CONSTELLATION PHARMACEUTICALS, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Voting
The holders of Preferred Stock are entitled to vote, together with the holders of common stock, on matters submitted to stockholders for a vote. The holders of
Preferred Stock are entitled to the number of votes equal to the number of shares of common stock into which each such share of Preferred Stock could then convert.
Conversion
Each share of Preferred Stock is
convertible at the option of the holder at any time after the date of issuance. Each share of Preferred Stock will be automatically converted into shares of common stock at the applicable conversion ratio then in effect (i) upon the closing of
a firm commitment public offering with at least $35 million of gross proceeds to the Company, and at a price of at least $1.00 per share, subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other
similar recapitalization, or, (ii) upon the written consent of at least a majority of the holders of the then-outstanding shares of Preferred Stock voting together as a single class on an
as-converted
basis. The conversion ratio of each series of Preferred Stock is determined by dividing the Original Issue Price of each series by the Conversion Price of each series. The Original Issue Price is $1.00 per share for Series A convertible preferred
stock, (Series A), $1.20 per share for Series B convertible preferred stock (Series B), $1.60 per share for Series D convertible preferred stock (Series D), $2.25 per share for Series E convertible preferred stock
(Series E), $1.75 per share for
Series E-1 convertible
preferred stock and $1.00 per share for Series F convertible preferred stock (Series F). The Conversion Price, as
adjusted for Series E in 2016 as a result of the issuance of
Series E-1 preferred
stock at a price per share of less than the conversion price of Series E preferred stock, is $11.01 per share for
Series A, $13.21 per share for Series B, $17.61 per share for Series D, $19.27 per share for Series E, $19.27 per share for
Series E-1 and
$11.01 per share for Series F, subject, in each case, to
appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization and other adjustments as set forth in the Companys certificate of incorporation, as amended and restated.
Dividends
As of December 31, 2017, the
holders of Series E and
Series E-1 Preferred
Stock were entitled to receive, prior to or simultaneously with the holders of Series A, Series B and Series D Preferred Stock, cumulative dividends at
the rate of eight percent (8%), compounded quarterly, of the Series E and
Series E-1 Original
Issue Price, as applicable, per annum on each then-outstanding share of Series E and
Series E-1 Preferred
Stock. The holders of Series A, Series B and Series D Preferred Stock were entitled to receive dividends at the rate of eight percent (8%), compounded quarterly, of the Original Issue
Price, as applicable, per annum on each then-outstanding share, subject to the rights of the Series E and Series
E-1
described above. Holders of Series A, Series B, Series D, Series E and
Series E-1
Preferred Stock were entitled to receive dividends only when, as, and if declared by the Companys board of directors. The Company could not declare, pay or set aside any dividends on shares of
any other series of capital stock of the Company, other than dividends on common stock payable in common stock, unless the holders of the Preferred Stock first received, or simultaneously received, a dividend on each outstanding share of Preferred
Stock in an amount at least equal to the greater of (i) 8% per share, as compounded quarterly, on a calendar-year basis, subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization
with respect to such shares, and (ii) the amount of dividend payable on the Preferred Stock calculated as if all shares of Preferred Stock had been converted to common stock. No dividends were declared or paid during 2017. As of
December 31, 2017, cumulative undeclared and unpaid dividends totaled $76.6 million.
As of June 30, 2018, the holders of Preferred Stock
are no longer entitled to cumulative dividends. The holders of Series E, Series
E-1
and Series F Preferred Stock are entitled to receive, prior to or simultaneously with the holders of Series A, Series B and
Series D Preferred Stock,
non-cumulative
dividends at the rate of eight percent (8%) per annum, of the Series E, Series
E-1
and Series F Original Issue Price, as
applicable, per annum on each then-outstanding share of Series E, Series
E-1
and Series F Preferred Stock. The holders of Series A, Series B and Series D Preferred Stock will be entitled to receive
non-cumulative
dividends at the rate of eight percent (8%) per annum, of the Original Issue Price, as applicable, per annum on each then-outstanding share, subject to the rights of the Series E, Series
E-1
and Series F described above. Holders of Series A, Series B, Series D, Series E, Series
E-1
and Series F Preferred Stock are entitled to receive dividends only when, as,
and if declared by the Companys board of directors. The Company may not declare, pay or set aside any dividends on shares of any other series of capital stock of the Company, other than dividends on common stock payable in common stock, unless
the holders of the Preferred Stock first receive, or simultaneously receive, a dividend on each outstanding share of Preferred Stock in an amount at least equal to the greater of (i) 8% per share, on a calendar-year basis, subject to appropriate
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