Lock-Up Waiver
(IPO)

Summary

This template may be used by an underwriter to provide a waiver to selling shareholders or other parties to a lock-up agreement who have agreed to restrictions in transacting in company shares after an initial public offering (IPO). The waiver releases the recipient from certain of the lock-up agreement’s restrictions. This template includes practical guidance, drafting notes, and optional clauses. In a standard IPO, the underwriters usually, as a condition of the underwriting agreement, require that certain company insiders (such as selling shareholders and directors and officers) agree to restrictions on selling their shares for a period of time immediately following the offering, pursuant to a lock-up agreement. This period, referred to as the lock-up period, typically lasts from 90 to 180 days after the date of an offering (with 180 days more typical in an IPO and 90 days in a follow-on offering). After the lock-up period expires, company insiders have the right, but not the obligation, to sell their shares on the open market. Lock-up periods are generally meant to prevent company insiders from selling their shares in the period immediately after the offering date, which can cause volatility in the company’s share price. Lock-up agreements may also be required in other circumstances, such as in a private placement of equity securities, where as a condition of sale, the purchaser agrees not to resell the purchased shares for a certain period of time. In some circumstances, the underwriters may agree to waive the lock-up period for certain locked-up parties. To grant a partial or total waiver of these restrictions, the underwriters (or initial purchasers in the case of an unregistered offering) can deliver a waiver to some or all of the locked-up parties. For a template of standard lock-up agreement, see Lock-Up Agreement (IPO). For additional information on the IPO process and additional IPO-related templates, see Initial Public Offerings Resource Kit.