liquidation, dissolution or winding up of Chipotle, after payment in full of the amounts required to be paid to holders of any outstanding shares of preferred stock, if any, all
holders of common stock, regardless of class, are entitled to receive the same amount per share with respect to any distribution of assets to holders of shares of common stock.
The certificate of incorporation authorizes the issuance of an aggregate of 600,000,000 shares of preferred stock. Upon consummation of this offering, there will
be no shares of preferred stock outstanding
board of directors may, from time to time, direct the issue of shares of preferred stock in series and may, at the time of issue, determine the designation, powers, rights,
preferences and limitations of each series. Satisfaction of any dividend preferences of outstanding preferred stock would reduce the amount of funds available for the payment of dividends on shares of
common stock. Holders of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of Chipotle before any payment is made
to the holders of common stock. Under certain circumstances, the issuance of preferred stock may render more difficult or tend to discourage a merger, tender offer or proxy contest, the assumption of
control by a holder of a large block of Chipotle's securities or the removal of incumbent management. Upon the affirmative vote of a majority of the total number of directors then in office, the board
of directors may issue shares of preferred stock with voting and conversion rights that could adversely affect the holders of shares of common stock.
At December 20, 2005, there were about 8,034,009 shares of Series B Preferred Stock outstanding, about 3,925,125 shares of Series C Preferred Stock outstanding and
about 8,510,639 shares of Series D
Preferred Stock outstanding, without taking into account the Reclassification. Each of these shares will be converted into one-third of one share of class B common stock as described above
Under Delaware law, a shareholder is not entitled to pre-emptive rights to subscribe for additional issuances of common stock or any other class or
series of common stock or any security convertible into such stock in proportion to the shares that are owned unless there is a provision to the contrary in the certificate of incorporation. Our
certificate of incorporation does not provide that our shareholders are entitled to pre-emptive rights.
Certain Certificate of Incorporation and Bylaw Provisions
The certificate of incorporation provides for the board to be divided into three classes, as nearly equal in number as possible, serving staggered terms. About
one-third of the board will be elected annually, and each member will serve a three-year term. The provision for a classified board could prevent a party who acquires control of a majority
of the outstanding voting shares from obtaining control of the board until the second annual shareholders meeting following the date the acquirer obtains the controlling share interest. The classified
board provision is designed to have the effect of discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of Chipotle and to increase the likelihood that
incumbent directors will retain their positions. Under Delaware law, directors of a corporation with a classified board may only be removed for cause unless the certificate of incorporation provides
otherwise. Our certificate of incorporation does not provide that our shareholders can remove the directors without cause. See "Management."
After the completion of this offering, McDonald's will beneficially own no shares of our outstanding class A common stock, but will own about 22,262,884 shares of our outstanding
class B common stock, representing 88% of the combined voting power of all classes of our outstanding voting securities and 69% of the economic interest in our outstanding common stock (or 87%
and 65%, respectively, if the