8-KMaterial Agreements

CHIPOTLE MEXICAN GRILL INC 8-K Report, Agreement Terminated (Jul 6, 2006)

Filed July 6, 2006For Securities:CMG

Summary

This 8-K filing from Chipotle Mexican Grill, Inc. (CMG) on July 6, 2006, primarily details the termination of certain services provided by McDonald's Corporation. Specifically, McDonald's has provided notice of termination for benefits and insurance services, effective when McDonald's stake falls below 80% of Chipotle's voting power. Mutual agreement also led to the termination of certain accounting services as of July 1, 2006. While McDonald's is divesting its interest in Chipotle, expected by year-end 2006, the company anticipates no material impact from these service terminations. Additionally, McDonald's will continue to provide limited internal audit services through August 2006 and IT systems and facilities services under a Transition Services Agreement until October 30, 2006, or the second anniversary of the disposition date, whichever is sooner. Investors should note that McDonald's, Chipotle's largest shareholder, holds approximately 51% of common stock and 82% of voting power, with a McDonald's representative on Chipotle's board. Further information regarding McDonald's disposition of its stake will be made available through SEC filings.

Key Highlights

  • 1McDonald's Corporation has provided notice to terminate benefits and insurance services provided to Chipotle, effective upon McDonald's share disposition.
  • 2Certain accounting services provided by McDonald's have been terminated by mutual agreement as of July 1, 2006.
  • 3Chipotle does not anticipate a material impact from the termination of these services.
  • 4McDonald's will continue to provide limited internal audit services through August 2006.
  • 5McDonald's will also provide IT systems and facilities services under a Transition Services Agreement until October 30, 2006.
  • 6McDonald's, the largest shareholder, is expected to complete its disposition of interest in Chipotle by the end of 2006.
  • 7Investors are advised to review future SEC filings for details on McDonald's disposition of its Chipotle stake.

Frequently Asked Questions

The main event is Chipotle Mexican Grill, Inc. receiving notice from McDonald's Corporation of the termination of benefits and insurance services. Additionally, certain accounting services have been terminated by mutual agreement.

The benefits and insurance services will terminate when McDonald's ceases to own shares representing more than 80% of Chipotle's voting power. Certain accounting services terminated on July 1, 2006. Limited internal audit services will conclude in August 2006, and IT/facilities services under a Transition Services Agreement will end by October 30, 2006.

Chipotle Mexican Grill, Inc. does not expect the termination of services provided by McDonald's under the Services Agreement to have a material impact on the company.

McDonald's is Chipotle's largest shareholder and is in the process of divesting its interest, expecting to complete this disposition no later than the end of 2006. Currently, McDonald's holds approximately 51% of Chipotle's common stock and 82% of its voting power.