Section 107.850 - Restrictions on redemption of Equity Securities(a) A Portfolio Concern cannot be required to redeem Equity Securities earlier than one year from the date of the first closing unless: (1) The concern makes a public offering, or has a change of management or control, or files for protection under the provisions of the Bankruptcy Code, or materially breaches your Financing agreement; or(2) You make a follow-on investment, in which case the new securities may be redeemed in less than one year, but no earlier than the redemption date associated with your earliest Financing of the concern.(b) The redemption price must be either: (1) A fixed amount that is no higher than the price you paid for the securities; or(2) An amount that cannot be fixed or determined before the time of redemption. In this case, the redemption price must be based on:(i) A reasonable formula that reflects the performance of the concern (such as one based on earnings or book value); or(ii) The fair market value of the concern at the time of redemption, as determined by a professional appraisal performed under an agreement acceptable to both parties.(c) Any method for determining the redemption price must be agreed upon no later than the date of the first (or only) closing of the Financing.61 FR 3189, Jan. 31, 1996, as amended at 64 FR 52646, Sept. 30, 1999; 69 FR 8098 , Feb. 23, 2004