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Preferred Stock Purchase Agreement

Preferred Stock Purchase Agreement Template for Canada

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Key Requirements PROMPT example:

Preferred Stock Purchase Agreement

"I need a Preferred Stock Purchase Agreement for my Series B technology startup to issue convertible preferred shares to a venture capital consortium, with a purchase price of CAD 5 million, including standard anti-dilution protection and board observation rights for the lead investor."

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Document background
The Preferred Stock Purchase Agreement is a crucial document in Canadian corporate finance, typically used when companies seek growth capital or strategic investment while maintaining certain controls over ownership and governance. This agreement, governed by Canadian federal and provincial laws, serves as the primary transaction document for preferred stock investments, outlining the terms of purchase, investor rights, and company obligations. It's particularly relevant for growth-stage companies, venture capital transactions, and strategic corporate investments. The document must comply with both the Canada Business Corporations Act and provincial securities regulations, making it essential for both private and public company transactions. The agreement includes detailed provisions for share rights, corporate governance, investor protections, and regulatory compliance, making it a fundamental tool for structuring sophisticated investment transactions in the Canadian market.
Suggested Sections

1. Parties: Identification of the Company issuing preferred stock and the Purchaser(s)

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

3. Definitions: Defined terms used throughout the agreement

4. Purchase and Sale of Preferred Stock: Details of the transaction, including number of shares, purchase price, and closing mechanics

5. Representations and Warranties of the Company: Company's statements regarding its legal status, authority, capitalization, and business condition

6. Representations and Warranties of the Purchaser: Purchaser's statements regarding authority, investment intent, and sophistication

7. Closing Conditions: Conditions that must be satisfied before the parties are obligated to complete the transaction

8. Closing: Mechanics and timing of the closing, including deliverables

9. Rights and Preferences of Preferred Stock: Detailed terms of the preferred stock, including dividend rights, liquidation preferences, and conversion rights

10. Registration Rights: Rights of investors to register their shares for public trading

11. Information Rights: Investor rights to receive financial and other company information

12. Board Rights: Any board representation or observer rights granted to investors

13. Covenants: Ongoing obligations of the parties

14. Indemnification: Terms for compensating parties for losses arising from breaches

15. Miscellaneous: Standard legal provisions including notices, amendments, governing law, etc.

Optional Sections

1. Pre-emptive Rights: Rights of investors to participate in future financing rounds - include when negotiated by investors

2. Tag-Along Rights: Rights of investors to participate in sales by other shareholders - include for minority investor protection

3. Drag-Along Rights: Company's right to force investors to join in a sale - include when requested by company

4. Anti-dilution Provisions: Protection against dilution from future down rounds - include when negotiated by investors

5. Voting Rights: Special voting rights of preferred stockholders - include when preferred shares have voting rights

6. Redemption Rights: Rights to require company to repurchase shares - include when investors require exit rights

7. Participation Rights: Rights to participate in distributions beyond stated preference - include if participating preferred

8. Conversion Price Adjustments: Mechanisms for adjusting conversion price - include for convertible preferred stock

Suggested Schedules

1. Schedule A - Capitalization Table: Complete breakdown of company's capital structure pre and post-investment

2. Schedule B - Disclosure Schedule: Exceptions to company representations and warranties

3. Schedule C - Terms of Preferred Stock: Detailed terms and conditions of the preferred stock

4. Schedule D - Form of Investors' Rights Agreement: Agreement detailing ongoing rights of investors

5. Schedule E - Form of Right of First Refusal Agreement: Agreement regarding transfer restrictions and ROFR rights

6. Schedule F - Form of Voting Agreement: Agreement regarding voting arrangements

7. Schedule G - Legal Opinion Requirements: Requirements for legal opinion to be delivered at closing

8. Schedule H - Financial Statements: Company's financial statements

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Relevant Industries

Technology

Healthcare

Clean Energy

Financial Services

Manufacturing

Biotechnology

Software

E-commerce

Real Estate

Telecommunications

Consumer Goods

Agriculture Technology

Media and Entertainment

Infrastructure

Life Sciences

Relevant Teams

Legal

Finance

Corporate Development

Executive Leadership

Investment

Treasury

Compliance

Board of Directors

Corporate Governance

Investor Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Secretary

Investment Director

Venture Capital Partner

Private Equity Associate

Corporate Attorney

Investment Banker

Board Member

Chief Legal Officer

Corporate Development Manager

Finance Director

Compliance Officer

Treasury Manager

Industries








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