THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Chipotle Mexican Grill, Inc. (CMG)

4/27/2006 Proxy Information

Relationship with McDonald's

McDonald's Ventures, LLC, a wholly owned subsidiary of McDonald's, holds about 87% of the combined voting power of our outstanding stock and 65% of the economic interest in our outstanding common stock.

In connection with our IPO, we entered into agreements with McDonald's to clarify our relationship with McDonald's. As our controlling shareholder after the IPO, McDonald's continues to exercise significant influence over our business policies and affairs, including the composition of our Board of Directors and any action requiring the approval of our shareholders. Currently, our Lead Director, Mats Lederhausen, is also an employee of McDonald's.

We paid McDonald's $9.6 million in 2005 as reimbursement for payroll and related expenses relating to certain McDonald's employees that performed services for us, insurance coverage, software maintenance agreements and non-income based taxes. The company also leases office and restaurant space from McDonald's and its affiliates for which rent expense was $404,000, for the year ended December 31, 2005.

Services Agreement

We entered into a services agreement with McDonald's effective on the closing of the IPO, pursuant to which McDonald's will continue to provide us with certain services it has historically provided, including, among others, accounting services, insurance policy coverage and certain welfare plans for our employees. The agreed term of services is one or two years depending on the type of service. We estimate that the mutually agreed aggregate fees we'll pay for the first year of services will be about $10 million to $11 million. We believe that the payments we've made and will continue to make to McDonald's are at least as favorable to us as an unrelated party would charge.

The agreement to provide services will renew automatically unless we or McDonald's terminates it prior to renewal. In addition, we may in the future repurchase Chipotle franchises from our franchisees in connection with their obligation to dispose of either that franchise or their McDonald's franchise within 24 months after relevant triggering events. We are not obligated to repurchase any of these franchises.

If McDonald's ceases to own more than 80% of the combined voting power of our stock, certain categories of services will no longer be provided by McDonald's and we or McDonald's may terminate the services agreement or any of the services on providing advance notice, which ranges from two to 15 months, depending on the service. We or McDonald's may terminate the accounting services that McDonald's provides to us at any time, upon providing 15 months' notice, regardless of the level of McDonald's ownership.

Tax Allocation

McDonald's has filed federal income tax returns with us on a consolidated basis since June 2000. In connection with this consolidation, the allocation of federal and state tax liabilities to us was based on the liability that would have been calculated had we operated on a stand-alone basis. At the IPO, we became a separate taxable entity for federal and some state tax returns. We have a tax sharing agreement with McDonald's that remains in effect for those states in which we and McDonald's will continue to file tax returns on a combined basis. As of December 31, 2005, we had a receivable from McDonald's of $28.2 million for the net operating losses utilized by McDonald's in accordance with the tax allocation arrangements. McDonald's has agreed that any amounts owed to us under the tax sharing agreement will be paid to us no later than the first quarter of 2008.

Corporate Opportunity

Our Restated Certificate of Incorporation contains provisions related to corporate opportunities that may be of interest to both McDonald's and us. It provides that if a corporate opportunity is offered to:

one of our officers or employees who is also a director (but not an officer or employee) of McDonald's, that opportunity will belong to us unless expressly offered to that person primarily in his or her capacity as a director of McDonald's, in which case it will belong to McDonald's;

one of our directors who is also an officer or employee of McDonald's, that opportunity will belong to McDonald's unless expressly offered to that person primarily in his or her capacity as our director, in which case it will belong to us; and

any person who is either (i) an officer or employee of both us and McDonald's or (ii) a director of both us and McDonald's (but not an officer or employee of either one), that opportunity will belong to McDonald's unless expressly offered to that person primarily in his or her capacity as our director, in which case such opportunity shall belong to us.

In addition, no such director, officer or employee will be liable to us or our shareholders for breach of any duty by reason of the fact that in compliance with those guidelines, (i) the director, officer or employee offered such corporate opportunity to McDonald's (rather than us) or did not communicate information about such corporate opportunity to us; or (ii) McDonald's pursues or acquires such corporate opportunity for itself or directs such corporate opportunity to another person or does not communicate information about such corporate opportunity to us. Neither McDonald's nor any officer or director of McDonald's will be liable to us or our shareholders for breach of any duty by reason of the fact that McDonald's or an officer or director of McDonald's takes or fails to take any action or exercises or fails to exercise any rights or gives or withholds any consent in connection with any agreement or contract between McDonald's and us.

In addition, no contract, agreement, arrangement or other transaction between us and McDonald's will be void or voidable solely because McDonald's is a party thereto, and so long as the material facts as to such transaction are disclosed or known to the Board of Directors or the committee thereof that authorizes that transaction, and the board or such committee (which may, for quorum purposes, include directors who are directors or officers of McDonald's) in good faith authorizes the transaction by an affirmative vote of a majority of the disinterested directors, then McDonald's will have fulfilled its fiduciary duties to us and our shareholders, will not be liable to us or our shareholders for any breach of fiduciary duty by entering into or executing such transaction, will be deemed to have acted in good faith and in a manner it reasonably believes to be in and not opposed to our best interests and will be deemed not to have breached its duties of loyalty to us and our shareholders or to have received an improper personal gain from this transaction.

Relationship with Messner & Reeves, LLC

Monty Moran, our President and Chief Operating Officer, served as general counsel of Chipotle while he was the chief executive officer and member of the Denver law firm Messner & Reeves, LLC ("M&R"). M&R billed Chipotle a total of about $2.9 million for legal services provided in 2005. Mr. Moran ceased to be a member of M&R in March 2005. During the period from January 1, 2005 to the date of Mr. Moran's departure from M&R, we paid M&R about $0.8 million for legal services. We continue to employ M&R as legal counsel.

Registration Rights

Prior to the consummation of the IPO, McDonald's and certain of our current shareholders, including Steve Ells, our Chairman and Chief Executive Officer, Monty Moran, our President and Chief Operating Officer, and Albert S. Baldocchi and Darlene J. Friedman, members of our Board of Directors (the "Initial Shareholders"), entered into a Registration Rights Agreement with us relating to the shares of common stock they hold (including shares issuable upon the exercise of outstanding options). McDonald's has the right to require us to register its shares of common stock for public resale under the Securities Act in accordance with the terms and conditions of the Registration Rights Agreement. McDonald's will have the right to demand several such registrations. The Initial Shareholders other than McDonald's are entitled to piggyback registration rights with respect to any registration request made by McDonald's, subject to customary restrictions and pro rata reductions in the number of shares to be sold in an offering. In addition, the Initial Shareholders have been granted piggyback rights on any registration for our account or the account of another shareholder. We would be responsible for the expenses of any such registration.