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The Preferred Stock Agreement serves as a critical instrument in corporate financing, particularly for companies seeking growth capital while maintaining operational control. This document, governed by Hong Kong law, establishes the framework for issuing shares with preferential rights to investors, typically in Series A or later funding rounds. It comprehensively addresses key aspects such as dividend rights, liquidation preferences, voting rights, and conversion features, while ensuring compliance with Hong Kong's Companies Ordinance and securities regulations. The agreement is particularly important in balancing investor protections with company flexibility, often used by startups and growth companies raising capital from venture capital firms or institutional investors. The document must carefully consider Hong Kong's unique legal and regulatory environment, including requirements for share class rights, corporate governance, and shareholder protections.

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

2. Background: Context of the preferred stock issuance, including company's capital structure and purpose of the issuance

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

4. Subscription Details: Number of preferred shares, price per share, and total investment amount

5. Dividend Rights: Terms of dividend payments, including rate, frequency, and whether dividends are cumulative or non-cumulative

6. Liquidation Preference: Priority and amount payable to preferred stockholders in case of liquidation or sale

7. Voting Rights: Scope and nature of voting rights attached to the preferred shares

8. Conversion Rights: Terms and conditions for converting preferred shares to ordinary shares

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

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

11. Information Rights: Rights of preferred stockholders to receive financial and other company information

12. Board Representation: Rights of preferred stockholders to appoint directors or observers

13. Protective Provisions: Actions requiring preferred stockholder approval

14. Representations and Warranties: Company's declarations regarding its status, authority, and compliance

15. Covenants: Ongoing obligations of the company

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

17. Governing Law and Jurisdiction: Specification of Hong Kong law as governing law and jurisdiction for disputes