Stock Redemption Agreement 5
Stock Redemption Agreement 1
Stock Redemption Agreement 2
Stock Redemption Agreement 3
Stock Redemption Agreement 4
Stock Redemption Agreement 5
Stock Redemption Agreement 1

Stock Redemption Agreement

    Exiting shareholders may sell to the company instead of a co-owner with stock redemption agreements. In a redemption, a shareholder can be removed from the company while retaining ownership among all other shareholders. Our Stock Redemption Agreement template is a valid and lawful document for a company to repurchase a share holder’s stock. This template has been prepared after hours-long consultation with a business law attorney and is easy to understand. The agreement built with this template protects the business as well as investors’ interest and avoids the usual cash flow concerns that arise when a person leaves the company.

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Stock Redemption Agreement
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Stock Redemption Agreement

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In an organization, what will the other members do if a shareholder leaves, dies, or gets disable? Well, a stock redemption agreement, prepared at the time of distribution of the shares, shall come to rescue.

This agreement has the complete details as to how the shares will be transferred or purchased in such circumstances. Moving forward, let’s understand the redemption agreement definition and how useful this agreement is .

What Is a Stock Redemption Agreement?

A legal document created between the corporation and the shareholders, where the stock owner sells or transfers its stocks back to the corporation is a stock redemption agreement. This agreement is mostly used in partnership, corporation, or limited liability companies.

Firstly, a buy and sell agreement is created to restrict the owners from transferring shares’ ownership in a closed business organization. It helps to create an orderly and planned transfer of a business interest.

What Are the Differences Between the Stock Redemption Agreement and Stock Transfer Agreement?

While crafting a shareholder agreement, one of the major decisions to make is whether the transaction should be redemption or transfer.

When there are multiple owners, the ownership percentage of the shareholders remains unchanged if one or more than one owner leaves. The selling shareholder sells their shares back to the organization in exchange for cash or property in the stock redemption agreement.

On the other hand, if the company wants to keep the number of shares intact, they create a stock transfer agreement. Here, in case of retirement or death of a shareholder, the other members will be given a chance to purchase the shares.

What Are Included in a Stock Redemption Agreement?

The company shall create their agreement as per its requirement. However, they can refer to stock redemption agreements to state their terms clearly and lawfully. Here are a few common terms to be included in the agreement:

  • Payment: The corporation agrees to pay the stated amount to the leaving shareholder. The mode of payment and the last due date shall be mentioned here.
  • Delivery: The corporation shall provide the successful payment via the above-mentioned mode and the shareholders agree to fully transfer the ownership and the rights over those listed shares.
  • Voting Rights: If there is any voting rights or obligation on the owner of the above-listed stock, it shall get nullified or void upon transferring the shares to the company.
  • Shareholder Warranties: The shareholder shall provide the warranty that he is the sole owner of the above-listed stock. There shall not be any third party involved for said stock ownership which could conflict with the agreement.
  • Corporation Warranties: The corporation shall provide the warranty that there are no restrictions or agreements by the laws which could interfere with the redemption of the said shares. Furthermore, the redemption agreement shall not violate the state or federal laws and regulations.
  • Expenses: Any kind of expenses incurred while preparing the redemption agreement shall be the individual responsibility of each party.
  • Exhibits & Addendums: In case of any exhibits or addendums shall be considered valid only if given in written and signed by both the parties.
  • Waiver: If the parties agree to provide a waiver of any single right or term of the redemption agreement, the party shall not constitute the whole agreement canceled.
  • Severability: If the party finds any provision of the agreement invalid, all the other sections of the agreement shall continue to be upheld and enforced.
  • Binding Agreement: Both the parties and their successors shall be considered legally bound with this agreement until its termination.
  • Modification: If any party wishes to modify the stock redemption agreement, he/she needs to provide a written addendum signed by both parties.
  • Acceptance: Both parties need to constitute their signature stating that they have read and understood the above terms and agree to follow the same.
Manage real tragedies in business with our Stock Redemption Agreement template

Our stock redemption agreement template is quite valuable to any corporation because several standards have been fulfilled and it is correctly prepared. Edit the template accordingly to manage unforeseen tragedies with stock owners.

Sign our template by downloading the document below


Most of the time, the members don’t think through the real tragedies in the business. In such conditions, this agreement helps to make fair decisions that keep the business running smoothly.

With this, the partners can also agree on the price and conditions ahead of time without any need for hasty decisions. It will save a lot of chaos and mess in the business arrangement.

So, to be one step ahead, you could get a free sample of stock redemption agreement on CocoSign, a leading agreement templates provider, where there is a wide range of templates available created by legal professionals.



Redemption Agreement




This redemption agreement is made and entered into on [Agreement.Date]  by and between [Sender.Company] (Corporation) and [Shareholder.Name] (Shareholder).Both parties are in agreement to the following terms:


The Shareholder is the rightful owner of [Number.Shares] of [Stock.Type] stock in the Corporation.


The Shareholder and Corporation mutually desire that the Corporation redeem these shares in accordance with the terms of this redemption agreement.


Therefore, the Corporation agrees to redeem the above listed stock as of[Agreement.Date] .




The Corporation agrees to pay $[Share.Price] per share by either:

Cancellation of Shareholder's financial obligation to the Corporation in relation to the                        above listed shares, OR

Wire transfer for the full amount required to redeem the shares, if no such financial

obligation exists.


Seller's wire transfer information is as follows:

Financial Institution:

Primary Account Holder:

Routing Number:

Account Number:







On [Agreement.Date] , and upon successful payment via one of the two means listed above, the Shareholder agrees to fully surrender all rights and ownership to the above listed stock.




Any dividends earned prior to [Agreement.Date] shall be the sole property of the Shareholder. Likewise, any dividends earned after [Agreement.Date] shall be the sole property of the          Corporation.


Voting Rights


Any voting rights granted by ownership of the above listed stock shall belong to the Shareholder until [Agreement.Date] . After this date, voting rights shall be considered null and void.


Shareholder Warranties


The Shareholder warrants and swears that they are the sole owner of the above listed stock, and that there are no agreements in place with third parties for transfer of said stock's           ownership which could conflict with this redemption agreement.


Corporation Warranties


The Corporation warrants and swears that there are no agreements, covenants, or restrictions   in the Corporation's incorporation documents or bylaws which would interfere with the execution of this redemption agreement. Furthermore, the Corporation warrants that this redemption         agreement does not violate any State, Local, or Federal statutes, regulations, or guidelines. If    the Corporation's bylaws require that this redemption agreement be approved by the                  Corporation's boards, shareholders, or any other entity, the Corporation warrants that such        approval will be obtained prior to [Agreement.Date] .






Each party agrees to be held responsible for their own expenses as they relate to this redemption agreement.


Exhibits & Addendums


Any exhibits or addendums related to this redemption agreement shall be considered valid so long as they are signed by both parties.




Waiver of any single right or article related to this redemption agreement by either party shall not constitute a cancellation or waiver of the entire agreement.




Should any aspect, article, or provision of this redemption agreement be judged as invalid, all other sections of this agreement shall continue to be upheld and enforced.


Binding Agreement


This redemption agreement shall be considered legally binding on both parties and their successors.




This redemption agreement shall not be modified, except through a written addendum signed by both parties.


The signatures below constitute as acceptance between both parties for any and all statements found within this redemption agreement.




Therefore, this agreement is duly executed as of the dates below.


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