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Preferred Stock Agreement
"I need a Preferred Stock Agreement for a Series B investment round closing on March 15, 2025, where we're issuing convertible preferred shares with a 1x liquidation preference and standard anti-dilution protection to a Qatar-based private equity firm investing $10 million for a 15% stake."
1. Parties: Identification of the Company and the Preferred Stock purchaser(s)
2. Background: Context of the preferred stock issuance, including company status and purpose of the investment
3. Definitions: Key terms used throughout the agreement
4. Issuance of Preferred Stock: Details of the preferred shares being issued, including number, price, and class
5. Dividend Rights: Terms of dividend payments, including rate, frequency, and priority
6. Voting Rights: Scope and limitations of voting rights attached to the preferred shares
7. Conversion Rights: Terms and conditions for converting preferred shares to common shares
8. Liquidation Preferences: Rights and priorities in case of company liquidation or sale
9. Anti-dilution Protection: Mechanisms to protect preferred stockholders from dilution
10. Transfer Restrictions: Limitations and conditions on the transfer of preferred shares
11. Information Rights: Rights of preferred stockholders to receive company information and reports
12. Registration Rights: Rights related to the registration of shares for public trading
13. Board Representation: Rights to appoint directors or observers to the board
14. Governing Law and Jurisdiction: Specification of Qatar law as governing law and relevant jurisdiction
15. Notices: Procedures for formal communications between parties
16. Amendment and Waiver: Procedures for modifying the agreement or waiving rights
1. Redemption Rights: Optional terms for company or investor redemption rights, used when parties want the ability to force a buyback of shares
2. Tag-Along Rights: Rights of preferred stockholders to join in sale of shares by other stockholders, included when minority shareholder protection is desired
3. Drag-Along Rights: Rights to force preferred stockholders to join in a company sale, included when majority shareholders want exit flexibility
4. Participation Rights: Rights to participate in future funding rounds, included when investors want to maintain their ownership percentage
5. Dividend Stopper: Restrictions on paying dividends to other classes of shares, used when stronger dividend protection is needed
6. Most Favored Nation Provision: Guarantees that terms offered to future investors won't be more favorable, included in early-stage investments
7. Sharia Compliance Provisions: Specific provisions ensuring compliance with Islamic law, required when parties require Sharia compliance
1. Schedule A - Share Certificate: Form of share certificate for the preferred stock
2. Schedule B - Capitalization Table: Complete breakdown of company's capital structure pre and post-investment
3. Schedule C - Disclosure Schedule: Company disclosures and exceptions to representations and warranties
4. Schedule D - Registration Rights Details: Detailed procedures and terms for share registration rights
5. Schedule E - Conversion Calculations: Detailed methodology for calculating conversion ratios and adjustments
6. Schedule F - Corporate Documents: Copies of relevant corporate authorizations and resolutions
7. Schedule G - Investor Rights: Detailed description of specific investor rights and procedures
8. Appendix 1 - Form of Adherence Agreement: Template for new parties to join the agreement
9. Appendix 2 - Board Resolution Template: Template for board resolutions required under the agreement
Authors
Financial Services
Technology
Real Estate
Energy and Resources
Healthcare
Manufacturing
Infrastructure Development
Telecommunications
Professional Services
Retail and Consumer
Education
Transportation and Logistics
Legal
Finance
Corporate Governance
Compliance
Investment
Risk Management
Corporate Secretary Office
Board of Directors
Executive Leadership
Treasury
Chief Executive Officer
Chief Financial Officer
Chief Legal Officer
Corporate Secretary
Investment Director
Legal Counsel
Finance Director
Investment Manager
Corporate Governance Officer
Compliance Officer
Board Director
Private Equity Manager
Venture Capital Manager
Investment Banker
Corporate Attorney
Financial Controller
Risk Manager
Company Secretary
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