Redemption agreements are sophisticated, written corporate contracts that provide for a company to “redeem”, i.e. get back, some of its equity offerings that are currently owned by one or more investors. The agreement will usually refer to several prior agreements made between the parties that transferred the equity offerings, such as shares of preferred or common stock, to the investors in the first place. The most common type of redemption agreements are stock redemption agreements. There are several reasons why a company may want to redeem its stock. Usually, the company wants to regain a certain percentage ownership control of the company that it gave away when it offered stock to investors. Obviously, the company has to pay in order to redeem the stocks. The terms of conditions of this exchange between the investors and the company are thus effectuated in a redemption agreements.

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