Lock-Up Agreement
Drafts a market-standard lock-up agreement protecting post-offering price stability, aligned with the underwriting agreement. Covers Rule 13d-3 beneficial ownership scope, derivative/hedge prohibitions, permitted transfer conditions, transferee joinders, and underwriter third-party beneficiary rights.
Prerequisites
Collect before drafting:
- Underwriting agreement — lock-up period, form, release mechanics, representative name
- Securityholder details — name, capacity, entity type, address, beneficial ownership scope
- Issuer details — legal name, jurisdiction, offering type (IPO vs secondary), security class
- Equity awards inventory — options, RSUs, warrants, convertibles, ESPP, other awards
- Existing transfer restrictions — stockholders' agreement, registration rights, ROFR/repurchase
Document Outline
- Title, date, addressee (representative of underwriters), parties
- Recitals — offering context, underwriting agreement reference, consideration
- Definitions — "Lock-Up Period," "Common Stock," "Beneficial Ownership" (Rule 13d-3)
- Lock-Up Covenant — transfer and hedging restrictions
- Lock-Up Period — start/end formula, early release language
- Extension — earnings/material news blackout extension [VERIFY]
- Permitted Transfers — categories + conditions
- Representations and Authority
- Enforcement — stop-transfer, legends, refusal to register
- Third-Party Beneficiary (underwriters)
- Waiver/Release mechanics
- Governing Law, Venue, Injunctive Relief
- Miscellaneous — amendments, waivers, counterparts, e-signatures, severability
- Signature blocks (individual/entity)
Core Covenant Checklist
- Prohibit direct or indirect offer, sell, pledge, lend, hypothecate, gift, assign, transfer
- Prohibit derivatives/hedges transferring economic exposure (cash or physical settlement)
- Cover beneficially owned securities under Rule 13d-3
- Cover securities issuable on conversion/exercise/vesting
- Apply to shares acquired during the Lock-Up Period
Key Clauses
Lock-Up Period: Begins on agreement date, ends [180] days after final prospectus date, unless earlier released in writing by the Representative.
Extension (if required): If the Company issues an earnings release or announces material news during [17] days before through [17] days after the Lock-Up Period end date, extend until [18] days after such release/announcement, unless waived by the Representative. [VERIFY]
Permitted Transfers
| Category |
Scope |
| Gifts |
Bona fide gifts to family members or 501(c)(3) charities |
| Estate Planning |
Trusts for holder/immediate family; will/intestacy; QDRO/divorce |
| Entity Restructuring |
Affiliates or entities controlled by holder or same manager/GP/advisor |
| Company Repurchase |
Transfers to issuer under repurchase/ROFR agreements |
| Equity Awards |
Exercise/vesting/settlement (no sale; shares remain locked) |
| Rule 10b5-1 |
Plan establishment with no sales during Lock-Up Period and no public announcement |
Conditions for all permitted transfers:
- Transferee executes joinder lock-up in substantially the same form
- Section 16(a) report (if required) states transfer was permitted under lock-up
- No voluntary public disclosure during Lock-Up Period except as required by law
Representations
- Authority and enforceability (subject to bankruptcy/creditor rights and equity)
- No conflicting agreements or inconsistent proxies/voting arrangements
- Holder acknowledges reliance by issuer and underwriters
Enforcement and Beneficiary Rights
- Stop-transfer instructions to transfer agent; issuer may refuse noncompliant transfers
- Restrictive legends on certificates or book-entry positions
- Underwriters are intended third-party beneficiaries with direct enforcement rights
- Representative may release all or part; specify pro rata release if required by underwriting agreement or exchange rules
Pitfalls and Verification
- Align lock-up period, release mechanics, and exceptions with the underwriting agreement first
- Use "final prospectus date" as anchor unless underwriting agreement dictates otherwise
- Ensure permitted transfers keep restrictions attached via joinder
- Flag conflicts with existing transfer or registration rights for resolution
- Mark [VERIFY] on any exchange or regulatory timing rule not specified by underwriting agreement
- Keep governing law/venue consistent with underwriting agreement unless directed otherwise
1---2name: lock-up-agreement3description: Drafts U.S. IPO/secondary offering lock-up agreements restricting securityholder transfers and hedging during the post-offering period. Trigger when drafting lock-up agreements, market stand-off letters, or underwriting lock-up exhibits in capital markets transactions.4---5
6# Lock-Up Agreement
7
8Drafts a market-standard lock-up agreement protecting post-offering price stability, aligned with the underwriting agreement. Covers Rule 13d-3 beneficial ownership scope, derivative/hedge prohibitions, permitted transfer conditions, transferee joinders, and underwriter third-party beneficiary rights.
9
10## Prerequisites
11
12Collect before drafting:
13
141. **Underwriting agreement** — lock-up period, form, release mechanics, representative name
152. **Securityholder details** — name, capacity, entity type, address, beneficial ownership scope
163. **Issuer details** — legal name, jurisdiction, offering type (IPO vs secondary), security class
174. **Equity awards inventory** — options, RSUs, warrants, convertibles, ESPP, other awards
185. **Existing transfer restrictions** — stockholders' agreement, registration rights, ROFR/repurchase
19
20## Document Outline
21
221. Title, date, addressee (representative of underwriters), parties
232. Recitals — offering context, underwriting agreement reference, consideration
243. Definitions — "Lock-Up Period," "Common Stock," "Beneficial Ownership" (Rule 13d-3)
254. Lock-Up Covenant — transfer and hedging restrictions
265. Lock-Up Period — start/end formula, early release language
276. Extension — earnings/material news blackout extension [VERIFY]
287. Permitted Transfers — categories + conditions
298. Representations and Authority
309. Enforcement — stop-transfer, legends, refusal to register
3110. Third-Party Beneficiary (underwriters)
3211. Waiver/Release mechanics
3312. Governing Law, Venue, Injunctive Relief
3413. Miscellaneous — amendments, waivers, counterparts, e-signatures, severability
3514. Signature blocks (individual/entity)
36
37## Core Covenant Checklist
38
39- Prohibit direct or indirect offer, sell, pledge, lend, hypothecate, gift, assign, transfer
40- Prohibit derivatives/hedges transferring economic exposure (cash or physical settlement)
41- Cover beneficially owned securities under Rule 13d-3
42- Cover securities issuable on conversion/exercise/vesting
43- Apply to shares acquired during the Lock-Up Period
44
45## Key Clauses
46
47**Lock-Up Period:** Begins on agreement date, ends [180] days after final prospectus date, unless earlier released in writing by the Representative.
48
49**Extension (if required):** If the Company issues an earnings release or announces material news during [17] days before through [17] days after the Lock-Up Period end date, extend until [18] days after such release/announcement, unless waived by the Representative. [VERIFY]
50
51## Permitted Transfers
52
53| Category | Scope |
54| --- | --- |
55| Gifts | Bona fide gifts to family members or 501(c)(3) charities |
56| Estate Planning | Trusts for holder/immediate family; will/intestacy; QDRO/divorce |
57| Entity Restructuring | Affiliates or entities controlled by holder or same manager/GP/advisor |
58| Company Repurchase | Transfers to issuer under repurchase/ROFR agreements |
59| Equity Awards | Exercise/vesting/settlement (no sale; shares remain locked) |
60| Rule 10b5-1 | Plan establishment with no sales during Lock-Up Period and no public announcement |
61
62**Conditions for all permitted transfers:**
631. Transferee executes joinder lock-up in substantially the same form
642. Section 16(a) report (if required) states transfer was permitted under lock-up
653. No voluntary public disclosure during Lock-Up Period except as required by law
66
67## Representations
68
69- Authority and enforceability (subject to bankruptcy/creditor rights and equity)
70- No conflicting agreements or inconsistent proxies/voting arrangements
71- Holder acknowledges reliance by issuer and underwriters
72
73## Enforcement and Beneficiary Rights
74
75- Stop-transfer instructions to transfer agent; issuer may refuse noncompliant transfers
76- Restrictive legends on certificates or book-entry positions
77- Underwriters are intended third-party beneficiaries with direct enforcement rights
78- Representative may release all or part; specify pro rata release if required by underwriting agreement or exchange rules
79
80## Pitfalls and Verification
81
82- Align lock-up period, release mechanics, and exceptions with the underwriting agreement first
83- Use "final prospectus date" as anchor unless underwriting agreement dictates otherwise
84- Ensure permitted transfers keep restrictions attached via joinder
85- Flag conflicts with existing transfer or registration rights for resolution
86- Mark [VERIFY] on any exchange or regulatory timing rule not specified by underwriting agreement
87- Keep governing law/venue consistent with underwriting agreement unless directed otherwise
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