Shake Shack 2015 Annual Report Download - page 30

Table of Contents
Court of Chancery in the State of Delaware. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of
lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
Risks Related to Ownership of Our Class A Common Stock
The Continuing SSE Equity Owners have the right to have their LLC Interests redeemed pursuant to the terms of the SSE Holdings LLC Agreement.
We have an aggregate of more than 188,691,853 shares of Class A common stock authorized but unissued, including approximately 24,191,853 shares of Class A common stock
issuable upon redemption of LLC Interests that are held by the Continuing SSE Equity Owners. Subject to certain restrictions set forth in the SSE Holdings LLC Agreement, the
Continuing SSE Equity Owners are entitled to have their LLC Interests redeemed for shares of our Class A common stock. We also entered into a Registration Rights Agreement
pursuant to which the shares of Class A common stock issued to the Continuing SSE Equity Owners upon redemption of LLC Interests and the shares of Class A common stock issued
to the Former SSE Equity Owners in connection with the Organizational Transactions are eligible for resale, subject to certain limitations set forth therein.
We cannot predict the size of future issuances of our Class A common stock or the effect, if any, that future issuances and sales of shares of our Class A common stock may have on the
market price of our Class A common stock. Sales or distributions of substantial amounts of our Class A common stock, including shares issued in connection with an acquisition, or the
perception that such sales or distributions could occur, may cause the market price of our Class A common stock to decline.
Taking advantage of the reduced disclosure requirements applicable to "emerging growth companies" may make our Class A common stock less attractive to investors.
The JOBS Act provides that, so long as a company qualifies as an "emerging growth company," it will, among other things:
We currently utilize and intend to continue to utilize the exemptions described above for so long as we are an emerging growth company. We have irrevocably elected not to take
advantage of the extension of time to comply with new or revised financial accounting standards available under Section 107(b) of the JOBS Act. We could be an emerging growth
company for up to five years after our initial public offering. We cannot predict if investors will find our Class A common stock less attractive if we elect to rely on these exemptions,
or if taking advantage of these exemptions would result in less active trading or more volatility in the price of our Class A common stock.
We will incur increased costs as a result of becoming a public company and in the administration of our organizational structure.
As a public company, we will incur significant legal, accounting, insurance and other expenses that we have not incurred as a private company, including costs associated with public
company reporting requirements. We also have incurred and will incur costs associated with the Sarbanes-
Oxley Act and related rules implemented by the Securities and Exchange
Commission (" SEC
"). We will incur ongoing periodic expenses in connection with the administration of our organizational structure. The expenses incurred by public companies
generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make
some activities more time-
consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. In estimating these costs, we took into account
expenses related to insurance, legal, accounting, and compliance activities, as well as other expenses not currently incurred. These laws and regulations could also make it more
difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve
on our Board of Directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to
delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
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▪ be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the " Sarbanes-Oxley Act
") requiring that its independent registered public accounting
firm provide an attestation report on the effectiveness of its internal control over financial reporting;
▪ be exempt from "say on pay" and "say on golden parachute" advisory vote requirements of the Dodd-Frank Wall Street Reform and Customer Protection Act (the " Dodd-
Frank Act ");
▪ be exempt from certain disclosure requirements of the Dodd-
Frank Act relating to compensation of its executive officers and be permitted to omit the detailed compensation
discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934 (the " Exchange Act "); and
▪
be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor's
report on the financial statements.