Baskin Robbins 2011 Annual Report Download - page 43

There may be sales of a substantial amount of our common stock by our current stockholders, and these sales
could cause the price of our common stock to fall.
As of December 31, 2011, there were 120,136,631 shares of common stock outstanding. Approximately 55.3%
of our outstanding common stock is held by investment funds affiliated with the Sponsors.
Sales of substantial amounts of our common stock in the public market, or the perception that such sales will
occur, could adversely affect the market price of our common stock and make it difficult for us to raise funds
through securities offerings in the future. The shares sold in the IPO and secondary offering in November 2011
are eligible for immediate sale in the public market without restriction by persons other than our affiliates.
Certain holders of shares of our common stock may require us to register their shares for resale under the federal
securities laws, and holders of additional shares of our common stock would be entitled to have their shares
included in any such registration statement, all subject to reduction upon the request of the underwriter of the
offering, if any. Registration of those shares would allow the holders to immediately resell their shares in the
public market. Any such sales, or anticipation thereof, could cause the market price of our common stock to
decline.
In addition, we have registered shares of common stock that are reserved for issuance under our 2011 Omnibus
Long-Term Incentive Plan.
Provisions in our charter documents and Delaware law may deter takeover efforts that you feel would be
beneficial to stockholder value.
In addition to the Sponsors’ beneficial ownership of a controlling percentage of our common stock, our
certificate of incorporation and bylaws and Delaware law contain provisions which could make it harder for a
third party to acquire us, even if doing so might be beneficial to our stockholders. These provisions include a
classified board of directors and limitations on actions by our stockholders. In addition, our board of directors has
the right to issue preferred stock without stockholder approval that could be used to dilute a potential hostile
acquiror. Our certificate of incorporation also imposes some restrictions on mergers and other business
combinations between us and any holder of 15% or more of our outstanding common stock other than the
Sponsors. As a result, you may lose your ability to sell your stock for a price in excess of the prevailing market
price due to these protective measures and efforts by stockholders to change the direction or management of the
company may be unsuccessful.
Because certain of our officers hold restricted stock or option awards that will vest upon a change of control if
the Sponsors achieve certain minimum rates of return on their initial investment in us, these officers may
have interests in us that conflict with yours.
As of December 31, 2011, certain of our officers held, in the aggregate, 580,214 shares of restricted stock and
options to purchase 2,693,274 shares that are subject to vesting upon a change of control if the Sponsors achieve
certain minimum rates of return on their initial investment in us. As a result, these officers may view certain
change of control transactions more favorably than an investor due to the vesting opportunities available to them
and, as a result, may have an economic incentive to support a transaction that you may not believe to be
favorable to stockholders.
The Sponsors will continue to have significant influence over us, including control over decisions that require
the approval of stockholders, which could limit your ability to influence the outcome of key transactions,
including a change of control.
We are currently controlled by the Sponsors. Investment funds affiliated with the Sponsors beneficially own
approximately 55.3% of our outstanding common stock. For as long as the Sponsors continue to beneficially own
shares of common stock representing more than 50% of the voting power of our common stock, they will be able
-33-