Lock-Up Provision

See: 144a.

The legal name of a lock-up provision is a "144a." Yes, lawyers are so clever at naming things. Like calling it Highway 101 instead of Bob's Lane, or Suzy's Cute Freeway Of Love. But whatever.

A lock-up provision restricts when early investors can sell their shares when the public has bought.

Typical example: an IPO. Private investors funded the company. The stock boomed, then went public at $50 a share on May 4th (the founders love Star Wars). The lock-up provision locks up early insiders from selling for 6 months and change, such that their next window to sell comes around at Thanksgiving, at which point they can then sell and get liquid or do whatever, as they ask, "What would Luke do?"