Item 3. Material Modification to Rights of Securityholders
Amended and Restated Certificate of Incorporation
On February 15, 2022, Hiro Systems PBC, a Delaware public benefits corporation f/k/a Blockstack Inc. (“Hiro”), filed an Amended and Restated Certificate of Incorporation (the “Certificate”) in connection with the issuance and sale of its Series B Preferred Stock (the “Series B Financing”). Pursuant to the Certificate, the number of shares authorized was increased from (A) 20,558,946 shares, consisting of 16,000,000 shares of common stock, $0.00001 par value per share (“Common Stock”), and 4,558,946 shares of preferred stock, $0.00001 par value per share (“Preferred Stock”), with 2,639,283 shares of Preferred Stock designated as “Series A-1 Preferred Stock,” 440,365 shares of Preferred Stock designated as “Series A-2 Preferred Stock,” 120,238 shares of Preferred Stock designated as “Series A-3 Preferred Stock,” 1,162,059 shares of Preferred Stock designated as “Series A-4 Preferred Stock,” 94,332 shares of Preferred Stock designated as “Series A-5 Preferred Stock,” 83,523 shares of Preferred Stock designated as “Series A-6 Preferred Stock,” and 19,146 shares of Preferred Stock designated as “Series A-7 Preferred Stock,” to (B) 26,498,810 shares, consisting of 20,000,000 shares of Common Stock and 6,498,810 shares of Preferred Stock, with 2,638,835 shares of Preferred Stock designated as “Series A-1 Preferred Stock,” 440,365 shares of Preferred Stock designated as “Series A-2 Preferred Stock,” 120,238 shares of Preferred Stock designated as “Series A-3 Preferred Stock,” 1,162,059 shares of Preferred Stock designated as “Series A-4 Preferred Stock,” 94,332 shares of Preferred Stock designated as “Series A-5 Preferred Stock,” 83,523 shares of Preferred Stock designated as “Series A-6 Preferred Stock,” 19,146 shares of Preferred Stock designated as “Series A-7 Preferred Stock,” and 1,940,312 shares of Preferred Stock newly designated as “Series B Preferred Stock.”
Creation of Series B Preferred Stock
Upon the filing of the Certificate, the Series B Preferred Stock was created. The Series B Preferred Stock ranks senior to all Common Stock and pari passu with all other present classes or series of Preferred Stock and is entitled to dividends at the rate per annum of $1.64921 per share on such shares of Series B Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization as set forth in the Certificate). The right to receive dividends on the Series B Preferred Stock is not cumulative, and no right to dividends accrues to holders of the Series B Preferred Stock by reason of the fact that dividends on said shares are not declared or paid. Dividends will be payable only when, as, and if declared by the Board of Directors of Hiro.
The Series B Preferred Stock carries a liquidation preference of an amount equal to the greater of (i) the sum of (a) $20.61518 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization as set forth in the Certificate), and (b) all declared but unpaid dividends (if any) on such shares of Preferred Stock and (ii) such amount per share as would have been payable had all shares of Preferred Stock been converted into Common Stock immediately prior to the liquidation, dissolution or winding up of Hiro, or such lesser amount as may be approved by the holders of a majority of the outstanding shares of Preferred Stock (voting as a single class and on an as-converted basis).
Upon the occurrence of an Automatic Conversion Event (as defined in the Certificate), all outstanding shares of Series B Preferred Stock, will automatically be converted into shares of Common Stock at the Conversion Rate (as defined in the Certificate) then in effect.
The foregoing description of the Certificate is qualified in its entirety by reference to the full text of the Certificate, a copy of which is attached hereto as Exhibit 2.1 and is incorporated herein in its entirety by reference.
Item 8. Certain Unregistered Sales of Equity Securities
Series B Preferred Stock
On February 16, 2022, Hiro consummated the Series B Financing by entering into a Series B Preferred Stock Purchase Agreement (the “Stock Purchase Agreement”) with certain investors on Exhibit A attached thereto (each, an “Investor” and collectively, the “Investors”), pursuant to which the Investors purchased 606,345 shares of Hiro’s newly issued Series B Preferred Stock for an aggregate purchase price of $12,499,911.34, based on a price per share of $20.61518 per share of newly issued Series B Preferred Stock (the “New Shares”).
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