Lock-Up Agreement
A legally binding contract between the underwriters and insiders of a company prohibiting these individuals from selling any shares of stock for a specified period of time. Lock-up periods typically last 180 days (six months) but can on occasion last for as little as 120 days or as long as 365 days (one year).
Investopedia Commentary
Underwriters will have company executives, managers, employees and venture capitalists sign lock-up agreements to ensure an element of stability in the stock's price in the first few months of trading. When lock-ups expire, restricted people are permitted to sell their stock, which sometimes (if these insiders are looking to sell their stock) results in a drastic drop in share price due to the huge increase in supply of stock.
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See also: Eating Stock, Final Prospectus, Gross Spread, Gun Jumping, Initial Public Offering - IPO, Prospectus, Red Herring, Underwriter
Also spelled: Lock Up, Lockup, Lockup agreement, Lock ups