreement.
References in periodicals archive ?
that the companies that have entered into lockup agreements with Aurora, in respect of the bid, be treated as acting jointly and in concert with Aurora in making the bid; and IV.
Ramsey Salem, who along with all other shareholders receiving shares from the company in this transaction have entered into two-year lockup agreements with the company restricting any share sales during that period.
Earlier this year, Pincus asked a Delaware court to throw out a lawsuit that alleging that he and others had broken their duty to shareholders by waiving lockup agreements for themselves, while continuing to enforce them for the majority of investors.
Additionally, since lockup agreements only allow insider selling prior to lockup expiration if the lead underwriters agree with such early release, a lockup may assist the lead underwriter in extracting additional compensation by either making markets for the shares of insiders' block transactions or underwriting seasoned equity offerings (SEOs).
While many lockup agreements are 180 days, pre-IPO owners often extend their lockup period to signal stability in the face of uncertainty.
In addition, the prospectus also covers the potential resale of Cowen shares attributable to certain executive officers and directors, though many of these individuals are still subject to lockup agreements that prevent the sale of these shares.
The company said that this filing was made under contractual obligations on behalf of some of its security holders, the majority of which are subject to lockup agreements till 20 December 2014, restricting their ability to sell these securities.
Such lockup agreements prevent pre-IPO owners from selling shares for a specified period--typically six months--following the IPO, and they generally apply to most of the shares not sold in the IPO.
Atrium also announced that it has entered into forbearance and lockup agreements with requisite majorities of the holders of each tranche of Atrium's funded indebtedness.
The company said that the filing was made under its contractual obligations on behalf of some of its security holders, the majority of which are subject to lockup agreements restricting their ability to sell till 20 December 2014.
Lockup agreements in Singapore, like those in the United States, prohibit pre-IPO shareholders from selling their shares for a period after the IPO.
As a result, the shares subject to lockup agreements will become freely tradable in the public market beginning May 20, 2008, subject to certain extension as described in the prospectus for the initial public offering.