Lock-Up Contract

A Lock-Up Contract under USA law is a legal template that outlines the terms and conditions agreed upon between parties in a contract with regards to the restriction on the sale of certain assets or interests. This contract is commonly used in business transactions, mergers, acquisitions, or public offerings, where one party (typically the seller or an investment insider) agrees not to sell or dispose of their shares, assets, or other securities for a specified period, usually ranging from a few months to a few years. The lock-up period aims to provide stability and protect the interests of the counterparty by preventing sudden and massive sell-offs that could negatively impact the value of an asset or disrupt the success of a business transaction. The template would lay out the specifics of the lock-up period, including the duration, scope, and conditions under which the restriction can be waived or modified. It also covers the consequences for violating the agreement, potential exemptions or carve-outs, and any negotiated provisions specific to the intent of the contract. It is crucial to consult a legal professional to ensure compliance with relevant federal and state laws and to tailor the template to specific business needs.