Exhibit 10.2


 


SERVICES AGREEMENT


 


THIS SERVICES AGREEMENT
(this “Agreement”) is entered into
as of January 31, 2006 by and between Chipotle Mexican Grill, Inc., a
Delaware corporation (“Chipotle”),
and McDonald’s Corporation, a Delaware corporation (“McDonald’s”).


 


RECITALS


 


WHEREAS, Chipotle
will be issuing shares of Class A Common Stock, $0.01 par value per share
(“Class A Common Stock”), to
the public in an offering registered under the Securities Act of 1933, as
amended (the “Initial Public Offering”);


 


WHEREAS, upon
consummation of the Initial Public Offering, McDonald’s will own, indirectly
through its wholly-owned subsidiary McDonald’s Ventures, LLC, at least 65%
of the outstanding shares of Common Stock (as defined below), which
ownership will provide McDonald’s with, in most circumstances, at least 87% of
the combined voting power of the outstanding Common Stock;


 


WHEREAS, McDonald’s
has heretofore directly or indirectly provided certain services to Chipotle,
including (a) accounting and financial transaction processing and
reporting services, as described in more detail on Schedule I attached to
this Agreement (the “Accounting Services”),
(b) making certain insurance coverage programs available to Chipotle, as
described in more detail on Schedule II attached to this Agreement
(the “Insurance Services”),
and (c) making certain McDonald’s employee benefit plans available to
employees of Chipotle, as described in more detail on Schedule III
attached to this Agreement (the “Benefits
Services”, and together with the Accounting Services and the
Insurance Services, collectively, the “Services”);


 


WHEREAS, on the
terms and subject to the conditions set forth herein, Chipotle desires to
retain McDonald’s as an independent contractor to provide, directly or indirectly,
the Services to Chipotle after the Closing Date (as defined below); and


 


WHEREAS, on the
terms and subject to the conditions set forth herein, McDonald’s desires to
provide, directly or indirectly, such Services to Chipotle.


 


AGREEMENTS


 


NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are acknowledged by this
Agreement, McDonald’s and Chipotle, for themselves, their successors and
assigns, agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


As used in this Agreement, the following terms will have the following
meanings, applicable both to the singular and the plural forms of the terms
described:


 


“Accounting Services” has
the meaning ascribed thereto in the recitals to this Agreement.


 


“Action” has the meaning
ascribed thereto in Section 5.02.


 


“Agreement” has the
meaning ascribed thereto in the preamble to this Agreement, as such agreement
may be amended and supplemented from time to time in accordance with its terms.


 

















 


“Benefits Services” has
the meaning ascribed thereto in the recitals to this Agreement.


 


“Chipotle” has the meaning
ascribed thereto in the preamble to this Agreement.


 


“Chipotle Indemnified Person”
has the meaning ascribed thereto in Section 5.03.


 


“Class A Common Stock”
has the meaning ascribed thereto in the recitals to this Agreement.


 


“Closing Date” means the
date of the closing of the initial sale of Class A Common Stock in the
Initial Public Offering.


 


“Common Stock” means the Class A
Common Stock, the Class B Common Stock, $0.01 par value per share, of
Chipotle, and any other class of Chipotle capital stock representing the right
to vote for the election of directors.


 


“Confidential Information”
has the meaning ascribed thereto in Section 7.07.


 


“Initial Public Offering”
has the meaning ascribed thereto in the recitals to this Agreement.


 


“Insurance Services” has
the meaning ascribed thereto in the recitals to this Agreement.


 


“McDonald’s” has the
meaning ascribed thereto in the preamble to this Agreement.


 


“McDonald’s Indemnified Person”
has the meaning ascribed thereto in Section 5.01.


 


“McDonald’s Plans” means
those certain employee benefit plans of McDonald’s that are being made
available to certain employees of Chipotle as part of the Benefits Services,
all as described in more detail on Schedule III.


 


“Ownership Reduction Date”
means the date on which McDonald’s ceases to own, directly or indirectly,
shares of Common Stock representing more than eighty percent (80%) of the
combined voting power of the outstanding Common Stock.


 


“Parties” means both
Chipotle and McDonald’s, and “Party”
means one of them as the context indicates.


 


“Payment Date” has the
meaning ascribed thereto in Section 3.02.


 


“Person” means any
individual, partnership, limited liability company, joint venture, corporation,
trust, unincorporated organization, government (and any department or
agency thereof) or other entity.


 


“Schedule I” means
the first schedule attached to this Agreement which lists the Accounting
Services to be provided by McDonald’s to Chipotle and sets forth the related
billing methodology and term.


 


“Schedule II” means
the second schedule attached to this Agreement which lists the Insurance
Services to be provided by McDonald’s to Chipotle and sets forth the related
billing methodology and term.


 


“Schedule III” means
the third schedule attached to this Agreement which lists the Benefits
Services to be provided by McDonald’s to Chipotle and sets forth the related
billing methodology and term.


 


2

















 


“Schedules” has the
meaning ascribed thereto in Section 3.01.


 


“Service Costs” has the
meaning ascribed thereto in Section 3.01.


 


“Services” has the meaning
ascribed thereto in the recitals to this Agreement.


 


“Subsidiary” means, with
respect to any Person, any corporation, association, partnership, joint venture
or other business entity of which more than 50% of the voting capital stock or
other voting ownership interests is owned or controlled directly or indirectly
by such Person or by one or more of the Subsidiaries of such Person or by a
combination thereof.


 


ARTICLE II


 


PURCHASE AND SALE OF SERVICES; NO WARRANTY


 


Section 2.01.  Purchase and Sale of Services.


 


(a)  Subject to the terms and conditions of this Agreement and in
consideration of the Service Costs described below, McDonald’s agrees to
provide to Chipotle, or procure the provision to Chipotle of, and Chipotle
agrees to purchase from McDonald’s, the Services. Unless otherwise specifically
agreed by McDonald’s and Chipotle, the Services to be provided or procured by
McDonald’s hereunder shall be substantially similar in scope, quality, and
nature to those provided to, or procured on behalf of, Chipotle prior to the
Closing Date.


 


(b)  The Parties understand that (i) the Services McDonald’s
shall provide to Chipotle under this Agreement will, at Chipotle’s request, be
provided to Subsidiaries of Chipotle and (ii) McDonald’s may satisfy its
obligation to provide or procure Services hereunder by causing one or more of
its Subsidiaries to provide or procure such Services. With respect to Services
provided to, or procured on behalf of, any Subsidiary of Chipotle, Chipotle
agrees to pay on behalf of such Subsidiary all amounts payable by or in respect
of such Services.


 


Section 2.02.  Additional Services. In addition to the
Services to be provided or procured by McDonald’s pursuant to Section 2.01,
to the extent that McDonald’s and Chipotle mutually agree in their
respective sole discretion, McDonald’s may provide additional services
(including services not provided by McDonald’s to Chipotle prior to the Closing
Date) to Chipotle. The scope of any such services, as well as the term, costs,
and other terms and conditions applicable to such services, shall be as
mutually agreed by McDonald’s and Chipotle in their respective sole discretion.


 


Section 2.03  NO WARRANTY. Chipotle
acknowledges that (a) McDonald’s does not regularly provide the Services,
or any related services, to third parties as part of its business and (b) that
McDonald’s does not warrant or assume responsibility for its provision of the
Services. THERE ARE NO WARRANTIES RELATING TO THE SERVICES OF ANY KIND, EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.


 


ARTICLE III


 


SERVICE COSTS; OTHER CHARGES


 


Section 3.01.  Service Costs Generally. Schedule I,
Schedule II, and Schedule III attached to this Agreement (as may
be amended from time to time by mutual agreement of the Parties in writing,
collectively, the “Schedules”)
indicate, with respect to each Service listed therein, the method of
calculating the amount Chipotle shall pay to McDonald’s for such Services
(collectively, the “Service Costs”).
Chipotle agrees to pay to McDonald’s the Service Costs applicable to each of
the Services in the manner set forth in Section 3.02.


 


3

















 


Section 3.02.  Invoicing and Settlement of Costs.


 


(a)  Unless alternative arrangements for a particular Service are
set forth on the applicable Schedule, McDonald’s will invoice or otherwise
notify Chipotle of the Service Costs on a monthly basis, either directly or
through McDonald’s intracompany billing system, in a manner substantially
consistent with the billing practices used in connection with services provided
to Chipotle prior to the Closing Date. In connection with the invoicing
described in this Section 3.02(a), McDonald’s will provide to
Chipotle the same billing data and level of detail as it customarily provided
to Chipotle prior to the Closing Date.


 


(b)  Chipotle agrees to pay, without setoff, all of the Service
Costs on or before ten (10) business days after the date on which McDonald’s
invoices or otherwise notifies Chipotle of the Service Costs (each invoice date
or notification date, a “Payment Date”).
At McDonald’s option, and upon reasonable notice to Chipotle, Chipotle shall
make such payments through McDonald’s intracompany billing system, cash
management systems, or by wire transfer of immediately available funds payable
to the order of McDonald’s. If Chipotle fails to pay any monthly payment within
ten (10) business days of the relevant Payment Date, Chipotle shall be
obligated to pay, in addition to the amount due on such Payment Date, interest
on such amount at the prime rate announced by JP Morgan Chase (as of the
applicable Payment Date) plus two percent (2%) per annum, compounded
monthly from the relevant Payment Date through the date of payment.


 


Notwithstanding the foregoing, if Chipotle has reasonable basis to
believe an invoice is incorrect, Chipotle shall notify McDonald’s of the basis
for its belief and the Parties shall reasonably cooperate to resolve such
matter. Provided Chipotle has timely paid all amounts not in dispute, in such
event, interest shall not accrue on any amount in dispute and no default shall
be alleged until the earlier of (x) thirty (30) days from the Payment
Date and (y) three (3) business days following resolution of such
matter.


 


ARTICLE IV


 


CHIPOTLE DELEGATION; TRADEMARKS AND SERVICE
MARKS


 


Section 4.01.  Delegation. Chipotle delegates to
McDonald’s final, binding, and exclusive authority, responsibility, and
discretion to interpret and construe the provisions of McDonald’s Plans.
McDonald’s may further delegate such authority to third-party plan administrators.


 


Section 4.02.  Trademarks and Service Marks. Chipotle
agrees to permit McDonald’s and its Subsidiaries to use the trademarks and
service marks owned by Chipotle or any of its Subsidiaries at no cost to
McDonald’s or its Subsidiaries for use in McDonald’s annual report to
shareholders, documentation relating to any of the Services, and for any other
similar purposes, so long as Chipotle reviews and consents to such particular
uses, said consent not to be unreasonably withheld, delayed or conditioned.


 


4

















 


ARTICLE V


 


LIMITATION OF LIABILITY; INDEMNIFICATION


 


Section 5.01.  Limitation of Liability.


 


(a)  Chipotle agrees that none of McDonald’s and its Subsidiaries
and their respective directors, officers, agents, and employees (each, a “McDonald’s Indemnified Person”) shall have
any liability, whether direct or indirect, in contract or tort or otherwise, to
Chipotle or any of its Subsidiaries for or in connection with the Services
rendered or to be rendered by any McDonald’s Indemnified Person pursuant to
this Agreement or any other services rendered by any McDonald’s Indemnified
Person, the transactions contemplated by this Agreement, or any McDonald’s
Indemnified Person’s actions or inactions in connection with any such Services,
any such other services, or any such transactions, except for damages which
have resulted from such McDonald’s Indemnified Person’s willful misconduct in
connection with any such Services, other services, transactions, actions or inactions.


 


(b)  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT OR
AT LAW OR IN EQUITY, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ITS
SUBSIDIARIES FOR PUNITIVE, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL
DAMAGES (INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROFITS,
LOSS OF DATA, LOSS OF USE, BUSINESS INTERRUPTION OR ANY OTHER LOSS) HOWEVER
CAUSED, UNDER ANY THEORY OF LIABILITY, ARISING FROM OR RELATING TO ANY CLAIM
MADE UNDER THIS AGREEMENT OR REGARDING THE PROVISION OF OR THE FAILURE TO
PROVIDE THE SERVICES OR ANY OTHER SERVICES. THE FOREGOING LIMITATION WILL NOT
LIMIT EITHER PARTY’S OBLIGATIONS WITH RESPECT TO PAYMENT OF DAMAGES OF ANY KIND
INCLUDED IN AN AWARD OR SETTLEMENT OF A THIRD PARTY CLAIM UNDER ANY INDEMNITY
PROVISIONS SPECIFIED HEREIN. McDONALD’S SHALL HAVE NO LIABILITY OF ANY KIND OR
NATURE WHATSOEVER FOR CEASING TO PROVIDE ANY OF THE SERVICES UPON TERMINATION
PURSUANT TO THIS AGREEMENT.


 


Section 5.02.  Indemnification of McDonald’s by Chipotle.
Chipotle agrees to indemnify and hold harmless each McDonald’s Indemnified
Person from and against any damages, and to reimburse each McDonald’s
Indemnified Person for all reasonable expenses as they are incurred in
investigating, preparing, pursuing, or defending any claim, action, proceeding,
or investigation, whether or not in connection with pending or threatened
litigation (each an “Action”) and
whether or not any McDonald’s Indemnified Person is a party, arising out of or
in connection with Services rendered or to be rendered by any McDonald’s
Indemnified Person pursuant to this Agreement or any other services rendered by
any McDonald’s Indemnified Person, the transactions contemplated by this
Agreement, or any McDonald’s Indemnified Person’s actions or inactions in
connection with any such Services, any such other services, or any such
transactions; provided that no Chipotle Indemnified Person will be responsible
for any damages of any McDonald’s Indemnified Person that have resulted from
such McDonald’s Indemnified Person’s willful misconduct in connection with any
such Services, other services, transactions, actions, or inactions.


 


Section 5.03.  Indemnification of Chipotle by McDonald’s.
McDonald’s agrees to indemnify and hold harmless Chipotle and its Subsidiaries
and their respective directors, officers, agents, and employees (each, a “Chipotle Indemnified Person”) from and
against any damages, and will reimburse each Chipotle Indemnified Person for
all reasonable expenses as they are incurred in investigating, preparing,
pursuing or defending any Action, arising out of the willful misconduct of any
McDonald’s Indemnified Person in connection with the Services rendered or to be
rendered pursuant to this Agreement.


 


5

















 


Section 5.04.  Further Indemnification. To the extent
that any other Person has agreed to indemnify any McDonald’s Indemnified Person
or to hold a McDonald’s Indemnified Person harmless and such Person provides
services to McDonald’s or any affiliate of McDonald’s relating directly or
indirectly to any McDonald’s Plan included in the Benefits Services, McDonald’s
will exercise reasonable efforts to make such agreement applicable to any
Chipotle Indemnified Person so that each Chipotle Indemnified Person is held
harmless or indemnified to the same extent as any McDonald’s Indemnified
Person.


 


ARTICLE VI


 


TERM AND TERMINATION


 


Section 6.01.  Term; Expiration. This Agreement shall
expire on the date of termination of the last to terminate of the Services, according
to their respective terms set forth on the Schedules.


 


Section 6.02.  Termination Prior to Expiration.


 


(a)  McDonald’s may terminate any affected Service at any time if (i) Chipotle
shall have failed to perform any of its material obligations under this
Agreement relating to any such Service, (ii) McDonald’s has notified
Chipotle in writing of such failure, and (iii) such failure shall have
continued for a period of thirty (30) days after Chipotle’s receipt of
notice of such failure.


 


(b)  Chipotle may terminate any affected Service at any time if (i) McDonald’s
shall have failed to perform any of its material obligations under this
Agreement relating to any such Service, (ii) Chipotle has notified
McDonald’s in writing of such failure, and (iii) such failure shall have
continued for a period of thirty (30) days after McDonald’s’ receipt of
notice of such failure.


 


(c)  McDonald’s may terminate any affected Service effective
immediately upon written notice to Chipotle if the performance of such Service
would require McDonald’s to violate any applicable laws, rules or
regulations or would result in the breach of any applicable contract.


 


Section 6.03.  Effect of Termination.


 


(a)  Other than as required by law, upon termination or expiration
of any Service pursuant to Section 6.01 or Section 6.02, McDonald’s
will have no further obligation to provide the terminated or expired Service
(or any Service, in the case of termination of this Agreement) and
Chipotle will have no obligation to pay any fees relating to such Services;
provided, however, that notwithstanding such termination or expiration, (i) Chipotle
shall remain liable to McDonald’s for fees owed and payable in respect of
Services provided prior to the effective date of the termination or expiration;
(ii) with respect to Benefits Services, McDonald’s shall continue to
charge Chipotle for administrative and program costs relating to McDonald’s
Plans if such costs are paid after but incurred prior to the termination or
expiration of any Benefits Service, and Chipotle shall be obligated to pay such
expenses in accordance with the terms of this Agreement; and (iii) the
provisions of Articles IV, V, VI and VII shall survive any such
termination or expiration.


 


(b)  Following termination or expiration of this Agreement with
respect to any Service, McDonald’s and Chipotle agree to cooperate, at Chipotle’s
expense, in providing for an orderly transition of such Service to Chipotle or
to a successor service provider.


 


6

















 


ARTICLE VII


 


MISCELLANEOUS


 


Section 7.01.  Prior Agreements. In the event
there is any conflict between the provisions of this Agreement and provisions
of prior written or oral agreements between McDonald’s or its Subsidiaries and
Chipotle or its Subsidiaries, the provisions of this Agreement shall govern and
such provisions in the prior agreements are deemed to be amended so as to
conform with this Agreement.


 


Section 7.02.  Future Litigation and Other Proceedings.
In the event that Chipotle (or any of its officers or directors) or
McDonald’s (or any of its officers or directors) at any time after the
date hereof initiates or becomes subject to any litigation or other proceedings
before any governmental authority or arbitration panel with respect to which
the Parties have no prior agreements (as to indemnification or otherwise),
the Party (and its officers and directors) that has not initiated and is
not subject to such litigation or other proceedings shall comply, at the other
Party’s expense, with any reasonable requests by the other Party for assistance
in connection with such litigation or other proceedings (including by way of
provision of information and making available of employees as witnesses). In
the event that Chipotle (or any of its officers or directors) and McDonald’s
(or any of its officers or directors) at any time after the date hereof
initiate or become subject to any litigation or other proceedings before any
governmental authority or arbitration panel with respect to which the Parties
have no prior agreements (as to indemnification or otherwise), each Party
(and its officers and directors) shall, at its own expense, coordinate its
strategies and actions with respect to such litigation or other proceedings to
the extent such coordination would not be detrimental to its interests and
shall comply, at the expense of the requesting Party, with any reasonable
requests of the other Party for assistance in connection therewith (including
by way of provision of information and making available of employees as
witnesses).


 


Section 7.03.  No Agency. Nothing in this Agreement
shall constitute or be deemed to constitute a partnership or joint venture
between the Parties or, except to the extent provided in Section 4.01,
constitute or be deemed to constitute any Party as the agent or employee of the
other Party for any purpose whatsoever and neither Party shall have authority
or power to bind the other or to contract in the name of, or create a liability
against, the other in any way or for any purpose.


 


Section 7.04.  Subcontractors. McDonald’s may hire or
engage one or more subcontractors to perform all or any of its obligations
under this Agreement, provided that, subject to Section 5.01, McDonald’s
will in all cases remain primarily responsible for all obligations undertaken
by it in this Agreement with respect to the scope, quality and nature of the
Services provided to Chipotle.


 


Section 7.05.  Force Majeure.


 


(a)  For purposes of this Section, “force majeure” means an event beyond the control of either
Party, which by its nature could not have been foreseen by such Party, or, if
it could have been foreseen, was unavoidable, and includes without limitation,
acts of God, storms, floods, riots, fires, terrorism, sabotage, civil commotion
or civil unrest, interference by civil or military authorities, acts of war
(declared or undeclared), telecommunications failure and failure of energy
sources.


 


(b)  Neither Party shall be under any liability for failure to
fulfill any obligation under this Agreement, so long as and to the extent to
which the fulfillment of such obligation is prevented, frustrated, hindered, or
delayed as a consequence of circumstances of force majeure, provided always
that such Party shall have exercised all due diligence to minimize to the
greatest extent possible the effect of force majeure on its obligations
hereunder.


 


7

















 


(c)  Promptly on becoming aware of force majeure causing a delay
in performance or preventing performance of any obligations imposed by this
Agreement (and termination of such delay), the Party affected shall give
written notice to the other Party giving details of the same, including
particulars of the actual and, if applicable, estimated continuing effects of
such force majeure on the obligations of the Party whose performance is
prevented or delayed. If such notice shall have been duly given, and actual
delay resulting from such force majeure shall be deemed not to be a breach of
this Agreement, and the period for performance of the obligation to which it
relates shall be extended accordingly, provided that if force majeure results
in the performance of a Party being delayed by more than sixty (60) days,
the other Party shall have the right to terminate this Agreement with respect
to any Service effected by such delay by written notice.


 


Section 7.06.  Entire Agreement. This Agreement
(including the Schedules) and any other writing signed by the Parties that
specifically references this Agreement constitute the entire agreement among
the Parties with respect to the subject matter hereof and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
Parties with respect to the subject matter hereof. This Agreement is not intended
to confer upon any Person other than the Parties to this Agreement any rights
or remedies hereunder.


 


Section 7.07.  Confidential Information. Chipotle and
McDonald’s covenant and agree to hold in trust and maintain confidential all
Confidential Information relating to the other Party. “Confidential Information” shall mean all
information disclosed by either Party to the other in connection with this
Agreement whether orally, visually, in writing or in any other tangible form,
and includes, but is not limited to, economic and business data, business
plans, and the like, but shall not include (a) information which becomes
generally available other than by release in violation of the provisions of
this Section 7.07, (b) information which becomes available on a
nonconfidential basis to a Party from a source other than the other Party
provided the Party in question reasonably believes that such source is not or
was not bound to hold such information confidential, (c) information
acquired or developed independently by a Party without violating this Section 7.07
or any other confidentiality agreement with the other Party and (d) information
that any Party reasonably believes it is required to disclose by law, provided
that it first notifies the other Party of such requirement and allows such
Party a reasonable opportunity to seek a protective order or other appropriate
remedy to prevent such disclosure. Without prejudice to the rights and remedies
of either Party, a Party disclosing any Confidential Information to the other
Party in accordance with the provisions of this Agreement shall be entitled to
equitable relief by way of an injunction if the other Party breaches or
threatens to breach any provision of this Section 7.07. Notwithstanding
anything to the contrary set forth in this Agreement, McDonald’s may disclose
any Confidential Information that McDonald’s reasonably believes is necessary
or appropriate to be disclosed in the course of performing the Services,
provided, however, McDonald’s shall instruct all such Persons to whom it
discloses any Confidential Information to hold in trust and maintain
confidential all such Confidential Information.


 


Section 7.08.  Notices. Any notice, instruction,
direction or demand under the terms of this Agreement will be duly given upon
delivery, if delivered by hand, facsimile transmission, or mail, to the
following addresses:


 


(a)          If to Chipotle, to:


 


Chipotle Mexican Grill, Inc.


1543 Wazee Street, Suite 200


Denver, CO 80202


Attn: General Counsel


Fax: 303-390-5638


 


8

















 


with a copy to:


 


Bryant S. Messner, Esq.


Messner & Reeves, LLC


1430 Wynkoop Street, Suite 400


Denver, CO 80202


 


(b)         If to McDonald’s, to:


 


McDonald’s Corporation


2915 Jorie Blvd.


Oak Brook, IL 60523


Attn: General Counsel


Fax: 630-623-3512


 


or to such other addresses or telecopy numbers as may be specified by
like notice to the other Party.


 


Section 7.9.  Governing Law. This Agreement shall be
construed in accordance with and governed by the substantive internal laws of
the State of Illinois.


 


Section 7.10.  Severability. If any provision of this
Agreement shall be invalid or unenforceable, such invalidity or
unenforceability shall not render the entire Agreement invalid. Rather, the
Agreement shall be construed as if not containing the particular invalid or
unenforceable provision, and the rights and obligations of each Party shall be
construed and enforced accordingly.


 


Section 7.11.  Amendment. This Agreement may only be
amended by a written agreement executed by both Parties.


 


Section 7.12.  Counterparts. This Agreement may be
executed in separate counterparts, each of which shall be deemed an original
and all of which, when taken together, shall constitute one agreement.


 


9

















 


IN WITNESS WHEREOF,
the Parties have caused this Agreement to be signed by their duly authorized
representatives.


 


 


	
   

  	
  CHIPOTLE MEXICAN GRILL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steve Ells

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Steve Ells

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  MCDONALD’S CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary Healy

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Mary Healy

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President Corporate Finance

  



 


10

















 


Services Agreement—Schedule I


Accounting Services


 


Services:


 


Chart A below
details the Accounting Services and related service levels (subject to Chipotle
system obligations, as discussed below). The Accounting Services are
anticipated to be provided by the McDonald’s personnel located at the McDonald’s
accounting center in Columbus, Ohio.


 


Chipotle shall remain responsible for all accounting policy decisions.
McDonald’s will be responsible for incorporating accounting policies into the
functions performed for Chipotle. McDonald’s will provide input on proposed
accounting policy changes. McDonald’s will escalate to appropriate Chipotle
management any exceptions to accounting policies.


 


Notwithstanding anything to the contrary in the Agreement or this Schedule I,
all losses, costs and expenses relating to any accounting or processing errors
in the delivery of the Accounting Services by McDonald’s shall be borne by
Chipotle.


 


Billing Methodology:


 


McDonald’s will charge Chipotle a “fully-loaded all-in” charge for
delivery of the Accounting Services. This “fully-loaded all-in” charge is
intended to reimburse McDonald’s for all costs incurred by McDonald’s in the
delivery of the Accounting Services, including, without limitation, related
McDonald’s employee costs (salary and benefits), office and occupancy costs,
travel costs, computer and related technology equipment costs, and non-cash
charges (such as depreciation). This “fully-loaded all-in” charge is not
intended to provide a profit to McDonald’s. In the event that McDonald’s ceases
to own, directly or indirectly, shares of Common Stock representing more than
fifty percent (50%) of the combined voting power of the outstanding Common
Stock (and Chipotle continues to receive the Accounting Services from
McDonald’s under the terms of this Agreement), the amount that would otherwise
be charged by McDonald’s to Chipotle for delivery of the Accounting Services
shall be increased by ten percent (10%), which amount is intended to provide a
profit margin to McDonald’s for the delivery of the Accounting Services.


 


For calendar year 2006, the charge for Accounting Services shall be
billed to Chipotle on a per store basis at a charge of $4920.00 per year
(or $410 per month) per store (the “Per
Store Fee”). For each calendar year after 2006, the Per Store Fee
shall be calculated by dividing the projected “fully-loaded all-in” costs of
delivering the Accounting Services for such calendar year (the “Projected Costs”) by the projected average
number of Chipotle stores for such calendar year (the “Projected Stores”), which amount can be
divided again by twelve (12) to obtain the per month per store amount. In
consultation with Chipotle, McDonald’s shall calculate the Projected Costs and
Projected Stores in good faith exercising McDonald’s’ reasonable judgment.
McDonald’s and Chipotle agree to cooperate in business and efficiency
initiatives to improve service and reduce costs.


 


Term; Termination of Accounting Services:


 


Unless terminated earlier pursuant to Section 6.02 of the
Agreement or as set forth below, the Accounting Services shall have an initial
term expiring on December 31, 2007, and will be renewed automatically
thereafter for successive two (2) year terms unless either Chipotle or
McDonald’s elects not to renew the Accounting Services upon not less than
fifteen (15) months’ written notice prior to any such renewal.


 


Notwithstanding anything to the contrary set forth herein, either Party
may terminate the Accounting Services at any time on fifteen (15) months’
prior written notice to the other Party.


 


11

















 


Other Terms and Conditions Relating to Accounting Services


 


	
  Accounting Data and Documents

  	
   

  	
  * All accounting transactional data is owned by Chipotle.

  * All paper accounting documents are owned by Chipotle. McDonald’s
  will produce any stored documents upon request within 30 days.

  * Chipotle agrees to respond to System issues that impact McDonald’s
  service levels with 24 hours.

  	
   

  	
  McDonald’s processes on the Chipotle ERP
  System (Oracle), connecting remotely. The System is
  administrated by Chipotle. Chipotle employs a 3rd party for
  hosting, and is responsible in entirety for managing the relationship. All
  accounting transactional data is maintained by Chipotle.

   

  Certain paper accounting documents are filed in Columbus or moved to
  off-site storage in Columbus (McDonald’s maintains storage log).

  
	
  Rights to any Shared Tools / Technology:
  *Electronic Invoicing *Workflow *Accounting Tools

  	
   

  	
  Electronic Invoicing / Workflow

  *Upon termination of delivery of the Accounting Services by McDonald’s,
  Chipotle will be permitted to copy Sterling configuration information if they
  choose to buy Sterling software.

   

   

   

   

   

   

   

   

   

  Accounting Tools

  * Upon termination of delivery of the Accounting Services by McDonald’s,
  Chipotle will be permitted to copy these specific tools.

  * Future accounting tool development by McDonald’s will be fee basis
  (fully loaded cost) and subject to the same agreements as the existing tools.

  	
   

  	
  Electronic Invoicing (EDI)—One
  translation software (Sterling GIS) and architecture (hardware and hosting)
  are used for McOpCo, Chipotle, and CanOpCo restaurant accounts payable
  invoices. All entities bear in the related total cost of ownership in
  relation to usage.

  Two times daily, transactional data is sent from the translator to
  Chipotle’s ERP System (Oracle A/P data tables), which is owned by and
  controlled by Chipotle. Additionally, a Tools Warehouse is owned by McDonald’s.
  Oracle tables are copied to this Warehouse so that business rules can be
  applied to the EDI data for screening prior to acceptance (i.e. valid
  stores, duplicates, delivery date valid).

  Workflow
  (in development)—Sterling GIS is tool used also for invoice workflow.
  Front end a/p entry will be via this tool. On a daily basis, transactional
  data is sent from the translator to Chipotle ERP Sytstem (Oracle A/P data
  tables), which is owned by and controlled by Chipotle. Additionally, a Tools
  Warehouse is owned by McDonald’s. Oracle tables are copied to this Warehouse
  so that business rules can be applied to the workflow data.

  Accounting Tools—The
  following accounting tools contained in Chart B have been developed by
  McDonald’s. These tools enable a large reduction in accounting labor
  associated with certain accounting processes. The tools are excel based and
  are housed in the Tools Warehouse. Oracle tables are copied to this Warehouse
  so that business rules can be applied to flag exceptions for research
  and resolution.

  
	
  System Response Obligations

  	
   

  	
  Chipotle agrees to respond to System issues that impact McDonald’s
  service levels as follows:

  * Production down problems—acknowledge receipt of issue within
  1 business hour (close), 4 business hours (other). Continuous work
  to resolve.

  * Non production down problems—acknowledge receipt of issue within
  1 business day. Weekly status update.

   

  McDonald’s agrees to the same criterion as above for Electronic
  Invoicing, Workflow, and Accounting Tools.

  	
   

  	
  McDonald’s processes on the Chipotle ERP
  System (Oracle), connecting remotely. The System is
  administrated by Chipotle.

  
	
  Support of Chipotle Business Initiatives

  	
   

  	
  * Projects will be prioritized jointly.

  * Projects will be absorbed to the extent of the 1 full time
  equivalent.

  * Additional work requested by Chipotle beyond this will be on a fee
  basis.

  	
   

  	
  Certain Chipotle business initiatives impact the McDonald’s or
  require the support of McDonald’s (i.e. implementation of new inventory
  system—led by Chipotle, workflow—led by McDonald’s). One full time equivalent
  is currently allocated for these changes.

  



 


12

















 


Chart A: Services Performed / Service Level


 


	
  Area 

  	
   

  	
  Detailed Services

  	
   

  	
  Service Level

  
	
  Accounts Payable Processing

  	
   

  	
  • 
  New vendor set up

  • 
  Vendor maintenance

  • 
  Store invoice payments

  • 
  Corporate invoices payments

  • 
  Expense report payments

  • 
  Car allowance payments

  • 
  1099’s from AP subsystem

  •  EDI
  processing

  • 
  Stop payment processing

  • 
  Voids

  • 
  Check printing/ordering check stock/envelopes

  • 
  Check mailing

  • 
  Purchase Card Administrator Role (ordering/canceling cards/issuing
  monthly statements to cardholders)

  • 
  Retrieving purchase card data and posting to GL

  • 
  Pcard recodes for received and approved charges

  • 
  Pcard receipt tracking

  • 
  Daily cash funding (check accounts and request necessary funding from
  Mcd)

  • 
  Reconciling AP system to GL system

  • 
  Lease card and fuel card invoice receipt, review and payments

  	
   

  	
  Invoices processed within an average of 2.5 days or less of
  receipt

  
	
  Fixed Asset Processing 

  	
   

  	
  • 
  Store invoice payments

  • 
  Corporate invoice payments

  • 
  Construction invoice payments

  • 
  Transfers and retirements

  • 
  Reconciling FA system to GL system

  • 
  Utilizing Oracle Projects for new store construction. Includes
  entering misc adds (i.e. cost not entered by PO but necessary for
  reporting) and reconciling Projects to FA

  • 
  Utilizing Oracle Projects for reinvestment invoices (includes communication
  back to facilities if expense is not capitalizeable)

  • 
  Reviewing invoices to ensure they meet the Chipotle capitalization
  requirements

  	
   

  	
  Invoices processed within an average of 2.5 days or less of
  receipt

  
	
  General Ledger 

  	
   

  	
  • 
  Trial balance review & analysis—store level

  • 
  Sales review

  • 
  Book recurring expenses

  • 
  Close and distribute store P&Ls

  • 
  Store, Master and Corporate account bank reconciliations

  • 
  Book and report manager bonus accounts (reporting completed quarterly)

  • 
  Process defined G&A recurring entries

  • 
  Establishing new accounts in Oracle

  • 
  E&Y audit—around McDonald’s areas

  • 
  Oracle GL hierarchy maintenance/creation.

  • 
  New store set up in Oracle

  • 
  Booking monthly insurance charges for all lease car drivers

  • 
  Payroll 3rd party reconciliation

  	
   

  	
  Close P&L by workday 5

   

  Bank Reconciliations completed monthly

  
	
  Accounts Receivable 

  	
   

  	
  • 
  House accounts—billings, collection and reconciliations

  • 
  Subtenant receivables—billings, collection and reconciliations

  • 
  Misc accounts receivable as it relates to stores—following up on a
  monthly basis and reporting to Wazee for write off guidance when needed

  	
   

  	
  Accounts receivable aging sent to Controller monthly

  
	
  Cash Receipts 

  	
   

  	
  • 
  Check receipts deposit and journal entry processing

  • 
  Daily deposit verification (cash and cashless)

  	
   

  	
  99% of Deposits (both cash and credit cards excluding AMEX and
  armored car) verified within 4 business days (excludes bank holidays).

   

  99% of Deposits for AMEX and armored car verified within
  6 business days (excludes bank holidays).

  



 


13

















 


	
  Lease 

  	
   

  	
  •  Lease payments

  •  Sales reporting to landlords

  •  Percentage rent tracking/accruals/payments

  •  Desk audit triple net reconciliation review

  	
   

  	
  All lease defaults cured within cure date

   

  99% of monthly recurring payments received by landlords by lease due
  date

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sales, Use, Personal Property and Rent Taxes 

  	
   

  	
  • 
  Processing personal property tax payments

  • 
  Filing sales and use tax returns

  • 
  Researching tax rates for new stores on Checkpoint and communicating
  information to Chipotle IT

  • 
  Processing sales and use tax payments

  • 
  Self assess use tax based upon Chipotle tax strategy (needs
  formalized)

  • 
  Sending data requests to Marvin & Poer for personal property
  tax reporting

  • 
  Receiving and reviewing personal property tax payments from Marvin
  Poer prior to payment

  • 
  Sales and use tax audit administration

  • 
  Sending tax rate change requests for existing stores to IT as
  identified by states/localities

  • 
  New York commercial rent tax preparation and payment (quarterly)

  	
   

  	
  Payments made to Taxing Authorities per due date

  Tax returns are filed with Taxing Authority per due date

  
	
  Treasury 

  	
   

  	
  • 
  Setting up new bank accounts based upon guidance from Chipotle
  (i.e. established relationships). For so long as McDonald’s owns in
  excess of 50% of the combined voting power of the outstanding Common Stock of
  Chipotle, such bank accounts shall be established utilizing forms and
  procedures approved by McDonald’s, in each case with approval from the Treasury
  Department of McDonald’s.

  	
   

  	
  Bank Accounts requested within 60 days of store turnover to
  Operations

  
	
  New Stores 

  	
   

  	
  • 
  Setting up new store numbers and cross validation rules in Oracle

  • 
  Setting up bank accounts, Merchant IDS and ordering banking supplies

  • 
  Communicating sales tax rates to IT per review and research on
  Checkpoint

  	
   

  	
   

  
	
  Petty Cash 

  	
   

  	
  • 
  Process petty cash expense reports via accounts payable system.

  •  Regional petty cash accounting (funding)

  	
   

  	
  Invoices processed within an average of 2.5 days or less of
  receipt

  
	
  System Access 

  	
   

  	
  • 
  Determine needs and submit a request to IT, Application Development
  Manager (Chipotle)

  	
   

  	
   

  
	
  Financial Reporting 

  	
   

  	
  • 
  Distribution of monthly recap via Email on WD4 and WD5 (store
  level and company/regional level)

  • 
  Distribution of store P&Ls via Email on WD4 and WD5

  	
   

  	
  Prelim P&Ls distributed on WD4 and Final P&Ls
  distributed on WD5

  
	
  Licenses 

  	
   

  	
  •  Existing store license renewals except for
  liquor

  	
   

  	
  95% of license renewals processed by due date

  
	
  Cash Management 

  	
   

  	
  •  Daily cash funding

  	
   

  	
  Review cash funding each business day by 10:00 EST

  
	
  Gift cards 

  	
   

  	
  • 
  Reconcile from the POS to 3rd party administrator—Valuelink on a daily
  basis.

  • 
  Escalate any issues to IT for resolution.

  • 
  Book monthly gift card entries for franchise sites.

  • 
  Prepare monthly reconciliation from GL to Valuelink balance.

  • 
  Bulk gift card entries

  	
   

  	
  Reconcile GL gift card balance to Valuelink monthly

  



 


14

















 


Chart B: Accounting Tools


 


	
  Application

  	
   

  	
  Purpose

  
	
  CHI_JESplits

  	
   

  	
  Used to prepare the journal entry split

  
	
  CHI_PNLDist

  	
   

  	
  Used to distribute the store P&L

  
	
  CHI_Recap

  	
   

  	
  Used to see Financial Performance at the various levels

  
	
  CHI_RegSumPNL

  	
   

  	
  Used to see Financial Performance at the regional level

  
	
  CHI_RevLIC

  	
   

  	
  Used to ensure licenses are maintained and current—will need to be
  upgraded after move in November

  
	
  CHI_RevDCR

  	
   

  	
  Used to verify Deposits, Gift Card transactions, etc

  
	
  CHI_RevPNL

  	
   

  	
  Used to review the P&L for accuracy

  
	
  CHI_Transfers

  	
   

  	
  Used to prepare the journal entry for the transfer tickets

  



 


15

















 


Services Agreement—Schedule II


 


Insurance Services


 


Services:


 


McDonald’s will negotiate and develop property and casualty insurance
programs, terms, coverages, and premiums for Chipotle, including the following
categories of insurance:


 


Fiduciary Liability


Crime


Internet Liability


All Risk Property, including Earthquake and Flood


Umbrella Liability & Excess Liability


General Liability


Workers Compensation


Auto Liability and Physical Damage


 


In addition, McDonald’s will:


 


(a)                                  interface with the
Network, Gallagher Bassett and other insurance service providers on behalf of
Chipotle as reasonably requested by Chipotle;


 


(b)                                 enter Chipotle store
and office locations into the SOCS system; and


 


(c)                                  provide advice on
insurance, risk management and claims matters as reasonably requested by
Chipotle.


 


Billing Methodology:


 


The amounts to be paid by Chipotle to McDonald’s for the Insurance
Services are intended to represent the pass-through to Chipotle of costs
incurred by McDonald’s on Chipotle’s behalf.


 


With regard to (i) Fiduciary Liability, (ii) Crime, (iii) Internet
Liability, (iv) All Risk Property, including Earthquake and Flood, and (v) Umbrella
Liability & Excess Coverage insurances, these coverages consist of
policies of insurance naming McDonald’s and its subsidiaries as insureds
(the “McDonald’s Policies”).
Based on McDonald’s’ current level of ownership of Chipotle, Chipotle
participates as an insured subsidiary under the McDonald’s Policies. A portion
of the premiums paid by McDonald’s for the McDonald’s Policies will be
allocated to Chipotle (the “Chipotle
Allocation”). For the policy period from November 1, 2005
through October 31, 2006, the Chipotle Allocation shall be $645,000.00,
which amount shall be paid in full immediately upon execution of this
Agreement. For each policy period thereafter, McDonald’s shall calculate the
Chipotle Allocation in good faith exercising McDonald’s’ reasonable judgment
and, when feasible, considering advice from insurance companies and other
relevant, disinterested third parties.


 


With regard to (x) General Liability, (y) Workers
Compensation, and (z) Auto Liability and Physical Damage insurances, these
coverages are included in stand-alone programs arranged specifically for
Chipotle and billed directly to Chipotle. As such, McDonald’s will collect no
fees or costs from Chipotle in connection with these programs.


 


16

















 


Term; Termination of Insurance Services:


 


The policies of insurance contemplated by the Insurance Services expire
on October 31st of each calendar year, and, as such, unless
terminated earlier pursuant to Section 6.02 of the Agreement or as set
forth below, the Insurance Services shall have an initial term expiring on October 31,
2006, and will be renewed automatically thereafter for successive one (1) year
terms unless either Chipotle or McDonald’s elects not to renew the Insurance
Services upon not less than six (6) months’ written notice prior to any
such renewal.


 


The Insurance Services are subject to early termination by either
Chipotle or McDonald’s at any time on or after an Ownership Reduction Date,
provided the terminating party has provided not less than sixty (60) days’
written notice of such termination. The required sixty (60) days’ written
notice may be provided before or after the Ownership Reduction Date, so long as
(i) the termination date is no earlier than the Ownership Reduction Date
and (ii) the period between the date of notice and the termination date is
at least sixty (60) days.


 


17

















 


Services Agreement—Schedule III


 


Benefits Services


 


Services:


 


On and after the Closing Date, Chipotle employees shall continue to be
eligible to participate in McDonald’s Plans, subject to the terms of the
governing plan documents, as interpreted by the appropriate plan fiduciaries.
On and after the Closing Date, subject to regulatory requirements, McDonald’s
will continue to provide Benefits Services to and in respect of Chipotle
employees with reference to McDonald’s Plans as it administered the plans prior
to the Closing Date. The McDonald’s Plans for purposes of this Agreement are as
follows:


 


The McDonald’s Corporation Health Plan for Chipotle Employees


McDonald’s Ventures 401(k) Plan


The McDonald’s Excess Benefit and Deferred Bonus Plan.


 


Billing Methodology:


 


Chipotle shall reimburse McDonald’s for McDonald’s costs (including any
contributions and premium costs and including certain third-party expenses and
allocations of certain McDonald’s personnel expenses), generally in accordance
with past practice, relating to participation by Chipotle employees in the
McDonald’s Plans.


 


The reimbursement for The McDonald’s Corporation Health Plan for
Chipotle Employees shall be a monthly premium determined actuarially on an
annual basis to reflect (a) the prior year’s claims experience, (b) risk
assumption, (c) plan design, (d) demographic and geographic
adjustments, and (e) vendor, legal, benefits accounting, administrative
and consulting fees for services on behalf of Chipotle employees for the
upcoming year.


 


It is the express intent of the Parties that Service Costs relating to
the administration of the McDonald’s Plans and the performance of related
Services will not exceed reasonable compensation for such Services as defined
in 29 CFR

Section 2550.408c-2.


 


In addition, costs associated with certain McDonald’s Plans will be
paid in part through employee payroll deductions for such McDonald’s Plans.


 


Term; Termination of Benefits Services:


 


Unless terminated earlier pursuant to Section 6.02 of the
Agreement or as set forth below, the Benefits Services shall have an initial
term expiring on December 31, 2006, and will be renewed automatically thereafter
for successive one (1) year terms unless either Chipotle or McDonald’s
elects not to renew the Benefits Services upon not less than six (6) months’
written notice prior to any such renewal.


 


The Benefits Services are subject to early termination by either
Chipotle or McDonald’s at any time on or after an Ownership Reduction Date,
provided the terminating party has provided not less than sixty (60) days’
written notice of such termination. The required sixty (60) days’ written
notice may be provided before or after the Ownership Reduction Date, so long as
(i) the termination date is no earlier than the Ownership Reduction Date
and (ii) the period between the date of notice and the termination date is
at least sixty (60) days.


 


18

















 


Other Terms and Conditions Relating to Benefits Services


 


McDonald’s and Chipotle agree to cooperate fully with each other in the
administration and coordination of regulatory and administrative requirements
associated with McDonald’s Plans, including, but not limited to, ERISA, COBRA
and HIPAA. Such coordination, upon request, will include (but is not
limited to) the (a) sharing payroll data for determination of highly
compensated employees, (b) sharing claims data for purposes of plan
design, claims appeal determinations and premium calculations, (c) providing
census information (including accrued benefits) for purposes of running
discrimination tests, (d) providing actuarial reports for purposes of
determining the funded status of any plan, (e) reviewing and coordinating
of insurance and other independent third party contracts, and (f) providing
for review of all summary plan descriptions and other plan communications,
requests for determination letters, insurance contracts, Forms 5500,
financial statement disclosures and plan documents.


 


McDonald’s shall provide to Chipotle data or reports requested by
Chipotle relating to (a) benefits paid to or on behalf of Chipotle
employees under McDonald’s Plans, including but not limited to financial
statements, claims history, and census information, and (b) other
information relating to the Services that is required to satisfy any reporting
or disclosure requirement of ERISA or the Code. McDonald’s will provide such
information within a reasonable period of time after it is requested. The costs
for reports shall be billed as incremental costs.


 


19

















 


ADDENDUM TO SERVICES AGREEMENT
 
THIS ADDENDUM TO SERVICES AGREEMENT (this “Addendum”) is entered into as of June 30, 2006 by and between Chipotle Mexican Grill, Inc., a Delaware corporation (“Chipotle”), and McDonald’s Corporation, a Delaware corporation (“McDonald’s”).
 
RECITALS
 
WHEREAS, McDonald’s and Chipotle are parties to that certain Services Agreement, dated as of January 31, 2006 (the “Services Agreement”), pursuant to which McDonald’s provides to Chipotle certain Services (as defined therein);
 
WHEREAS, Section 2.02 of the Services Agreement contemplates that McDonald’s may agree to provide additional services to Chipotle on terms established by McDonald’s and Chipotle; and
 
WHEREAS, McDonald’s and Chipotle have agreed that McDonald’s shall provide Chipotle certain internal audit services for a limited period of time, as described in greater detail on Exhibit A hereto (the “Internal Audit Services”).
 
AGREEMENTS
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are acknowledged by this Addendum, McDonald’s and Chipotle, for themselves, their successors and assigns, agree as follows:
 
ARTICLE I
 
PURCHASE AND SALE OF SERVICES
 
Section 1.01.                             Purchase and Sale of Services.
 
(a)  Subject to the terms and conditions of the Services Agreement and in consideration of the service costs described in subsection (d) below, McDonald’s and Chipotle agree that the Internal Audit Services shall constitute an additional service under Section 2.02 of the Services Agreement for all purposes of the Services Agreement (including, without limitation, those relating to warranty, invoicing, limitations of liability, and indemnity), except to the extent expressly modified hereby. Any services procured by McDonald’s may be provided by any third party selected by McDonald’s in its sole discretion.
 
(b)  Without limiting the generality of Section 2.03 of the Services Agreement, McDonald’s makes no representation or warranty regarding the sufficiency for your purposes of the procedures to be performed as part of the Internal Audit Services and disclaims any obligations with respect to any remediation of any control deficiencies identified as a result of the provision of the Internal Audit Services or any required disclosure thereof to any body or authority under any applicable law.
 
(c)  Chipotle agrees to provide such information as may be reasonably required by McDonald’s in its provision of the Internal Audit Services and represents that such information will be accurate and complete in all material respects.


 

















 


(d)  For delivery of the Internal Audit Services, Chipotle shall pay service costs for the Internal Audit Services at the following hourly rates (together with all travel and other expenses incurred in delivery of the Internal Audit Services):
 


	McDonald’s Manager Level Staff - Audit
	 
	$
	82.00/hour
	 

	McDonald’s Supervisor Level Staff (Senior) - Audit
	 
	$
	57.00/hour
	 

	Outsourced Senior Level Staff - Audit
	 
	$
	140.00/hour
	 

	Outsourced Associate Level Staff – Audit
	 
	$
	100.00/hour
	 

	Outsourced Senior Level Staff – IT
	 
	$
	85.00/hour
	 




 
McDonald’s will invoice Chipotle as soon as reasonably possible after the Completion Date. Payments shall be made in accordance with Section 3.02(b) of the Service Agreement.
 
ARTICLE II
 
TERM AND TERMINATION
 
Section 2.01.                             Term; Expiration. This Addendum shall expire on the “Completion Date,” which shall be the earlier to occur of (a) completion of the Internal Audit Services or (b) the occurrence of an Ownership Reduction Date (as defined in the Services Agreement).
 
Section2.02.                                Termination Prior to Expiration.
 
(a)  McDonald’s may terminate this Addendum at any time if (i) Chipotle shall have failed to perform any of its material obligations under this Addendum, (ii) McDonald’s has notified Chipotle in writing of such failure, and (iii) such failure shall have continued for a period of thirty (30) days after Chipotle’s receipt of notice of such failure.
 
(b)  Chipotle may terminate this Addendum at any time if (i) McDonald’s shall have failed to perform any of its material obligations under this Addendum, (ii) Chipotle has notified McDonald’s in writing of such failure, and (iii) such failure shall have continued for a period of thirty (30) days after McDonald’s’ receipt of notice of such failure.
 
(c)  Either party may terminate this Addendum effective immediately upon written notice to the other party if the performance of the Internal Audit Services would require the party providing such notice to violate any applicable laws, rules or regulations or would result in the breach of any applicable contract.
 
ARTICLE III
 
MISCELLANEOUS PROVISIONS
 
Section 3.01. Governing Law. This Addendum shall be construed in accordance with and governed by the substantive internal laws of the State of Illinois.
 
Section 3.02. Counterparts. This Addendum may be executed in separate counterparts, each of which shall be deemed an original and all of which, when taken together, shall constitute one agreement.


 

















 


IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be signed by their duly authorized representatives.


 


	
   

  	
  CHIPOTLE MEXICAN GRILL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Monty Moran

  
	
   

  	
  Name:

  	
    Monty Moran

  
	
   

  	
  Title:

  	
    President & COO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  McDONALD’S CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Robert L. Switzer

  
	
   

  	
  Name:

  	
    Robert L. Switzer

  
	
   

  	
  Title:

  	
    Corporate Vice President,
  Associate General

  
	
   

  	
   

  	
    Counsel and Assistant
  Secretary

  



 

















 


EXHIBIT A
 
INTERNAL AUDIT SERVICES
 


The McDonald’s Global Internal Audit team will be conducting internal
control testing at Chipotle Headquarters in Denver, Colorado commencing on July 10,
2006.


 


The scope of this review consists of an evaluation of controls relating
to the following business processes over financial reporting for the six-month
period ending June 30, 2006:


 


1.               Invoice Processing


2.               Fixed Assets


3.               Sales & Cash


4.               Accounting for Lease Expense


5.               Consumption Tax


6.               Inventory


7.               Accounts Payable


8.               Site Development


9.               Accrued Liabilities


10.         Market Financial Statement Close


11.         Contingent Liabilities


12.         Income Taxes


13.         Payroll


14.         Leasehold Improvements


15.         Asset Impairment


16.         Stock Options


17.         Reporting Close


18.         Investments


 


Internal Audit Services shall include:


 


•                  Testing
of such controls to determine operating effectiveness of controls at an
individual control activity level using such procedures as are consistent with
customary practices of McDonald’s Global Internal Audit team, as determined by
such team in its sole discretion.


•                  Documenting
all testing conclusions with supporting documentation in all pre-assigned
areas, such documentation to be, in form and scope, consistent with customary
practices of McDonald’s Global Internal Audit team, as determined by such team
in its sole discretion.


 


Internal Audit Services exclude:


 


•                  Documentation
of controls;


•                  Remediation
of any control deficiency identified as a result of the evaluation; and


•                  Retention
by McDonald’s for the benefit of Chipotle of any documentation with respect to
any of the foregoing testing procedures or testing conclusions.


 

















 


June 30, 2006


 


 


Via Facsimile Transmission (303-390-5638) & Overnight Courier


 


Chipotle Mexican Grill, Inc.


Attention:  General Counsel


1543 Wazee Street, Suite 200


Denver, CO 80202


 


Re:                             Services
Agreement, dated January 31, 2006 (the “Services Agreement”), by and
between McDonald’s Corporation (“McDonald’s”) and Chipotle Mexican Grill, Inc.
(“Chipotle”)


 


Ladies and Gentlemen:


 


As set forth below in more detail, this letter shall serve as notice of
termination pursuant to the Services Agreement of certain of the Services
provided pursuant thereto, and all capitalized terms not otherwise defined
herein shall have the meanings set forth in the Services Agreement.


 


1.                   In anticipation of an Ownership
Reduction Date, McDonald’s hereby provides the requisite sixty (60) days’
notice to terminate the Insurance Services, as described on Schedule II to
the Services Agreement. McDonald’s will cease providing the Insurance Services
on the Ownership Reduction Date, which shall be no earlier than sixty (60) days’
from the date hereof.


2.                   In anticipation of an Ownership
Reduction Date, McDonald’s hereby provides the requisite sixty (60) days’
notice to terminate the Benefit Services, as described on Schedule III to
the Services Agreement. McDonald’s will cease providing the Benefit Services on
the Ownership Reduction Date, which shall be no earlier than sixty (60) days’
from the date hereof.


 


As contemplated by the Services Agreement, McDonald’s is prepared to
cooperate in providing for an orderly transition of the Insurance Services and
Benefit Services to Chipotle or to a successor service provider.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert L. Switzer

  	
   

  
	
   

  	
  Robert L. Switzer,

  
	
   

  	
  Corporate Vice President, Associate General Counsel

  and Assistant Secretary

  



 


 


	
  cc:

  	
  Via Facsimile Transmission (303-623-0552) & Overnight
  Courier

  
	
   

  	
   

  
	
   

  	
  Bryant S. Messner, Esq.

  
	
   

  	
  Messner & Reeves, LLC

  
	
   

  	
  1430 Wynkoop Street, Suite 400

  
	
   

  	
  Denver, CO 80202