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The Preferred Stock Agreement is a crucial document used when a company in Indonesia seeks to raise capital by issuing shares with preferential rights. It's particularly relevant for growth-stage companies, startups seeking venture capital, or established companies looking for strategic investment. The agreement must navigate Indonesian corporate law requirements, including Law No. 40 of 2007 and OJK regulations, while balancing investor protections with company interests. This document typically becomes necessary during Series A or later funding rounds, when sophisticated investors require specific rights and protections beyond those offered to common stockholders. The agreement details various preferential rights such as enhanced voting powers, dividend preferences, liquidation priorities, and conversion rights, while ensuring compliance with Indonesian foreign investment restrictions and corporate governance requirements.

1. Parties: Identification of the Company, existing shareholders, and preferred stock investors

2. Background: Context of the investment, company status, and purpose of the preferred stock issuance

3. Definitions: Key terms used throughout the agreement, including financial, technical, and legal definitions

4. Subscription and Issuance: Details of the preferred stock subscription, including number of shares, price, and payment terms

5. Preferred Stock Rights: Specific rights attached to preferred shares including dividend rights, liquidation preferences, and conversion rights

6. Voting Rights: Voting powers of preferred stockholders, including any special voting rights on specific matters

7. Anti-dilution Protection: Provisions protecting preferred stockholders from dilution in future funding rounds

8. Transfer Restrictions: Limitations on the transfer of preferred shares and right of first refusal provisions

9. Corporate Governance: Board composition, board appointment rights, and management provisions

10. Information Rights: Rights of preferred stockholders to receive financial and operational information

11. Representations and Warranties: Company's and shareholders' representations regarding legal, financial, and operational matters

12. Covenants: Ongoing obligations of the company and existing shareholders

13. Events of Default: Circumstances constituting default and corresponding remedies

14. Exit Provisions: Terms governing IPO, acquisition, or other liquidation events

15. Governing Law and Dispute Resolution: Choice of Indonesian law and dispute resolution mechanisms

16. Miscellaneous: Standard provisions including notices, amendments, and severability