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).
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Those same holders will still need to wait another six months before selling more shares, thanks to lockup agreements.
Approximately 95% of the shares shall be issued to the main shareholder of THC Industries, Inc., 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.
According to Business Insider, Pincus argued that the suit should be waived because he and the Zynga board agreed only to sell 20 percent of their stock holdings, putting the remainder on a lockup agreement that lasted into the summer of 2012.
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).
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.
Lockup agreements, signed with investment bankers at the time of the IPO, also restrict pre-IPO investors from selling shares immediately after an IPO.
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.
Resale of Cowen shares attributable to certain executive officers and directors, many of whom are still subject to lockup agreements and cannot sale of these shares.
The final element which may be used to ensure the ongoing involvement of entrepreneurs in their venture is the lockup agreement. The lockup agreement is an agreement wherein the pre-IPO shareholders in the organization promise not to sell or disperse any of their shares for a specified period of time after the IPO (Bradley, Jordan, Yi, & Roten, 2001).