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The Preferred Stock Purchase Agreement (PSPA) is a crucial document used in private equity and venture capital transactions in India, typically when companies seek growth capital or strategic investment. This agreement is essential for companies looking to raise capital while providing investors with preferential rights and protections. The document must comply with Indian corporate law framework, including the Companies Act, 2013, SEBI regulations, and where applicable, FEMA guidelines for foreign investments. It details the terms of investment, share rights, corporate governance provisions, and investor protections. The PSPA is particularly important in growth-stage companies where investors require additional rights and protections beyond those available to common stockholders. The agreement serves as the foundational document governing the relationship between the company and its preferred stockholders, outlining everything from economic rights to control provisions.

1. Parties: Identification of the company issuing preferred stock and the investor(s)

2. Background: Context of the transaction, including company's current capitalization and purpose of investment

3. Definitions: Definitions of key terms used throughout the agreement

4. Purchase and Sale: Details of the preferred stock being sold, purchase price, and payment terms

5. Closing: Closing date, conditions precedent, and deliverables

6. Representations and Warranties of the Company: Company's statements about its legal status, financial condition, and business

7. Representations and Warranties of the Investor: Investor's statements about their investment capacity and compliance

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

9. Covenants: Ongoing obligations of the company and restrictions on its operations

10. Information Rights: Investor's rights to receive financial and other company information

11. Registration Rights: Rights related to registration of shares for public trading

12. Board Rights: Provisions regarding board composition and voting rights

13. Transfer Restrictions: Limitations on transfer of preferred shares and right of first refusal

14. Termination: Circumstances under which the agreement can be terminated

15. Indemnification: Provisions for compensation in case of breach or misrepresentation

16. Miscellaneous: Standard provisions including notices, governing law, dispute resolution, and amendments