EXHIBIT 10(b)
McDONALD'S CORPORATION
PROFIT SHARING PROGRAM
As amended and restated
effective
January 1, 1996
McDONALD'S CORPORATION PROFIT SHARING PROGRAM
Summary of Contents
Page
ARTICLE I - DEFINITIONS
1.1 "Account"......................................... 3
1.2 "Active Participant".............................. 6
1.3 "Affiliated Service Group"........................ 7
1.4 "Authorized Leave of Absence"..................... 9
1.5 "Auxiliary ESOP".................................. 9
1.6 "Beneficiary"..................................... 9
1.7 "Board of Directors".............................. 9
1.8 "Break in Service"................................ 9
1.9 "Committee"....................................... 9
1.10 "Commonly Controlled Corporation"................. 9
1.11 "Commonly Controlled Entity"...................... 9
1.12 "Company"......................................... 9
1.13 "Company Stock"................................... 10
1.14 "Considered Compensation"......................... 10
1.15 "Credited Service"................................ 12
1.16 "Disability"...................................... 13
1.17 "Disqualified Person"............................. 13
1.18 "Domestic Affiliate".............................. 13
1.19 "Effective Date".................................. 13
1.20 "Eligibility Computation Period".................. 13
1.21 "Eligibility Service"............................. 14
1.22 "Employee"........................................ 13
1.23 "Employer"........................................ 14
1.24 "Employer Contributions".......................... 14
1.25 "Entry Date"...................................... 15
1.26 "ERISA"........................................... 15
1.27 "Five Percent Owner".............................. 15
1.28 "Foreign Affiliate"............................... 15
1.29 "Forfeiture"...................................... 15
1.30 "Highly Compensated Employee"..................... 15
1.31 "Hour of Service"................................. 17
1.32 "Internal Revenue Code"........................... 21
1.33 "Investment Fund"................................. 21
1.34 "Leased Employee"................................. 21
1.35 "Leveraged ESOP".................................. 21
1.36 "Leveraged ESOP Suspense Account.................. 21
1.37 "Licensee"........................................ 22
1.38 "McDESOP"......................................... 22
1.39 "Non-highly Compensated Employee"................. 22
1.40 "Parental Leave".................................. 22
1.41 "Participant"..................................... 22
1.42 "Participant Contributions"....................... 23
1.43 "Participant Elected Contributions"............... 23
1.44 "Party in Interest"............................... 23
1.45 "Program"......................................... 23
1.46 "Plan Administrator............................... 23
1.47 "Plan Year"....................................... 23
1.48 "Profit Sharing Plan"............................. 23
1.49 "Qualified Preretirement Survivor Annuity"........ 23
1.50 "Related Plan".................................... 24
1.51 "Required Beginning Date"......................... 24
1.52 "Rollover"........................................ 24
1.53 "STIF Fund"....................................... 24
1.54 "Stock Sharing"................................... 25
1.55 "Subsidiary"...................................... 25
1.56 "Termination of Employment"....................... 25
1.57 "Top Paid Group".................................. 25
1.58 "Trust"........................................... 25
1.59 "Trust Agreement"................................. 25
1.60 "Trustee"......................................... 26
1.61 "Trust Fund"...................................... 26
1.62 "Valuation Date".................................. 26
1.63 "Vesting Retirement Date"......................... 26
1.64 "Year of Credited Service"........................ 26
1.65 "Year of Eligibility Service"..................... 26
ARTICLE II - PARTICIPATION
2.1 Participation..................................... 27
2.2 Certification of Participation and Compensation
to Committee...................................... 27
2.3 Termination of Employment, Break in Service,
Reemployment and Change in Employment Status...... 27
2.4 Employees of Foreign or Domestic Affiliates....... 28
2.5 Leased Employee................................... 28
ARTICLE III - PROFIT SHARING PLAN EMPLOYER CONTRIBUTIONS
3.1 Profit Sharing Contributions...................... 29
3.2 Payment of Contributions Made Pursuant to
Article III....................................... 30
ARTICLE IV - McDESOP EMPLOYER CONTRIBUTIONS
4.1 Amount of Employer Matching Contributions......... 31
4.2 Leveraged ESOP Contributions...................... 33
4.3 Annual Employer Contribution Elections............ 35
4.4 Additional Employer Contributions................. 36
4.5 Payment of Contributions Made Pursuant to
Article IV........................................ 36
4.6 Form of Contributions............................. 37
ARTICLE V - PARTICIPANT ELECTED CONTRIBUTIONS
5.1 Participant Elected Contributions................. 38
5.2 Restrictions on Participant Elected Contributions. 39
5.3 Allocation of Income to Certain Distributed
Amounts........................................... 42
5.4 Multiple Use of Alternative Limitations........... 43
5.5 Excess Compensation Reduction Elections........... 44
5.6 Deadline for Participant Elected Contributions.... 45
5.7 Application of the Limitations of Sections
5.2(c), 5.2(e), 4.1(c), 5.4 and 9.1............... 45
ARTICLE VI - LEVERAGED AUXILIARY ESOP PROVISIONS
6.1 Power to Borrow................................... 47
6.2 Accounting for Loan Proceeds and Leveraged ESOP
Contributions..................................... 48
6.3 Release from Leveraged ESOP Suspense Account...... 48
6.4 Installment Payments on Exempt Loan............... 50
6.5 Non-Terminable Rights and Protections............. 51
6.6 Independent Appraisals Required................... 52
ARTICLE VII - ALLOCATIONS OF CONTRIBUTIONS
7.1 Profit Sharing Contribution Allocation Formula.... 53
7.2 Employer Matching Contributions, Additional
Employer Contributions and Special Section 401(k)
Employer Contributions............................ 54
7.3 Leveraged ESOP Contributions...................... 55
7.4 Participant Elected Contributions................. 56
7.5 Timing of Allocations............................. 56
ARTICLE VIII - ROLLOVER CONTRIBUTIONS AND TRUSTEE TRANSFERS
8.1 Participant Rollovers............................. 57
8.2 Limited Participation............................. 57
8.3 Withdrawal of Rollovers........................... 57
8.4 Rollover Not Forfeitable.......................... 57
ARTICLE IX - LIMITATIONS ON CONTRIBUTIONS
BECAUSE OF FEDERAL LEGISLATION
9.1 Limitations on Contributions...................... 58
9.2 Employer Contribution Reductions.................. 62
ARTICLE X - TRUSTEE AND TRUST FUNDS
10.1 Trust Agreements.................................. 63
10.2 Trustee's Duties.................................. 63
10.3 Trust Expenses.................................... 63
10.4 Trust Entity...................................... 63
10.5 Right of the Employers to Trust Assets............ 63
10.6 Trust Investment Funds............................ 64
10.7 Investment of Participant's Employer Profit
Sharing Contributions............................. 67
10.8 Investment Election with Regard to a Participant's
Profit Sharing, Diversification, Investment Savings
and Rollover Accounts............................. 67
10.9 Failure to Make an Investment Election............ 68
10.10 Diversification of McDESOP and Leveraged ESOP
Contributions..................................... 69
10.11 Effective Date of Participant's Investment and
Diversification Elections......................... 73
10.12 Trust Income...................................... 73
10.13 Adjustment of Participant Account Balances and
Leveraged ESOP Suspense Accounts.................. 73
10.14 Allocation of Income to Holding Funds............. 75
10.15 Separate Accounting in the Trust Fund............. 75
10.16 Trust Investment.................................. 75
10.17 Separate Accounting for Leveraged ESOP Suspense
Account........................................... 75
10.18 Correction of Error............................... 76
10.19 Statement of Accounts............................. 76
10.20 Purchase or Sale of Company Stock................. 76
10.21 Shareholder Rights in Company Stock............... 77
10.22 Cash Distributions with Respect to Company Stock.. 79
10.23 Holding Funds..................................... 79
ARTICLE XI - DISTRIBUTION OF BENEFITS
11.1 Distributions, General............................ 81
11.2 Payment of Net Balance Account on Disability, or
on Retirement or Other Termination of Employment.. 81
11.3 Payment of Net Balance Account on Death of
Participant....................................... 91
11.4 Vesting and Forfeitures...........................95
11.5 Payment of Employer Profit Sharing Contribution
for Year of Termination of Employment.............98
11.6 Designation of Beneficiary and Form of
Beneficiary Benefit...............................98
11.7 Incompetency, Distribution of Benefits............99
11.8 Deduction of Taxes from Accounts Payable..........100
11.9 Deadline for Payment of Benefits..................100
11.10 Spousal Consent to a Beneficiary or a Waiver......100
11.11 Single Sum Payment without Election...............101
11.12 Installment Payments..............................101
11.13 Required Minimum Distributions to Employed
Participants......................................103
11.14 Transitional Rules................................104
11.15 Sale of Restaurant - Special Vesting Rules........104
11.16 In-Service Withdrawals............................105
11.17 Direct Rollovers..................................106
ARTICLE XII - SUBSIDIARY PARTICIPATION
12.1 Adoption of Program and Trust.....................109
12.2 Withdrawal from Program by Participating
Employer..........................................109
ARTICLE XIII - ADMINISTRATION OF The Program
13.1 Appointment and Removal of, and Resignation by,
Trustee...........................................111
13.2 Appointment of Committee; Tenure in Office........111
13.3 Named Fiduciaries.................................111
13.4 Delegation of Responsibilities....................112
13.5 Committee Duties..................................112
13.6 Committee Action by Majority -- Authorization of
Members to Execute Documents......................113
13.7 Secretary.........................................114
13.8 Member as Participant.............................114
13.9 Rules and Decisions...............................114
13.10 Agents and Counsel................................114
13.11 Authorization of Benefit Distribution.............114
13.12 Claims Procedure..................................114
13.13 Information to be Furnished to Committee..........115
13.14 Plan Administrator................................116
13.15 Fiduciary as Participant..........................116
13.16 Fiduciary Responsibility..........................116
ARTICLE XIV - AMENDMENT, TERMINATION, MERGER AND
CONSOLIDATION OF PLAN
14.1 Amendment.........................................117
14.2 Termination of Program By the Company.............117
14.3 Merger, Consolidation, or Transfer of Assets......118
14.4 Transfer of Assets from Plans of Subsidiaries.....118
ARTICLE XV - TOP HEAVY PROVISIONS
15.1 Application.......................................120
15.2 Special Top Heavy Definitions.....................120
15.3 Special Top Heavy Provisions......................127
ARTICLE XVI - MISCELLANEOUS PROVISIONS
16.1 Headings..........................................131
16.2 Indemnification...................................131
16.3 Employees' Trust..................................131
16.4 Nonalienation of Benefits.........................131
16.5 Qualified Domestic Relations Order................132
16.6 Unclaimed Amounts.................................133
16.7 Maximum Age Condition.............................135
16.8 Invalidity of Certain Provisions..................135
16.9 Gender and Number.................................135
16.10 Law Governing.....................................136
MCDONALD'S CORPORATION PROFIT SHARING PROGRAM
History. The McDonald's Corporation Savings and Profit Sharing
Plan, as amended and restated effective January 1, 1987 ("Profit
Sharing Plan") and subsequently amended from time to time and the
McDonald's Matching and Deferred Stock Ownership Plan, as amended and
restated effective January 1, 1984 ("McDESOP") and subsequently
amended from time to time, were merged, effective December 31, 1988,
amended and restated effective January 1, 1989, and renamed the
"McDonald's Corporation Profit Sharing Program" (the "Program"). The
Program was subsequently amended from time to time and was amended and
restated effective July 1, 1992. The McDonald's Stock Sharing Plan
("Stock Sharing Plan") was amended and restated effective January 1,
1989.
The Stock Sharing Plan was merged into the Program effece
after the close of business on December 2199995. After the merger,
the Stock Sharing portion of the Program continued to be controlled by
the McDonald's Stock Sharing Plan, as amended and restated effective
JJaanuary 1, 1989 and the Profit Sharing portion of the Program
continued to be controlled by the McDonald's Corporation Profit
Sharing Program, as amended and restated effective January 1, 1992
until January 1, 1996, the effective date of this restatement. The
assets of the McDonald's Stock Sharing Trust were transferred to the
McDonald's Matching and Deferred Stock Ownership Trust on or after
December 29, 1995 until such time as there were no remaining assets
and the Trust ceased to exist.
The Program is hereby amended and restated in one Plan document
effective January 1, 1996, except as otherwise specifically provided
herein.
Structure and Purpose. The Program has four component portions,
(1) the Profit Sharing Plan portion which is intended to be a profit
sharing plan and to meet the requirements of Sections 401(a) of the
Internal Revenue Code, (2) the McDESOP portion which is intended to
meet the requirements for a stock bonus plan and a cash or deferred
arrangement under Sections 401(a) and 401(k) of the Internal Revenue
Code, (3) the Leveraged ESOP portion which is intended to meet the
requirements of a stock bonus plan and a leveraged employee stock
ownership plan under Sections 401(a) and 4975(e)(7) of the Internal
Revenue Code and (4) the Stock Sharing portion which is intended to
meet the requirements of a stock bonus plan and a tax credit ESOP in
accordance with Sections 401(a) and 409 of the Internal Revenue Code
and Section 41 of the Internal Revenue Code before its repeal with
respect to compensation paid or accrued after December 31, 1986. Each
portion of the Program shall be interpreted in a manner consistent
with it meeting the requirements of the respective Internal Revenue
Code Sections applicable thereto. The assets of the Leveraged ESOP
portion of the Program and the Stock Sharing portion of the Program
shall be invested primarily in qualifying employer securities as
defined in Section 409(l) of the Internal Revenue Code.
Application of Provisions. The purposes of the McDonald's
Corporation Profit Sharing Program are to permit Participants (1) to
share in the success of the Company by receiving a portion of its
profits, (2) to provide employees a convenient means to save for their
own future retirement security through their participation in this
Program and (3) to provide Participants individually and as a group
with a substantial ownership interest in the Company.
Except as otherwise specifically provided herein, the Program as
amended and restated herein applies to persons who are Employees on
and after January 1, 1996. Eligibility, benefits, payment of benefits
and the amount of benefits, if any, of a person whose employment with
an Employer terminated before January 1, 1996, and who is not rehired
by an Employer on or after January 1, 1996, shall, except as otherwise
specifically provided herein, be determined in accordance with the
provisions of the Program, the Stock Sharing Plan, or of McDESOP and
the Profit Sharing Plan as in effect on the date the person ceased to
be an Employee of an Employer.
DEFINITIONS
The following words and phrases, when used herein, unless their
context clearly indicates otherwise, shall have the following
respective meanings:
1.1 "Account" means a Participant's share of contributions and
Forfeitures arising under the Program, and the income, profits and
increments thereon less all losses, expenses and distributions
chargeable thereto.
(a) Each Participant may have one or more of the following
Accounts in the Profit Sharing portion of the Program ("Profit
Sharing Accounts") which shall be held in the Trust Fund:
(1) "Investment Savings Account," to which shall be
credited the Participant's after tax Participant
Contributions to the Profit Sharing Plan which were made
before January 1, 1987.
(2) "Profit Sharing Account," to which shall be
credited each Participant's share of Employer Profit Sharing
Contributions with respect to the Profit Sharing Plan
allocated in accordance with Section 7.1. A Participant's
Profit Sharing Account shall include his "Pre-Break Profit
Sharing Account" and his "Post-Break Profit Sharing Account"
pursuant to Section 11.4(e), if applicable.
(3) "Profit Sharing Holding Account," to which shall
be credited the Participant's share of Employer Profit
Sharing Contributions until such contributions shall be
removed and invested in accordance with Sections 10.7 and
10.8 as of each February 1.
(4) "Rollover Account," to which shall be credited the
balance of the Participant's Rollover Holding Account as of
each Valuation Date.
(5) "Rollover Holding Account," to which shall be
credited the Participant's Rollover pursuant to Section 8.1
until such contributions are removed and credited to the
Participant's Rollover Account at the next Valuation Date
occurring at the end of a calendar month in which such
contributions were made.
(b) Each Participant may have one or more of the following
Accounts in the McDESOP portion of the Program ("McDESOP
Accounts") which shall be held in the Trust Fund:
(1) A "Participant Elected Contribution Account", to
which shall be credited Participant Elected Contributions
made to the Program on behalf of the Participant in
accordance with Section 7.4;
(2) An "Employer Matching Contribution Account" to
which shall be credited Employer Matching Contributions
(including any Employer Per Capita Matching Contributions
under the provisions of the Program before January 1, 1996),
Additional Employer Contributions, Special Section 401(k)
Employer Contributions and any Forfeitures allocated to the
Participant in accordance with Section 7.2.
(3) The "McDESOP Holding Account" to which shall be
credited the Participants' Participant Elected Contributions
to the Program until such contributions are credited to the
Participants' Participant Elected Contribution Account.
(4) The "Matching Contribution Holding Account" to
which shall be credited the Participants' Employer Matching
Contributions to the Program until such contributions are
credited to the Participants' Employer Matching Contribution
Account.
(c) Each Participant shall have the following accounts in
the Leveraged ESOP portion of the Program ("Leveraged ESOP
Accounts") which shall be held in the Trust Fund and which shall
include:
(1) A "Per Capita Leveraged ESOP Contribution
Account," to which were credited Company Stock and
sssociated dividends attributable to Employer Contributions
madn aa Per Capita Basis under the terms of the Program
before January 1996.
(2) A "Leveraged ESOP Account," to which shall be
credited Company Stock released from the Leveraged ESOP
Suspense Account in accordance with Section 6.3, allocated
in accordance with Section 7.3(b) and any Special Dividend
Replacement Contributions credited to such account in
accordance with Section 7.3(d); and
(3) An "Additional Leveraged ESOP Account," to which
shall be credited, in accordance with Section 7.3(b) a
Participant's Per Capita Additional Leveraged ESOP
Contributions and Forfeitures therefrom and his Compensation
Based Additional Leveraged ESOP Contributions and
Forfeitures therefrom.
(d) Each Participant who has an account in the Stock
Sharing Plan may have the following Accounts in the Stock Sharing
portion of the Program ("Stock Sharing Accounts") which shall be
held in the Trust Fund:
(1) A "Participant Contribution Stock Sharing
Account," to which shall be credited Participant Matched
Contributions made under the Stock Sharing Plan with respect
to Plan Years ending on or before December 31, 1982, plus
income and gains and less expenses and losses attributable
thereto;
(2) An "Unmatched Employer Contribution Stock Sharing
Contribution Account," to which shall be credited Unmatched
Employer Contributions contributed to the Stock Sharing Plan
with respect to Plan Years ending on or before December 31,
1982, plus income and gains and less expenses and losses
attributable thereto;
(3) A "PAYSOP Stock Sharing Contribution Account," to
which shall be credited Employer Contributions contributed
to the Stock Sharing Plan with respect to Plan Years
beginning on or after January 1, 1983 and before January 1,
1987, plus income and gains and less expenses and losses
attributable thereto;
(4) An "Employer Matching Contribution Account," to
which shall be credited Employer Matching Contributions made
by an Employer to the Program in accordance with Section
3.1(d) for Plan Years ending on or before December 31, 1982,
plus income and gains and less expenses and losses
attributable thereto;
(5) An "Additional Employer Contribution Account," to
which shall be credited (A) contributions which have been
allocated to a Participant's Additional Company Contribution
Account with respect to Plan Years ending on or before
December 31, 1982, and (B) with respect to contributions for
Plan Years ending after December 31, 1982, contributions to
the Stock Sharing Plan in excess of the amount which
qualified for tax credit under Section 41(a)(2) of the
Internal Revenue Code, plus income and gains and less
expenses and losses attributable thereto.
(e) Each Participant shall have the following accounts
("Diversification Accounts"), to which shall be credited the
respective portions of a Participant's Leveraged ESOP Account,
and McDESOP Account, transferred to his Diversification Account
pursuant to a Diversification Election made in accordance with
Section 10.10. A Participant's Diversification Account shall be
part of the McDESOP and Leveraged ESOP portion of the Program, as
applicable, but is held in the Profit Sharing Master Trust in
order to implement Participant's diversification elections made
in accordance with Section 10.10. The Diversification Account
shall consist of two sub-accounts as follows:
(1) "Leveraged ESOP Diversification Account," to which
shall be credited the portions of a Participant's Leveraged
ESOP Account transferred to his Leveraged ESOP
Diversification Account pursuant to a Diversification
Election made in accordance with Section 10.10(a); and
(2) "McDESOP Diversification Account," to which shall
be credited the portions of a Participant's Participant
Elected Contribution Account and Employer Matching
Contribution Account, transferred to his McDESOP
Diversification Account pursuant to a Diversification
Election made in accordance with Sections 10.10(b) and
10.10(c).
(f) "Net Balance Account," means a Participant's interest
in the Trust composed of all of the Participant's Accounts. A
Participant's accrued benefit at any time during any Plan Year
(except on a Valuation Date) shall be the value of the number of
full and fractional shares of Company Stock and any other value
held in such Participant's Accounts as adjusted on the
immediately preceding Valuation Date, and on a Valuation Date it
shall be the number of full and fractional shares of Company
Stock and other value held in such Participant's Accounts as
adjusted to that Valuation Date.
1.2 "Active Participant" means
(a) for purposes of receiving an allocation of the Profit
Sharing Contributions pursuant to Section 7.1 for a Plan Year, a
Participant
(1) who (A) has accumulated one thousand (1,000) Hours
of Service during the Plan Year; (B) has Considered
Compensation during such Plan Year; and (C) is employed by
an Employer on the last day of the Plan Year; or
(2) who (A) is transferred during the Plan Year to a
Domestic Affiliate or Foreign Affiliate; (B) has accumulated
one thousand (1,000) Hours of Service during a Plan Year;
(C) has Considered Compensation during such Plan Year; and
(D) is employed on the last day of the Plan Year by an
Employer, a Domestic Affiliate or a Foreign Affiliate; or
(3) who (A) was a Participant on any day of a Plan
Year; (B) has Considered Compensation during such Plan Year;
and (C) prior to the last day of such Plan Year, died,
retired on or after attaining age 55 or suffering a
Disability, terminated his employment because of the sale or
lease of a McDonald's restaurant operation and became an
employee of the purchasing Licensee, or terminated his
employment when he had at least 10 years of Credited Service
under the Program; and
(b) for the purpose of being eligible to share in
allocations of Company Stock released from an Leveraged ESOP
Suspense Account for a Plan Year, in accordance with
Section 6.3(a), and of Additional Leveraged ESOP Contributions
for a Plan Year, a Participant who is a staff or an executive
employee or a store manager; and
(1) who (A) has accumulated one thousand (1,000) Hours
of Service during the Plan Year; (B) has Considered
Compensation during such Plan Year; and is employed by
an Employer on the last day of the Plan Year; or
(2) who (A) is transferred during the Plan Year to a
Domestic Affiliate or Foreign Affiliate; (B) has accumulated
one thousand (1,000) Hours of Service during a Plan Year;
(C) has Considered Compensation during such Plan Year; and
(D) is employed on the last day of the Plan Year by an
Employer, a Domestic Affiliate or a Foreign Affiliate; or
(3) who (A) was a Participant on any day of a Plan
Year; (B) has Considered Compensation during such Plan Year;
and (C) prior to the last day of such Plan Year, died,
retired on or after attaining age 55 or suffering a
Disability, terminated his employment because of the sale or
lease of a McDonald's restaurant operation and became an
employee of the purchasing Licensee, or terminated his
employment when he had at least 10 years of Credited Service
under the Program; and
(c) for purposes of the McDESOP portion of the Program, a
Participant who is an Employee on any day of the Plan Year.
1.3 "Affiliated Service Group" means a group including an
Employer which:
(a) consists of an organization the principal business of
which is the performance of services ("first service
organization") and one or more of the organizations described in
(1) or (2):
(1) any other service organization which
(A) is a shareholder or partner in the first
service organization (as determined in accordance with
applicable Treasury Regulations), and
(B) regularly performs services for the first
service organization or is regularly associated with
the first service organization in performing services
for third persons, or
(2) any other organization if
(A) a significant portion of the business of such
organization is the performance of services for the
first service organization or for one or more
organizations identified in Section 1.3(a)(1) or for
both, and the services are of a type historically
performed in such service field by employees, and
(B) 10 percent or more of the interests in such
organization are held by persons who are highly
compensated employees (within the meaning of section
414(q) of the Internal Revenue Code) of the first
service organization or an organization described in
Section 1.3(a)(1); or
(b) consists of
(1) an organization the principal business of which is
to perform on a regular and continuing basis management
functions for an organization identified in Section
1.3(b)(3), 1.3(b)(4) or 1.3(b)(5);
(2) all organizations aggregated in accordance with
Code Sections 414(b), 414(c), 414(m) or 414(o) with the
organization identified in Section 1.3(b)(1);
(3) an organization for which management functions are
performed by the organization identified in Section
1.3(b)(1);
(4) all organizations aggregated in accordance with
Code Sections 414(b), 414(c), 414(m) or 414(o) with the
organization identified in Section 1.3(b)(3); and
(5) all organizations ("first organizations") related
to any organization identified in Section 1.3(b)(3) or
1.3(b)(4) if the organization identified in Section
1.3(b)(3) or 1.3(b)(4) and the first organizations would be
related persons pursuant to Code Section 144(a)(3) and the
organization identified in Section 1.3(b)(3) or 1.3(b)(4)
performs management functions for the first organizations;
or
(c) is required to be aggregated pursuant to regulations
issued under Section 414(o) of the Internal Revenue Code.
1.4 "Authorized Leave of Absence" means any absence authorized
by an Employer under such Employer's standard personnel practices. An
absence due to service in the Armed Forces of the United States shall
be considered an Authorized Leave of Absence provided that the
Employee returns to employment with the Employer with reemployment
rights provided by law.
1.5 "Auxiliary ESOP" means the Leveraged ESOP portion of the
Program and the provisions applicable thereto.
1.6 "Beneficiary" means the person or persons designated by a
Participant or the Program, as applicable, in accordance with the
provisions of Section 11.3 or 11.6 to receive any benefit which shall
be distributable under the Program on account of the Participant's
death. Such a Beneficiary shall be deemed to be the Participant's
"designated beneficiary" for purposes of Section 401(a)(9) of the
Internal Revenue Code to the extent permitted therein.
1.7 "Board of Directors" means the board of directors of the
Company and any person or committee authorized to act on behalf of the
Board of Directors.
1.8 "Break in Service" means, for purpose of determining
Eligibility Service and Participant status, an Eligibility Computation
Period, and for all other purposes, a Plan Year, within which an
Employee has not completed more than five hundred (500) Hours of
Service.
1.9 "Committee" means the Administrative Committee appointed
pursuant to Section 13.2.
1.10 "Commonly Controlled Corporation" means the Company and any
other corporation if it and the Company are members of a controlled
group of corporations as defined in Section 409(1)(4) of the Internal
Revenue Code.
1.11 "Commonly Controlled Entity" means a corporation, trade or
business if it and an Employer are members of a controlled group of
corporations as defined in Section 414(b) of the Internal Revenue Code
or under common control as defined in Section 414(c) of the Internal
Revenue Code; provided, however, that solely for purposes of
Article IX including the definition of Related Plan when used in
Article IX, the standard of control under Sections 414(b) and 414(c)
of the Internal Revenue Code shall be deemed to be "more than 50%"
rather than "at least 80%."
1.12 "Company" means McDonald's Corporation or any successor
corporation by merger, consolidation, purchase or otherwise which
elects to adopt the Program and the Trust.
1.13 "Company Stock" means common or preferred stock of the
Company which is a qualifying employer security as defined in (a)
Section 4975(e)(8) of the Internal Revenue Code (for purposes of the
Leveraged ESOP), (b) Section 409(l) of the Internal Revenue Code (for
purposes of the Stock Sharing portion of the Program) and (c) Section
407(d)(5) of ERISA (for the purpose of all portions of the Program).
1.14 "Considered Compensation" of a Participant for a Plan Year
means:
(a) except as otherwise specified below, the Participant's
total compensation paid during the Plan Year to such Participant
by an Employer while an Active Participant in the Program as
reported in Box 1, for 1995, or the equivalent box on any
comparable form for subsequent Plan Years, increased by (i) any
amounts by which the Participant's compensation is reduced by
Participant Elected Contributions under the McDESOP portion of
the Program or any other portion of the Program, and under any
portion of any Related Plan which meets the requirements of
Section 401(k) of the Internal Revenue Code; and (ii)
compensation reduction contributions for medical, dental or
dependent care or other benefits under a cafeteria plan meeting
the requirements of Section 125 of the Internal Revenue Code; and
excluding (I) provisions for life insurance; (II) reimbursement
for or other payment for expenses related to, moving expenses
(including the relocation bonuses); (III) any benefits under the
Program or any other qualified plan described in Section 401(a)
of the Internal Revenue Code; (IV) distributions under McDonald's
Profit Sharing Program Equalization Plan ("McEqual"), McDonald's
1989 Executive Equalization Plan ("McCAP I"), the McDonald's
Supplemental Employee Benefit Equalization Plan ("McCAP II") or
the McDonald's Corporation Deferred Incentive Plan; (V) income
earned from stock options granted under the McDonald's 1975 Stock
Ownership Option Plan; Stock Exchange Rights or Performance Units
granted under the McDonald's Corporation 1978 Incentive Plan;
options, restricted stock, stock appreciation rights, performance
units and stock bonuses awarded under the McDonald's 1992 Stock
Ownership Incentive Plan, as amended and restated as of July 1,
1995; (VI) payments to a Participant for foreign service in the
form of tax gross-up benefits; (VII) allowances for cost of
living, housing and education, and other similar payments; (VIII)
any income attributable to personal use of an employer-provided
vehicle, an allowance paid for the loss of an employer-provided
vehicle, use of a company condo, participation in group trips,
gift stock, spouse's travel and perquisites whether in cash or in
kind and other similar items; and (IX) any special termination
bonus paid pursuant to a termination agreement and any severance
pay;
(b) for purposes of top heavy rules in Article XV (except
for determining whether a Participant is a Key Employee pursuant
to Section 15.2(d)) and for determining the limitations under
Code Section 415 in Article IX, Considered Compensation means
total compensation paid to the Participant by an Employer, a
Commonly Controlled Entity or a member of an Affiliated Service
Group for the Plan Year, including distributions from any
nonqualified deferred compensation plans maintained by an
Employer, Commonly Controlled Entity or member of an Affiliated
Service Group and amounts paid or reimbursed by the employer for
moving expenses incurred by the Participant to the extent it is
reasonable to believe that such amounts are not deductible by the
Participant under Section 217 of the Internal Revenue Code and
excluding any salary reduction contributions to a cafeteria plan
meeting the requirements of Code Section 125 or to the Program or
any other qualified plan described in Section 401(a) of the
Internal Revenue Code, or the amount of the Participant's
Participant Elected Contributions under the McDESOP portion of
the Program or any other portion of the Program or of any other
plan which meets the requirements of Section 401(k) of the
Internal Revenue Code, whether credited to the Participant's
accounts under the Program, the McDonald's Supplemental Employee
Benefit Equalization Plan ("McCAP II"), the McDonald's Profit
Sharing Program Equalization Plan ("McEqual"), the McDonald's
1989 Executive Equalization Plan ("McCAP I") or any other
non-qualified deferred compensation plans from time to time
maintained by the Company, or other deferred compensation, stock
options, and any other amounts which receive special tax
benefits;
(c) for the purpose of determining whether a Participant is
(1) a Highly Compensated Employee or (2) a member of the Top Paid
Group or (3) whether a Participant is a Key Employee pursuant to
Section 15.2(d), Considered Compensation shall be the
Participant's Considered Compensation as defined in Section
1.14(b) increased by the amount by which the Participant's
compensation is reduced pursuant to a compensation reduction
election under Section 5.1 or any other Related Plan which meets
the requirements of Section 401(k) of the Internal Revenue Code
or pursuant to other compensation reduction contributions for
medical, dental or dependent care or other benefits under a
cafeteria plan meeting the requirements of Section 125 of the
Internal Revenue Code;
(d) for the purpose of calculating (1) the actual
contribution percentage in accordance with Section 4.1, (2) the
actual deferral percentage in accordance with Section 5.2 or
(3) the multiple use test in accordance with Section 5.4,
Considered Compensation shall be the Participant's
compensation for the portion of the Plan Year during which he or
she was an Active Participant as defined in Section 1.2(c) (i) as
reported in Box 1, as revised for 1995, or the equivalent box on
any comparable form for subsequent years plus (ii) any amounts by
which the Participant's compensation is reduced by Participant
Elected Contributions under the McDESOP portion of the Program or
any other portion of the Program or any other plan which meets
the requirements of Section 401(k) of the Internal Revenue Code
or compensation reduction contributions for medical, dental or
dependent care or other benefits under a cafeteria plan meeting
the requirements of Section 125 of the Internal Revenue Code;
(e) for the purpose of determining the amount of
Participant Elected Contributions pursuant to Section 5.1,
Considered Compensation means a Participant's Considered
Compensation as defined in Section 1.14(a) increased by
expatriate equalization differentials and reduced by all
compensation not paid in cash, by cash perquisites and by any
payments for referrals to the extent included in Considered
Compensation as defined in Section 1.14(a).
For purposes of Sections 1.14(a), (c), (d) and (e), Considered
Compensation taken into account under the Program shall not exceed
$150,000 as adjusted in subsequent years as provided by the Secretary
of the Treasury (the "dollar limit"). In determining whether a
Participant's Considered Compensation for a Plan Year exceeds the
dollar limit, if and only to the extent required by the Internal
Revenue Code, the Considered Compensation of each Five Percent Owner
and of each Participant who is one of the ten Highly Compensated
Employees paid the greatest Considered Compensation (determined before
the aggregation of the Considered Compensation of any family member)
shall include the Considered Compensation of such Participant's spouse
and lineal descendants who have not attained age 19 before the end of
the Plan Year earned as employees of an Employer, a Commonly
Controlled Entity or member of an Affiliated Service Group. For
purposes of applying the dollar limit in the first sentence of this
paragraph, if the Considered Compensation of a Five Percent Owner or
of a Participant who is one of the ten Highly Compensated Employees
paid the greatest compensation (determined before the aggregation of
the compensation of any family member) is equal to or greater than the
dollar limit ("Affected Participant"), the Considered Compensation of
each of such Affected Participant, his spouse and lineal descendants
who have not attained age 19 before the end of the Plan Year
("Affected Family Member") shall be equal to the dollar limit for the
Plan Year multiplied by a fraction the numerator of which is such
individual's Considered Compensation after application of the dollar
limit and the denominator of which is the sum of such Considered
Compensation for the Affected Participant and the Affected Family
Members.
Anything to the contrary herein notwithstanding, Considered
Compensation for a Plan Year shall not be reduced by the pay for a
period of short term disability which is repaid to an Employer in a
subsequent Plan Year by a Participant who fails to complete the
requirements to be eligible to retain such pay.
1.15 "Credited Service" shall mean an Employee's total Years of
Credited Service excluding the following:
(a) Years of Credited Service before January 1, 1964;
(b) Years of Credited Service before January 1, 1976, which
would have been disregarded under the McDonald's Corporation
Savings and Profit Sharing Plan before January 1, 1976, with
regard to the then existing rules on reemployment;
(c) Years of Credited Service prior to a Break in Service,
if the Participant had no vested interest in his Profit Sharing
Account prior to such Break in Service and (1) effective with
respect to a Break in Service which occurred before January 1,
1985, if the Participant had no more than one year of Credited
Service prior to such Break in Service and (2) effective with
respect to one or more consecutive Breaks in Service none of
which occurred before January 1, 1985, if the number of
consecutive Breaks in Service equals or exceeds five consecutive
Breaks in Service;
(d) For purposes of determining a Participant's vested
interest in his Profit Sharing Account or his Leveraged ESOP
Account accrued before (1) a Break in Service which occurred
before January 1, 1985 and (2) five consecutive Breaks in Service
if none of the Breaks in Service occurred before January 1, 1985,
Years of Credited Service after such Break in Service.
1.16 "Disability" means a mental or physical condition which
renders a Participant permanently unable or incompetent to carry out
the job responsibilities he held or tasks to which he was assigned at
the time the disability was incurred. Such determination shall be
made by the Committee on the basis of such medical and other competent
evidence as the Committee shall deem relevant.
1.17 "Disqualified Person" means a person defined in Section
4975(e)(2) of the Internal Revenue Code.
1.18 "Domestic Affiliate" means any domestic corporation,
partnership or joint venture of which, in the case of a corporation,
the Company owns, directly or indirectly, either twenty-five percent
or more of the voting power of all classes of stock or twenty-five
percent or more of the value of all stock, or of which, in the case of
a partnership or joint venture, the Company owns, directly or
indirectly, a twenty-five percent or more interest in both the capital
and profits.
1.19 "Effective Date" means January 1, 1996.
1.20 "Eligibility Computation Period" means the twelve-month
period commencing with the first day of the pay period in which an
Employee first performs an Hour of Service following hire (or rehire
after a Break in Service) and each subsequent twelve-month period
commencing on an anniversary of that date. In addition, with respect
to Hours of Service which are credited to an Employee pursuant to
Section 1.31(b)(2) for service with a Licensee whose restaurant(s) are
acquired by an Employer (the "Acquisition"), Eligibility Computation
Period means (a) each full calendar year such individual was employed
by the Licensee before the calendar year of such Acquisition
commencing with the calendar year in which such Employee first
performed an hour of service for the Licensee and continuing through
the calendar year ending immediately before the date of such
Acquisition and (b) if such Employee was employed by the Licensee on
January 1 of the calendar year of the Acquisition, the calendar year
of such Acquisition; provided that for the calendar year in which the
Acquisition occurs both Hours of Service credited pursuant to Section
1.31(b)(2) and those credited pursuant to the remainder of Section
1.31 for service after the Acquisition shall both be counted in the
Eligibility Computation Period in which the Acquisition occurred.
1.21 "Eligibility Service" means the number of Eligibility
Computation Periods during which an Employee has completed not less
than 1000 Hours of Service excluding any Eligibility Service earned
before a Break in Service until the Employee has completed one Year of
Eligibility Service following the Break in Service.
1.22 "Employee" means any person who is employed by the Company
or another Employer (as that entity is defined for the Profit Sharing
Plan portion or McDESOP portion of the Program, respectively, with
respect to contributions to such portions of the Program with respect
to which the term Employee is being used) including a person on an
Authorized Leave of Absence. Such term does not include a consultant,
an independent contractor or a Leased Employee.
1.23 "Employer" means,
(a) for purposes of Article III, concerning contributions
to the Profit Sharing Plan portion of the Program and other
provisions of the Program as they relate to the Profit Sharing
Plan portion of the Program and for purposes of Section 4.1, 4.3
and Article V, concerning Employer Matching Contributions and
Participant Elected Contributions, the Company and any
Subsidiary, Commonly Controlled Entity, Domestic or Foreign
Affiliate, or any other business in which the Company owns an
interest which, pursuant to Section 12.1, elects to adopt the
Profit Sharing Plan portion of the Program; and
(b) for purposes of the Leveraged ESOP portion of the
Program, the Company and any Commonly Controlled Corporation
which, pursuant to Section 12.1, elects to adopt the Leveraged
ESOP portion of the Program on or after January 1, 1989; and
(c) for purposes of the Stock Sharing portions of the
Program, the Company and any Commonly Controlled Corporation
which had adopted the McDonald's Stock Sharing Plan before
January 1, 1989.
1.24 "Employer Contributions" means the following payments made
from time to time by an Employer to the Trustee:
(a) "Employer Profit Sharing Contributions" made pursuant
to Sections 3.1 or 15.3(a);
(b) "Employer Matching Contributions" made pursuant to
Section 4.1;
(c) "Special Section 401(k) Employer Contributions" made
pursuant to Section 4.3(b);
(d) "Leveraged ESOP Contributions" made pursuant to
Section 4.2;
(e) "Additional Employer Contributions" made pursuant to
Section 4.4;
(f) "Special Dividend Replacement Contributions" made
pursuant to Section 4.2(d).
(g) "Unmatched Employer Stock Sharing Contributions,"
"Employer Contributions", "Employer Matching Contributions," and
"Additional Employer Contributions" made to the Stock Sharing
Plan at various dates with respect to periods before January 1,
1987 as provided in Section 1.1(d).
1.25 "Entry Date" means January 1 and July 1 of each Plan Year.
1.26 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.27 "Five Percent Owner" means a Participant who owns (or is
considered as owning within the meaning of Section 318 of the Internal
Revenue Code) more than five percent of an Employer, Commonly
Controlled Entity or member of an Affiliated Service Group as provided
in Section 416(i)(1)(B)(i) of the Internal Revenue Code.
1.28 "Foreign Affiliate" means any foreign corporation,
partnership or joint venture of which, in the case of a corporation,
the Company owns, directly or indirectly, either twenty-five percent
or more of the voting power of all classes of stock or twenty-five
percent or more of the value of all stock, or, of which, in the case
of a partnership or a joint venture, the Company owns, directly or
indirectly, a twenty-five or more percent interest in both the capital
and profits.
1.29 "Forfeiture" means the portion of a Participant's Profit
Sharing Account which is forfeited as provided in Section 11.4, his
Leveraged ESOP Account which is forfeited as provided in Section 11.4
and unclaimed amounts which are forfeited under Section 16.6.
1.30 "Highly Compensated Employee" means, for a Plan Year, any
Participant who performs services as an employee for an Employer,
Commonly Controlled Entity or member of an Affiliated Service Group
during such Plan Year and who:
(a) (1) at any time during the Plan Year or the preceding
Plan Year ("Preceding Plan Year"), was a Five Percent Owner;
or
(2) (A) received Considered Compensation in excess of
$100,000 (for 1996, adjusted in subsequent years as provided
by the Secretary of the Treasury) during the Preceding Plan
Year or (B) received Considered Compensation in excess of
$100,000 (for 1996, adjusted in subsequent years as provided
by the Secretary of the Treasury) during the Plan Year and
was one of the 100 employees of the group consisting of the
Employers, Commonly Controlled Entities and members of an
Affiliated Service Group who received the most Considered
Compensation during the Plan Year; or
(3) received Considered Compensation for the Preceding
Plan Year in excess of $66,000 (for 1996, adjusted in
subsequent years as provided by the Secretary of the
Treasury) and is in the Top Paid Group for the Preceding
Plan Year; or
(4) (A) was an officer of (or performed the duties of
an officer for) an Employer, a Commonly Controlled Entity or
member of an Affiliated Service Group during the Preceding
Plan Year or was an officer of such an entity (or performed
the duties of an officer of such an entity) during the Plan
Year and one of the 100 employees of the group consisting of
the Employers, Commonly Controlled Entities and members of
an Affiliated Service Group who received the most Considered
Compensation during the Plan Year, and (B) received
Considered Compensation in excess of fifty percent (50%) of
the amount in effect under Section 415(b)(1)(A) of the
Internal Revenue Code ($120,000 in 1996, adjusted in
subsequent years as determined in accordance with
regulations prescribed by the Secretary of the Treasury or
his delegate), provided that no more than fifty (50) persons
shall be treated as officers hereunder for any Plan Year or
Preceding Plan Year.
(b) For purposes of this Section 1.30, the Considered
Compensation of (1) any Highly Compensated Employee in the group
consisting of the ten (10) Highly Compensated Employees paid the
greatest Considered Compensation (without regard to this Section
1.30(b)) or, (2) any Five Percent Owner, shall include any
Considered Compensation paid to a spouse, lineal ascendants or
descendants, or any spouse of such lineal ascendants or
descendants of such Highly Compensated Employee or such Five
Percent Owner and such spouse, lineal ascendants or descendants,
or any spouse of such lineal ascendants or descendants shall not
be treated as an employee for purposes of this Section 1.30.
(c) For purposes of this Section 1.30 and Section 1.53,
employees who are nonresident aliens and who receive no earned
income (within the meaning of Section 911(d)(2) of the Internal
Revenue Code) from an Employer, a Commonly Controlled Entity or
member of an Affiliated Service Group which constitutes income
from sources within the United States (within the meaning of
Section 861(a)(3) of the Internal Revenue Code) shall not be
treated as employees.
(d) A former employee shall also be treated as a Highly
Compensated Employee for a Plan Year if such former employee had
a Termination of Employment prior to such Plan Year and was a
Highly Compensated Employee (without regard to this Section
1.30(d)) for either the Plan Year in which he had a Termination
of Employment or any Plan Year ending on or after his 55th
birthday.
(e) In lieu of determining which individuals are Highly
Compensated Employees as provided in paragraphs (a)(1), (a)(2),
(a)(3), and (a)(4) of this Section 1.30, the Plan Administrator
may elect for any Plan Year to consider as a Highly Compensated
Employee for such Plan Year each Participant who performs
services as an employee for an Employer, Commonly Controlled
Entity or member of an Affiliated Service Group during such Plan
Year and who, during the Plan Year:
(1) was at any time a Five Percent Owner;
(2) received Considered Compensation in excess of
$100,000 (for 1996, adjusted in subsequent years as provided
by the Secretary of the Treasury or his delegate);
(3) received Considered Compensation in excess of
$66,000 (for 1996, adjusted in subsequent years as provided
by the Secretary of the Treasury or his delegate) and was a
member of the Top Paid Group; and
(4) was an officer of (or performed the duties of an
officer for) an Employer, a Commonly Controlled Entity or
member of an Affiliated Service Group and received
Considered Compensation in excess of fifty percent (50%) of
the amount in effect under Section 415(b)(1)(A) of the
Internal Revenue Code ($120,000 for 1996, adjusted in
subsequent years as provided by the Secretary of the
Treasury or his delegate).
(f) The Committee may elect for any Plan Year to determine
the Highly Compensated Employees for such year by substituting
(1) "$66,000" (in 1996, adjusted in subsequent years provided by
the Secretary of the Treasury or his delegate) for "$100,000" (in
1996, adjusted in subsequent years provided by the Secretary of
the Treasury or his delegate) in Sections 1.30(a)(ii) or
1.30(e)(2) as applicable, and ignoring Sections 1.30(a)(iii) or
1.30(e)(3), respectively.
(g) A Committee may make any of the elections permitted
under Sections 1.30(e) and 1.30(f) for a Plan Year, may make
different elections from Plan Year to Plan Year and may make
different elections for different purposes under the Program
(e.g., which Participants are considered to be Highly Compensated
Employees (1) for the purposes of calculating the limits
described in Sections 4.1(c), 5.2(e) and 5.4 and (2) for other
purposes under the Program.
1.31 "Hour of Service" means:
(a) Each hour for which an employee or a Leased Employee
(determined without regard to Section 1.34(b)) is paid directly
or indirectly, or entitled to payment, by an Employer, Commonly
Controlled Entity or member of an Affiliated Service Group,
(1) for performance of duties;
(2) on account of a period of time during which no
duties were performed, provided that, except as herein
otherwise expressly provided, no more than 501 Hours of
Service shall be credited for any single continuous period
during which an Employee performs no duty, and provided that
no Hours of Service shall be credited for payments made or
due under a plan maintained solely for the purpose of
complying with applicable worker's compensation,
unemployment compensation or disability insurance laws, or
for reimbursement of medical expenses; and
(3) for which back pay, irrespective of mitigation of
damages, is awarded or agreed to by the Employer, provided
that no more than 501 Hours of Service shall be credited for
any single continuous period of time during which the
Employee did not or would not have performed duties.
(b) (1) The credit for Hours of Service shall be given for
the following:
(A) For Plan Years beginning before January 1,
1994, an Employee's prior or subsequent employment
by a Foreign Affiliate or Domestic Affiliate;
(B) For Plan years beginning after December 31,
1993, an Employee's prior or subsequent employment
by a Domestic or Foreign Affiliate if the employee
is transferred to or from such Domestic or Foreign
Affiliate from or to, respectively, the employment
of an Employer at the initiative of an Employer (a
"Company Initiated Transfer"). For the purposes
of this Section 1.31(b)(1)(B), a sale of assets or
stock to a Domestic or Foreign Affiliate that is
not an Employer under the Program shall not be
considered a Company Initiated Transfer with
respect to employees employed solely with respect
to such assets or stock who become employees of
such purchasing Domestic or Foreign Affiliate
immediately after such sale, provided that the
decisions concerning such employment are made by
an entity which is not more than 50 percent owned
by an Employer.
In determining the number of such Hours of Service to be
credited, the Plan Administrator shall make good faith
estimates based upon the available information and records
including the use of reasonable equivalencies similar to
those permitted under DOL Reg. Section 2530.200b-3 or
estimated average number of hours per week for employees in
a given job category.
(2) If a McDonald's Restaurant or a group of
restaurants operated by a Licensee is acquired by the
Company or another Employer in the first six months of a
calendar year and if such restaurant or group of restaurants
is designated as a permanent acquisition by the Company, the
store managers who are employed by such Licensee either in a
restaurant or in connection with the operation of one or
more restaurants as of the date of such acquisition and who
continue to be employed by the Company or other Employer
until June 30 of the Plan Year in which the acquisition
occurred shall be credited by the Employer with his Hours of
Service with such Licensee. If a McDonald's Restaurant or
group of restaurants operated by a Licensee is acquired by
the Company or another Employer, during the Plan Year, each
store manager who is employed by such Licensee either in a
restaurant or in connection with the operation of one or
more restaurants as of the date of acquisition and continues
to be employed by the Company or other Employer until the
last day of the Plan Year in which such acquisition occurred
who has not already received credit for service with the
Licensee under the preceding sentence shall as of the last
day of such Plan Year be credited by the Company or other
Employer with his Hours of Service with such Licensee. In
determining the number of such Hours of Service to be
credited, the Plan Administrator shall make good faith
estimates based upon the available information and records
including the estimated average number of hours per week for
employees in a given job category.
(3) To the extent an Employee is not otherwise
credited with Hours of Service for each payroll period while
on an Authorized Leave of Absence, an Employee shall be
credited with the number of Hours of Service equal to the
average number of Hours of Service per payroll period (not
to exceed forty Hours of Service per week) of such Employee
for the six calendar week period, or pertinent payroll
period if such period is longer, ending immediately prior to
the commencement of the Authorized Leave of Absence
notwithstanding the limitations of Section 1.31(a)(2). If a
Participant is on an Authorized Leave of Absence on the last
day of a Plan Year, the Hours of Service credited pursuant
to the preceding sentence shall be counted for the purpose
of determining whether he is an Active Participant under
Sections 1.2(a) and (b) for such Plan Year. Notwithstanding
the foregoing, an Employee who fails either (A) to return to
his employment within ninety (90) days after the expiration
of an Authorized Leave of Absence, or (B) to remain in the
employ of an Employer after the expiration of an Authorized
Leave of Absence for the lesser of (i) a period equal to the
period of his Authorized Leave of Absence or (ii) one year
following his return to employment, unless such failure
shall be due to death, Disability, illness, retirement on or
after age 55 or the sale by the Company, one of its
subsidiaries or affiliates of the McDonald's Restaurant in
which such Employee is employed, shall be considered to have
voluntarily terminated his employment as of the date the
Leave of Absence commenced for purposes of determining Hours
of Service for Eligibility Service and Credited Service.
(4) A person who became an Employee on September 16,
1994, as a result of the acquisition of the Special
Operations Division of Corporate Systems, Inc. and who
immediately prior to that date was an employee of the
Special Operations Division of Corporate Systems, Inc. shall
be credited with Hours of Service pursuant to the foregoing
provisions of this Section 1.31 as if service with Corporate
Systems, Inc. were service with the Company. Such Hours of
Service shall be credited using actual hours of service for
hourly paid employees and using the service equivalencies
provided in Section 1.31(e) for salaried employees.
(c) To the extent not otherwise credited in Section 1.31,
solely for purposes of avoiding a Break in Service, for periods
of absence from work on account of Parental Leave, an Employee
shall be credited with Hours of Service as defined below:
(1) the Hours of Service which normally would have
been credited to such individual but for the Parental Leave,
or
(2) eight (8) Hours of Service per day of such absence
if the Program is unable to determine the Hours of Service
which would have been credited to such individual but for
the Parental Leave.
An Employee's Hours of Service for absence on account of
Parental Leave shall not exceed the lesser of 501 Hours of
Service or the number of Hours of Service needed to prevent a
Break in Service and shall be credited to the Eligibility
Computation Period (for purposes of crediting Eligibility
Service) or the Plan Year (for purposes of crediting service
other than Eligibility Service) in which absence because of a
Parental Leave commenced; except that if such Hours of Service
are not needed to prevent a Break in Service in the Eligibility
Computation Period or Plan Year in which absence because of a
Parental Leave commenced, and the Parental Leave continues into
the next following Eligibility Computation Period or Plan Year
then, if needed to prevent a Break in Service, such Hours of
Service shall be credited to the Eligibility Computation Period
or Plan Year following the year in which such absence commenced.
(d) Hours of Service for reasons other than the performance
of duties shall, except as provided in Section 1.31(b)(2), be
determined in accordance with the provisions of Department of
Labor Regulations Section 2530.200b-2(b), and Hours of Service
shall be credited to computation periods in accordance with the
provisions of Department of Labor Regulations Section
2530.200b-2(c).
(e) Except as provided in Sections 1.31(b)(2) and 1.31(c)
each Employee who is paid on a salaried basis shall be credited
with 95 Hours of Service for each semimonthly payroll period
during which such Employee has any Hours of Service.
1.32 "Internal Revenue Code" means the Internal Revenue Code of
1986, as from time to time amended and any subsequent Internal Revenue
Code. References to any section of the Internal Revenue Code shall be
deemed to include similar sections of the Internal Revenue Code as
renumbered or amended.
1.33 "Investment Fund" As provided in Section 10.6 and excluding
those assets held in the Profit Sharing Holding Fund pursuant to
Section 10.23, (a) assets of the Profit Sharing Plan portion of the
Trust Fund shall be held in the following Investment Funds: (1) the
Diversified Stock Fund, (2) the Profit Sharing McDonald's Common Stock
Fund, (3) the Money Market Fund, (4) the Insurance Contract Fund, and
(5) the Multi-Asset Fund, and (b) assets of the McDESOP and Leveraged
ESOP portions of the Trust Fund shall be held in the McDESOP
McDonald's Common Stock Fund provided, however, that separate
subaccounts shall be maintained of the amount of Company Stock held in
the McDESOP McDonald's Common Stock Fund and allocated to
Participants' Stock Sharing Accounts, Participant Elected Contribution
Accounts, Employer Matching Contribution Accounts and Leveraged ESOP
Accounts, in the latter case accounting separately for the Company
Stock purchased with each Loan (or Company Stock into which the
Company Stock purchased with the Loan has been converted).
1.34 "Leased Employee" means any person who is not an employee of
an Employer, a Commonly Controlled Entity or a member of an Affiliated
Service Group and who provides service to an Employer if:
(a) such services are provided pursuant to an agreement
between the recipient and any other person;
(b) such person has performed such services for the
Employer (or for the Employer, any Commonly Controlled Entity or
member of an Affiliated Service Group) on a substantially full
time basis for a period of at least 1 year; and
(c) such services are of a type historically performed, in
the business field of the Employer, Commonly Controlled Entity or
Affiliated Service Group, by employees.
1.35 "Leveraged ESOP" means the portion of the Program consisting
of Participants' Leveraged ESOP Accounts, and Additional Leveraged
ESOP Accounts.
1.36 "Leveraged ESOP Suspense Account" means the separate
accounts maintained by the Committee pursuant to Section 6.2. All
Employer Leveraged ESOP Contributions made with respect to a Loan and
the dividends with respect to Employer Stock purchased with such Loan
(and the Employer Stock into which such stock has been converted)
including dividends which have been replaced in Participant's
Leveraged ESOP Accounts by Dividend Replacement Contributions shall be
held and accounted for within the separate Leveraged ESOP Suspense
Account.
1.37 "Licensee" means any person, other than the Company or a
Commonly Controlled Entity which operates a McDonald's Restaurant
pursuant to lease and license agreements (or so-called "Business
Facilities Lease") with the Company or affiliated companies.
1.38 "McDESOP" means the portion of the Program consisting of
Participants' Participant Elected Contribution Accounts and Employer
Matching Contribution Accounts, McDESOP Holding Accounts, Matching
Contribution Holding Account and McDESOP Diversification Accounts.
1.39 "Non-highly Compensated Employee" means, for a Plan Year,
any Participant who performs services for an Employer, Commonly
Controlled Entity or Affiliated Service Group during such Plan Year
and who was not a Highly Compensated Employee for such Plan Year.
1.40 "Parental Leave" means a period during which an individual
is absent from work for any period:
(a) by reason of the pregnancy of the individual,
(b) by reason of the birth of a child of the individual,
(c) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual, or
(d) for purposes of caring for such child for a period
beginning immediately following such birth or placement.
An absence from work shall not be a Parental Leave unless
the individual furnishes the Committee such timely information as may
reasonably be required to establish that the absence from work was for
one of the reasons specified above and the number of days for which
there was such an absence. Nothing contained herein shall be
construed to establish an Employer policy of treating a Parental Leave
as an Authorized Leave of Absence or to otherwise establish a parental
leave policy for any Employer, except for the purpose of avoiding a
Break in Service.
1.41 "Participant" means a person participating in the Program in
accordance with the provisions of Article II.
1.42 "Participant Contributions" means (a) the voluntary
contributions made by a Participant to the Trustee with respect to
Plan Years commencing before January 1, 1987, and credited to his
Investment Savings Account and (b) Participant Matched Contributions
made under the Stock Sharing Plan with respect to Plan Years ending on
or before December 31, 1983 and credited to his Participant
Contribution Stock Sharing Account.
1.43 "Participant Elected Contributions" means the contributions
made by an Employer on behalf of an Active Participant attributable to
reductions of the Participant's Considered Compensation determined
under Section 5.1, including:
(a) "Participant Elected Matched Contributions", which
means the portion of Participant Elected Contributions for a Plan
Year with respect to which the Company may elect, in accordance
with Section 7.2, to make Employer Matching Contributions; and
(b) "Participant Elected Unmatched Contributions", which
means the portion of Participant Elected Contributions for a Plan
Year with respect to which the Company may not, in accordance
with Section 7.2, make Employer Matching Contributions.
1.44 "Party in Interest" means a person defined in Section 3(14)
of ERISA.
1.45 "Program" means the McDonald's Corporation Profit Sharing
Program as herein set forth, and as hereafter amended from time to
time, including its four components: (i) the Profit Sharing Plan,
McDESOP, the Leveraged ESOP and Stock Sharing.
1.46 "Plan Administrator" means the Plan Administrator appointed
under or by the provisions of Section 13.14.
1.47 "Plan Year" means the 12-month period commencing on
January 1 and ending on December 31.
1.48 "Profit Sharing Plan" means the portion of the Program
consisting of Participants' Profit Sharing Accounts, Rollover
Accounts, Rollover Holding Accounts, Investment Savings Accounts and
of the Profit Sharing Holding Fund.
1.49 "Qualified Preretirement Survivor Annuity" means an
immediate monthly pension payable in accordance with Section
11.2(e)(2) to the surviving spouse of a Participant who has elected to
receive benefits in the form of a life annuity in an amount equal to
an annuity for the life of the surviving spouse which can be purchased
with fifty percent of the portion of the Participant's vested Net
Balance Account which the Participant had elected to be paid in the
form of a life annuity pursuant to Section 11.2(a).
1.50 "Related Plan" means any other qualified defined
contribution plan or qualified defined benefit plan (as defined in
Section 415(k) of the Internal Revenue Code) maintained by an
Employer, a Commonly Controlled Entity or member of an Affiliated
Service Group, respectively called a "Related Defined Contribution
Plan" and "Related Defined Benefit Plan."
1.51 "Required Beginning Date" means April 1 of the calendar year
following:
(a) for a Participant who reaches age 70-1/2 before
January 1, 1988, the later of:
(1) the calendar year in which he reaches age 70-1/2,
or
(2) if the Participant is not a Five Percent Owner at
any time during the Plan Year ending with or within the
calendar year in which he attains age 70-1/2 or any of the
four (4) prior Plan Years, the calendar year in which he has
a Termination of Employment; provided that if any such
Participant becomes a Five Percent Owner during any Plan
Year after he attains age 70-1/2, the "Required Beginning
Date" for such Participant shall be the April 1 of the
calendar year following the calendar year in which such Plan
Year ends, and
(b) for a Participant who reaches age 70-1/2 on or after
January 1, 1988, the calendar year in which the Participant
reaches age 70-1/2.
Notwithstanding the foregoing, the Required Beginning Date shall not
be any date earlier than any date to which Required Beginning Date can
be delayed in accordance with Section 11.14 and any applicable law,
regulations, or rulings.
1.52 "Rollover" means a Participant's rollover contribution as
described in Section 402(a)(5) (effective before January 1, 1993),
Section 402(c) (effective on or after January 1, 1993), Section
403(a)(4) or Section 408(d)(3) of the Internal Revenue Code and
credited to his Rollover Holding Fund Account, in accordance with
Section 8.1., Rollovers made in accordance with Section 402(c) or
403(a)(4) may be transfers of (a) distributions made to a Participant
in accordance with one of the above referenced sections of the
Internal Revenue Code or (b) direct Rollovers made in compliance with
Section 401(a)(31) of the Internal Revenue Code.
1.53 "STIF Fund" means the Northern Trust Company Collectively
Trust Short Term Investment Fund and such other common or collective
trust funds or investment companies registered under the Investment
Company Act of 1940, which have similar investment and administrative
characteristics, as the Committee may from time to time designate.
1.54 "Stock Sharing" means the portion of the Program consisting
of Participants' Stock Sharing Accounts as identified in
Section 1.1(d).
1.55 "Subsidiary" shall mean any corporation affiliated with the
Company within the meaning of Section 1504 of the Internal Revenue
Code.
1.56 "Termination of Employment" means (a) a resignation by an
Employee for any reason, (b) a dismissal of an Employee for any
reason, or (c) any other termination of the employee-employer
relationship. Transfers of an Employee from an Employer, Commonly
Controlled Entity, member of an Affiliated Service Group, Domestic
Affiliate or Foreign Affiliate to another Employer, Commonly
Controlled Entity, member of an Affiliated Service Group, Domestic
Affiliate or Foreign Affiliate shall not be treated as a Termination
of Employment.
1.57 "Top Paid Group" means, for a Plan Year, the group
consisting of the top twenty percent of the total number of persons
employed by all Employers, Commonly Controlled Entities and members of
Affiliated Service Groups when ranked on the basis of Considered
Compensation paid during the Plan Year; provided that for purposes of
determining the total number of persons employed by such entities, the
following employees shall be excluded:
(a) employees who had not completed six (6) months of
service,
(b) employees who worked less than seventeen and one-half
(17-1/2) hours per week,
(c) employees who normally worked during not more than six
(6) months during any Plan Year, and
(d) employees who had not attained age 21.
1.58 "Trust" means the legal entity or entities resulting from
the Trust Agreement between the Company and the Trustee, and any
amendments thereto, by which Employer Contributions, Participant
Contributions, Rollovers, Participant Elected Contributions, the
proceeds of any loan made pursuant to Article VI, Employer Leveraged
ESOP Contributions the Leveraged ESOP Suspense Account, any Company
Stock purchased therewith, amounts held in Participants' Stock Sharing
Accounts and any net income and profits thereon shall be received,
held, invested and distributed to or for the benefit of the
Participants and Beneficiaries.
1.59 "Trust Agreement" means any agreement between the Company
and a Trustee, establishing the McDonald's Corporation Savings and
Profit Sharing Master Trust and the McDonald's Matching and Deferred
Stock Ownership Trust ("McDESOP Trust") and effective after December
29, 1995, the McDonald's Stock Sharing Trust for so long as it holds
assets of the Program ("Trust") and until such assets are transferred
to the McDESOP Trust, as amended from time to time and such additional
trust agreements as the Company and the Trustee shall establish under
the Program.
1.60 "Trustee" means any corporation, individual or individuals
who shall accept the appointment to execute the duties of Trustee as
set forth in a Trust Agreement.
1.61 "Trust Fund" means all property received and held by a
Trustee pursuant to a Trust Agreement for the Program.
1.62 "Valuation Date" means the last business day of each
calendar month and such additional dates as the Committee may from
time to time specify except that solely for the purpose of valuing
accounts to make distributions pursuant to Article XI, "Valuation
Date" means the fifteenth day of each calendar month (or if the
fifteenth day of the month is not a business day, the next previous
business day) and the last business day of each calendar month and
such additional dates as the Committee may from time to time specify.
1.63 "Vesting Retirement Date" means the date on which a
Participant attains age 55.
1.64 "Year of Credited Service" means a Plan Year during which an
Employee has not less than one thousand (1,000) Hours of Service,
including, once the individual has become an employee, Hours of
Service credited while he was a Leased Employee.
1.65 "Year of Eligibility Service" means an Eligibility
Computation Period during which an Employee has not less than one
thousand (1,000) Hours of Service, including, once the individual has
become an employee, Hours of Service credited while he was a Leased
Employee.
ARTICLE II
PARTICIPATION
2.1 Participation. Each person who was a Participant under the
provisions of the McDonald's Corporation Profit Sharing Program or the
McDonald's Stock Sharing Plan on the day before the Effective Date,
shall continue to be a Participant hereunder. Each other Employee
shall become a Participant in the Program on the first Entry Date
coinciding with or next following the date he completes one Year of
Eligibility Service and attains age 21; provided that each Participant
who is a certified swing manager, primary maintenance employee, crew
member or other store hourly employee shall only become a Participant
solely for purposes of the Profit Sharing Plan and the McDESOP
portions of the Program.
Admission to participation in the Program shall only be made when
an Employee is not on an Authorized Leave of Absence or serving with
the Armed Forces of the United States.
Each Participant shall continue to be a Participant for purposes
other than being an Active Participant as provided in Sections 1.2(a)
and 1.2(c) until the later of (a) the date he incurs a Termination of
Employment or has a Break in Service and (b) the date his entire
vested Net Balance Account has been paid from the Trust.
Notwithstanding the foregoing, each Participant is a participant
only with respect to the portions of the Program which have been
adopted by his Employer and no additional Participants shall enter the
Stock Sharing portion of the Plan.
2.2 Certification of Participation and Compensation to
Committee. Each Employer shall certify to the Committee, within a
reasonable time before each Entry Date, the names of all new
Participants. Each Employer, within a reasonable time after the last
day of each Plan Year, shall certify to the Committee with respect to
its Employees each Participant's number of Hours of Service and
Considered Compensation during such Plan Year and such other
information as the Committee may request.
2.3 Termination of Employment, Break in Service, Reemployment
and Change in Employment Status. Upon resuming employment following a
Break in Service, an Employee who is at least age 21, who had at least
one Year of Eligibility Service prior to such Break in Service
("Rehired Employee"), and who completes one Year of Eligibility
Service following such Break in Service shall become a Participant
retroactively to the day of such Rehired Employee's Retroactive
Participation Date (as defined in the following sentence) provided
that such Rehired Employee shall not be an Active Participant until
the first day of the calendar month in which occurs the date of his
completion of one Year of Eligibility Service following the Break in
Service (the "Active Participation Date") and his Considered
Compensation shall be deemed to be first earned commencing with his
Active Participation Date; and further provided that Participant
Elected Contributions and Employer Matching Contributions shall
commence on the first day of the pay period in which the Participant
completes One Year of Eligibility Service or as soon as
administratively feasible thereafter. An Employee's "Retroactive
Participation Date" is the date such Employee resumes employment.
Upon a change in his employment status or resuming employment
following a Termination of Employment which did not constitute a Break
in Service, an Employee who was a Participant prior to a Termination
of Employment shall be treated as an Active Participant from the day
of his change in status or resumption of employment.
Notwithstanding the foregoing provisions of this Section 2.3, a
Rehired Employee who has a Participant Elected Contribution Account
shall have his Participant Elected Contributions reinstated at the
same level as was in effect at the time of his Termination of
Employment subject to any new election made by such Participant
pursuant to Section 5.1
2.4 Employees of Foreign or Domestic Affiliates. An employee of
a Foreign or Domestic Affiliate who becomes an Employee shall become a
Participant on the later of the day such individual becomes an
Employee or the next Entry Date following the date such Employee
attains age 21 and completes one Year of Eligibility Service.
2.5 Leased Employee. A person who has been a Leased Employee
(determined without regard to Section 1.34(b)) who becomes an Employee
shall become a Participant on the later of (a) the first day of the
month following the month in which such person becomes an Employee or
(b) the next Entry Date following the date such person attains age 21
and completes one Year of Eligibility Service.
ARTICLE III
PROFIT SHARING PLAN EMPLOYER CONTRIBUTIONS
3.1 Profit Sharing Contributions. Profit Sharing Contributions
shall be made by Employers, as follows:
(a) Determination of Contribution. The Board of Directors
shall determine and certify to the Committee the amount, if any,
of Employer Profit Sharing Contributions to be made to the
Program by all Employers hereunder separately for (1) staff and
executive employees or store managers and (2) Certified Swing
Managers, primary maintenance employees, crew members and other
hourly restaurant employees. In its discretion, the Board of
Directors may determine different amounts of contributions or
contributions of different percentages of Considered Compensation
for the groups identified in (1) and (2) of the preceding
sentence. Such determination shall be binding on all
Participants, the Committee, the Company and the Other Employers.
(b) Employer's Shares of Profit Sharing Contributions.
Subject to Section 12.2, each Employer including the Company
shall contribute for each Plan Year an amount equal to the sum of
the Staff Contribution and the Crew Contribution as determined
for such Employer below:
(1) Staff Contribution. The amount of an Employer's
Staff Contribution shall equal the product of (A) the total
Profit Sharing Contributions for the Plan Year for the
Participants identified in Section 3.1(a)(1), as determined
by the Board of Directors in accordance with Section 3.1(a),
multiplied by (B) a fraction the numerator of which is the
total Considered Compensation for such Plan Year of such
Participants who are (i) Active Participants and
(ii) Employees of such Employer and the denominator of which
is the total Considered Compensation for the Plan Year of
all Active Participants who are Employees, described in
Section 3.1(a)(1), of all Employers; and
(2) Crew Contribution. The amount of an Employer's
Crew Contribution shall equal the product of (A) the total
Profit Sharing Contributions for the Plan Year for the
Participants identified in Section 3.1(a)(2), as determined
by the Board of Directors in accordance with Section 3.1(a),
multiplied by (B) a fraction the numerator of which is the
total Considered Compensation for such Plan Year of such
Participants who are (i) Active Participants and
(ii) Employees of such Employer and the denominator of which
is the total Considered Compensation for the Plan Year of
all Active Participants who are Employees, described in
Section 3.1(a)(2), of all Employers.
3.2 Payment of Contributions Made Pursuant to Article III. The
Employer Profit Sharing Contributions for each Plan Year shall be paid
in cash or in securities of McDonald's Corporation, which are
qualifying employer securities as defined in ERISA Section 407(d)(5)
(which includes but is not limited to Company Stock), in full not
later than the due date for filing the federal income tax return of
the Employer for the tax year during which the last day of such Plan
Year falls.
Employer Profit Sharing Contributions, if any, for each Plan Year
shall be held in the Profit Sharing Holding Fund and, if contributed
in cash, invested in the STIF Fund or, if contributed as qualifying
employer securities, remain invested in qualifying employer securities
until February 1 following the Plan Year or, if not administratively
feasible, as soon thereafter as administrative requirements may
warrant, at which time the Committee shall allocate such amounts to
Participants' Profit Sharing Accounts and invest them in accordance
with Section 10.7, 10.8 or 10.9(a), as applicable.
ARTICLE IV
McDESOP and LEVERAGED EMPLOYER CONTRIBUTIONS
4.1 Amount of Employer Matching Contributions. Employer
Matching Contributions shall be made by Employers as specified in (a),
subject to the limitations specified in (b), as follows:
(a) Employer Matching Contributions. For each Plan Year,
each Employer shall contribute to the Trust as Employer Matching
Contributions an amount equal to (i) the Matching Amount reduced
by (ii) the Forfeiture Amount, as defined below:
(1) The Matching Amount shall equal fifty percent (or
such greater percentage as the Board of Directors from time
to time determines) of the sum of all Participant Elected
Matched Contributions (excluding Special Participant Elected
Matched Contributions as described in Section 5.1) for the
Plan Year made for Active Participants who are employed by
that Employer. If the Forfeiture Amount for a Plan Year is
greater than the Matching Amount, the Matching Amount shall
equal the Forfeiture Amount plus any Employer Matching
Contributions made to the Trust by the Employers for such
Plan Year.
(2) The Forfeiture Amount shall equal (A) the amount
of Forfeitures which occur during a Plan Year pursuant to
Sections 11.4(c) and 16.6 after any charges to Forfeitures
provided hereunder, (B) multiplied by a fraction the
numerator of which is the amount of Participant Elected
Matched Contributions (excluding Special Participant Elected
Matched Contributions) made for Active Participants who are
Employees of such Employer and the denominator of which is
the total amount of Participant Elected Matched
Contributions (excluding Special Participant Elected Matched
Contributions) made for Active Participants for the Plan
Year.
(b) Average Actual Contribution Percentage. The average
actual contribution percentage ("Average ACP") for a specified
group of Participants for a Plan Year shall be the average of the
actual contribution percentages of the persons in such group. A
Participant's actual contribution percentage is equal to the
product of (1) 100 multiplied by (2) the quotient of (A) the sum
of Employer Matching Contributions (including any Forfeitures
allocated therewith), and Special Section 401(k) Employer
Contributions and such amount of Participant Elected
Contributions actually paid to the Trust for each such Employee
for such Plan Year divided by (B) the Employee's Considered
Compensation for the Plan Year ("Actual Contribution
Percentage"). As soon as practicable after the end of the Plan
Year, the Committee shall calculate the Average ACP for the Plan
Year for the group of Employees eligible to be Active
Participants who are Highly Compensated Employees and for the
group of such Employees who are Non-highly Compensated Employees.
Solely for purposes of the Average ACP test the Committee
shall have the discretion to determine the portion of a
Participant's (or selected group of Participant's) Employer
Matching Contributions (and Forfeitures), Special Section 401(k)
Employer Contributions or Participant Elected Contributions to be
counted in calculating the Participant's average contribution
percentage and in making such determination shall be under no
obligation to treat similarly situated Participants in a like
manner so long as the following requirements (to the extent
applicable) are satisfied:
(1) The amount of Special Section 401(k) Employer
Contributions is non-discriminatory under Code Section
401(a)(4);
(2) The amount of Participant Elected Contributions,
including any Participant Elected Contributions counted for
purposes in calculating Participants' average contribution
percentages, shall satisfy the requirements of Code Section
401(k)(3);
(3) The Special Section 401(k) Contributions are
allocated to the Participant as of a date within the Plan
Year and the Participant Elective Contributions satisfy the
requirements of Treas. Reg. Section 1.401(k)-1(b)(4)(i) for
the Plan Year.
A Participant's Employer Matching Contributions, Special
Section 401(k) Contributions or Participant Elected Contributions
which are counted for purposes of the Required ADP Test pursuant
to Section 5.2(e) shall not be counted for purposes of
calculating such Participant's average contribution percentage.
(c) Required Actual Contribution Percentage Test and
Adjustment. The Average ACP for the group of Highly Compensated
Employees eligible to be Active Participants for any Plan Year
shall not exceed both (1) and (2) ("Required ACP Test") as
follows:
(1) the Average ACP for the group of Participants who
are Non-highly Compensated Employees multiplied by 1.25, and
(2) the lesser of (A) the Average ACP for the group of
Employees eligible to be Active Participants who are Non-
highly Compensated Employees multiplied by 2 or (B) such
Average ACP for such Employees plus 2%.
If the Required ACP Test for a Plan Year is not met and, if the
Company does not elect to make Special Section 401(k) Employer
Contributions with respect to the Plan Year sufficient to result
in the Average ACP of the Highly Compensated Employees not
exceeding the amounts in both Sections 4.1(c)(1) and (c)(2), then
the Committee shall reduce Employer Matching Contributions
including any Forfeitures allocated therewith which may be
allocated to Participants who are Highly Compensated Employees to
the highest percentage of Considered Compensation which results
in the Average ACP of Highly Compensated Employees not exceeding
the amounts in both Section 4.1(c)(1) or (c)(2) above. The
Committee shall reduce and distribute such excess Employer
Matching Contributions including any Forfeitures allocated
therewith and any income, gains or losses attributable thereto,
as determined in accordance with Section 5.3, to Highly
Compensated Employees by first reducing and distributing the
Employer Matching Contributions including any Forfeitures
allocated therewith of such Participants with the highest Actual
Contribution Percentage to equal that of the Highly Compensated
Employee with the next highest Actual Contribution Percentage and
repeating such reductions until the Average ACP for the Highly
Compensated Employees does not exceed both the amounts in
Sections 4.1(c)(1) or (c)(2) above. The Committee shall make any
distributions necessary for the Program to meet the Required ACP
Test after the end of the Plan Year with respect to which such
reduced Employer Matching Contributions including any Forfeitures
allocated therewith were made and, if reasonably possible, by
March 15 following the end of such Plan Year but, in any event,
not later than by the end of the following Plan Year.
4.2 Leveraged ESOP Contributions. Leveraged ESOP Contributions
shall be made by Employers, as follows:
(a) Company Leveraged ESOP Contributions. For each Plan
Year that a loan authorized under Section 6.1 remains unpaid, the
Company shall contribute in cash to the Trust, as Leveraged ESOP
Contributions, such amounts (if any) as shall be determined by
the Board of Directors, provided, however, the Company's
Leveraged ESOP Contribution in cash for any Plan Year shall not
be less than the product of:
(1) the installment (if any) payable on such loan
reduced by the dividends on unallocated shares of Company
Stock (including Company Stock into which such shares have
been converted) held in the suspense account associated with
such loan (or any loan refinanced with such loan), dividends
on allocated shares of Company Stock (including Company
Stock into which such shares have been converted) held in
Participants' Leveraged ESOP Accounts acquired with the
proceeds of such loan (or any Loan refinanced with such
loan) and earnings attributable to such dividends and to
Leveraged ESOP Contributions made to repay such loan;
multiplied by
(2) a fraction, the numerator of which is the
Considered Compensation paid by the Company to Employees for
the Plan Year paid while they were Active Participants and
the denominator of which is the Considered Compensation for
the Plan Year paid to all Employees while they were Active
Participants.
If no installment (as drawn or renegotiated) is payable on a loan
for the Plan Year, no Leveraged ESOP Contribution shall be
required with respect to such loan for the Plan Year, except as
otherwise determined by the Board of Directors. The dividends on
allocated shares of Company Stock held in Participants' Leveraged
ESOP Accounts acquired with the proceeds of a loan or any loan
refinanced with such loan (or shares into which such Company
Stock has been converted) shall be included in Section 4.2(a)(1)
only to the extent that Employer Contributions and the dividends
and other income attributable to unallocated shares held in the
suspense account associated with such loan are less than the
installments payable or to be payable with respect to such loan.
(b) Leveraged ESOP Contributions by Other Employers. Each
Employer that has adopted the Leveraged ESOP portion of the Plan
(other than the Company) shall contribute to the Trust an amount
equal to the product of:
(1) the total Considered Compensation for the Plan
Year paid by such Employer to Employees while they were
Active Participants; multiplied by
(2) a fraction the numerator of which is the Leveraged
ESOP Contribution of the Company for the Plan Year and the
denominator of which is the Considered Compensation paid by
the Company to Employees while they were Active
Participants.
(c) Additional Leveraged ESOP Contributions. The Board of
Directors may, in its discretion, determine that Additional
leveraged ESOP Contributions shall be made for a Plan Year in
Company Stock and designate such contributions as Per Capita
Additional Leveraged ESOP Contributions or Compensation Based
Additional Leveraged ESOP Contributions (collectively called
"Additional Leveraged ESOP Contributions"). The Company shall
make such Additional Leveraged ESOP Contributions in an amount
equal to the total Additional Leveraged ESOP Contribution
multiplied by a fraction the numerator of which is the Considered
Compensation paid by the Company to Employees for the Plan Year
paid while they were Active Participants and the denominator of
which is the Considered Compensation for the Plan Year paid to
all Employees while they were Active Participants.
Each Employer that has adopted the Leveraged ESOP (other
than the Company) shall contribute to the Trust as Additional
Leveraged ESOP Contributions an amount equal to the product of
the total Considered Compensation for the Plan Year paid by such
Employer to Employees while they were Active Participants
multiplied by a fraction the numerator of which is the Company's
Additional Leveraged ESOP Contribution and the denominator of
which is the Compensation paid by the Company to Employees while
they were Active Participants.
(d) Special Dividend Replacement Contributions. The Board
of Directors may, in its discretion, determine that Special
Dividend Replacement Contributions shall be made as of any
Valuation Date in an amount not to exceed the dividends with
respect to Company Stock allocated to Participant's Leveraged
ESOP Accounts which are used pursuant to Section 6.3(b). Each
Employer shall make any such Special Dividend Replacement
Contributions in an amount equal to the total amount of such
contributions to be made as of a Valuation Date multiplied by a
fraction the numerator of which is the Considered Compensation
paid to Active Participants who are Employees of the Employer for
the calendar quarter ending on the Valuation Date and the
denominator of which is the Considered Compensation paid to all
Active Participants during the calendar quarter ending on the
Valuation Date.
4.3 Annual Employer Contribution Elections.
(a) Minimum and Maximum Amount of Participant Elected
Matched Contributions. If Participant Elected Matched
Contributions (in addition to Special Participant Elected Matched
Contributions made prior to January 1, 1993) are to be permitted
for all or any portion of a Plan Year, the Company by action of
its Board of Directors shall specify for the Plan Year or portion
of the Plan Year, the amount (either as a dollar amount or a
percentage of each Active Participant's Considered Compensation)
of such Participant Elected Matched Contributions ("Specified
Participant Elected Matched Contributions") which shall be made
on behalf of an Active Participant in the absence of a contrary
election by the Participant and may also specify, the minimum and
maximum amounts of Participant Elected Matched Contributions
which a Participant may elect in lieu of Specified Participant
Elected Matched Contributions (either as a dollar amount or a
percentage of each Participant's Considered Compensation) for the
Plan Year or portion of the Plan Year as permitted by procedures
established by the Plan Administrator, provided that such minimum
and maximum amounts shall be not greater for any Plan Year than:
(1) six percent (6%) of the Participant's Considered
Compensation if the Participant is a staff or an executive
employee or a store manager,
(2) ten percent (10%) of the Participant's Considered
Compensation if the Participant is a Certified Swing Manager
or primary maintenance employee, and
(3) eight percent (8%) of the Participant's Considered
Compensation if the Participant is a crew member or other
hourly restaurant employee.
(b) Special Section 401(k) Employer Contributions. For
each Plan Year, the Company may elect to have the Company and the
other Employers make a Special Section 401(k) Employer
Contribution to the Program in such amount (if any) as the Board
of Directors may determine, which shall be allocated pursuant to
Section 7.2(b) to the Employer Matching Contribution Accounts of
those Active Participants who for the Plan Year are Non-highly
Compensated Employees who have Compensation reduction elections
in effect. In any Plan Year in which the Company elects to have
such a Special Section 401(k) Employer Contribution made, each
Employer, including the Company, shall contribute a fractional
portion of the Special Section 401(k) Employer Contribution, in
an amount equal to the Special Section 401(k) Employer
Contribution multiplied by a fraction, the numerator of which is
the amount of Participant Elected Contributions for such Plan
Year of those Active Participants who are employed by the
Employer and who are Non-highly Compensated Employees, and the
denominator of which is the amount of Participant Elected
Contributions for the Plan Year of all Active Participants who
are Non-highly Compensated Employees.
4.4 Additional Employer Contributions. For such Plan Years, if
any, as the Board of Directors shall direct, the Employers shall make
Additional Employer Contributions in an amount to be determined by the
Board of Directors. Each such Employer shall contribute Additional
Employer Contributions to the Trust for a Plan Year in an amount equal
to the total Additional Employer Contributions for such Plan Year
multiplied by a fraction the numerator of which is the number of
Active Participants eligible to receive Additional Employer
Contributions who are Employees of the Employer and the denominator of
which is the total number of Active Participants eligible to receive
Additional Employer Contributions.
4.5 Payment of Contributions Made Pursuant to Article IV.
Employer Contributions for each Plan Year made in accordance with
Article IV, except for Special Section 401(k) Employer Contributions
as provided in Section 4.3(b), shall be delivered to the Trustee on or
before the due date for the filing of the federal income tax return
(including any extensions) of the Employer for the tax year during
which the last day of such Plan Year occurs. Special Section 401(k)
Employer Contributions for a Plan Year may be made during the Plan
Year or at any time on or before the last day of the following Plan
Year.
Employer Matching Contributions and any Forfeitures allocated
therewith, Special Section 401(k) Employer Contributions and
Additional Employer Contributions shall be invested in the McDESOP
McDonald's Common Stock Fund and held in the McDESOP and Leveraged
ESOP Holding Fund until allocated to Participant's Accounts as
provided in Sections 7.2(a), 7.2(b) and 7.2(c), respectively.
Participant Elected Contributions shall be invested in the McDESOP
McDonald's Common Stock Fund and held in the McDESOP and Leveraged
ESOP Holding Fund until credited to Participant's Accounts as provided
in Section 7.4.
4.6 Form of Contributions. Except as otherwise provided,
Employer Contributions to the McDESOP Trust shall be either in cash or
in Company Stock, as each Employer shall determine in its discretion.
ARTICLE V
PARTICIPANT ELECTED CONTRIBUTIONS
5.1 Participant Elected Contributions. Each Active Participant,
who is employed by an Employer, shall have his Considered Compensation
reduced for each Plan Year or designated portion of a Plan Year by an
amount equal to the Specified Participant Elected Matched Contribution
for the Plan Year or designated portion of a Plan Year, as provided in
Section 4.3(a), which amount his Employer shall contribute to the
McDESOP Trust on the Participant's behalf as a Participant Elected
Matched Contribution, unless the Participant shall elect, on such
form, at such time and in such manner as the Committee shall specify,
not to have his Considered Compensation so reduced or (subject to the
minimum and maximum amounts of reduction specified for the Plan Year
pursuant to Section 4.3(a)) reduced by a lesser or greater amount. In
addition, each Active Participant may elect in writing on forms
approved by the Committee to have his Employer contribute to the
McDESOP Trust on the Participant's behalf as Participant Elected
Unmatched Contributions an amount equal to any additional amount by
which the Participant elects to have his Considered Compensation
reduced (which election may be a larger percentage for certain
Considered Compensation during a Plan Year, e.g. bonus, and a smaller
percentage for other Considered Compensation, e.g. salary, as the
Committee shall permit), provided that such amount may not exceed
seven percent (7%) of his Considered Compensation for a Plan Year and
further provided that an Active Participant may elect Participant
Elected Unmatched Contributions as provided above regardless of
whether the Participant is making Participant Elected Matched
Contributions for that period. The Committee may from time to time
establish general policies requiring Participants to elect Participant
Elected Matched Contributions up to a specified level before electing
any Participant Elected Unmatched Contributions.
At each quarterly Valuation Date, the amount of a Participant's
Participant Elected Matched Contributions shall be redetermined by
recharacterizing any Participant Elected Unmatched Contributions as
Participant Elected Matched Contributions to the extent in the Plan
Year to date taking into account all of the Participant's Participant
Elected Matched Contributions and his Considered Compensation in the
Plan Year through the Valuation Date, the Participant has not made the
maximum permitted Participant Elected Matched Contributions for
Participants in the same category as the Participant. Notwithstanding
any provision herein to the contrary, the amount of a Participant's
Participant Elected Contributions for any calendar year shall not
exceed an amount or percentage which from time to time is established
by the Committee or the Board of Directors, nor a pro rata portion of
said amount for any partial calendar year of contributions.
Except as otherwise specifically provided herein, a Participant
may make, change or revoke a Compensation reduction election at such
times and in such manner as the Committee may permit, provided that
any such election, change or revocation shall apply solely to
Considered Compensation, which is not currently available to the
Participant as of the date of such election, change or revocation.
The Compensation reduction election by the Active Participant which is
in accordance with the Program shall continue in effect,
notwithstanding any change in Considered Compensation, until he shall
change such Compensation reduction election or until he shall cease to
be an Active Participant. If a Participant has an election pursuant
to the McDonald's 1989 Executive Equalization Plan ("McCap I") or the
McDonald's Supplemental Employee Benefit Equalization Plan
("McCap II") in effect for a calendar year, the Participant's
Compensation reduction election hereunder may not be changed for such
year but may only be changed before the beginning of the following
Plan Year for such Plan Year. Each Employer shall make Participant
Elected Contributions to the Trustee on behalf of each Active
Participant employed by the Employer in the amount by which the
Participant's Considered Compensation was reduced pursuant to this
Section 5.1.
5.2 Restrictions on Participant Elected Contributions.
Notwithstanding the provisions of Section 5.1, the following
restrictions shall apply to Participant Elected Contributions:
(a) No Participant Compensation reduction election shall be
solicited or accepted from any Participant and no Participant
Elected Contributions shall be made on behalf of any Participant
unless and until a registration statement under the Securities
Act of 1933 has become effective with respect to securities
offered in connection with the Program, unless in the opinion of
counsel for the Company such registration statement is not
required;
(b) No Compensation reduction election shall be solicited
or accepted from any Participant who resides or works in any
state and no Participant Elected Contributions shall be made on
behalf of any Participant who resides or works in any state
unless and until the Program shall have complied with applicable
securities and blue sky laws of the state or in the opinion of
counsel of the Company is exempt from such law; and
(c) (1) The sum of Participant Elected Contributions and
of elected deferrals under any Related Defined Contribution
Plan for any Participant shall in no event exceed a maximum
of $9,500 (in 1996 as adjusted from time to time, in
accordance with Section 402(g)(5) of the Internal Revenue
Code) for a calendar year ("Maximum Elective Deferral
Amount").
(2) If the Participant notifies the Committee in
writing by March 1 following the Plan Year or such later
date not later than the April 15 following the Plan Year as
the Committee shall permit, that the sum of his elective
contributions to a simplified employer pension, to a 403(b)
plan (as defined in Section 402(g)(3) of the Internal
Revenue Code), or to any qualified cash or deferred
arrangement (as defined in Section 401(k) of the Internal
Revenue Code) exceeds the Maximum Elective Deferral Amount
("Excess Elected Deferrals"), such portion of the
Participant's Participant Elected Contributions as the
Participant shall elect in such notice not to exceed the
amount of such Excess Elected Deferrals (including any
income allocated thereto as determined in accordance with
Section 5.3) shall be distributed to the Participant not
later than the April 15 following the Plan Year. In
determining whether a Participant has made Excess Elected
Deferrals under this Section 5.2(c)(2), if a Participant is
a participant in any plan described in Section 403(b) of the
Internal Revenue Code under which he makes elective
deferrals, the Maximum Elective Deferral Amount shall be
increased in accordance with the provisions of Sections
402(g)(4) and 402(g)(8) of the Internal Revenue Code with
respect to any Participant who participates in a plan
described in Section 403(b) of the Internal Revenue Code or
who is a qualified employee in a plan of a qualified
organization (as defined in Section 402(g)(8) of the
Internal Revenue Code) for a calendar year.
(3) Notwithstanding the foregoing, if the Participant
has elected to participate in McCAP I or McCAP II as
provided therein his Compensation reduction elections
hereunder shall be irrevocable to the extent provided in
Section 5.1 and any amount of such deferrals which shall be
in excess of the Maximum Elective Deferral Amount and any
Employer Matching Contributions and any Forfeitures
allocated therewith shall not be contributed hereunder but
shall be credited to the Participant's account under McCAP I
or McCAP II, as applicable, to the extent provided
thereunder and further provided that no such amount shall be
credited to a Participant under more than one of the
McDonald's Profit Sharing Program Equalization Plan
("McEqual"), McCAP I and McCAP II or any other non-qualified
deferred compensation plan from time to time maintained by
the Company.
(4) If a Participant is not eligible to or has not
elected to participate in McCAP I or McCAP II as provided
therein and has Compensation reduction elections in excess
of the Maximum Elective Deferral Amount hereunder, such
Participant Elected Contributions shall not be contributed
to the Program nor shall such Participant be credited with
any Participant Elected Contributions or Employer Matching
Contributions and any Forfeitures allocated therewith under
McCAP I or McCAP II, as applicable, for the Plan Year.
(5) In determining whether the Maximum Elective
Deferral Amount has been exceeded, the Plan Administrator
may count Participant Elected Contributions toward the limit
in the order contributed to the Program, may apply the
Maximum Elective Deferral Amount on a pro rata basis to
periods specified by the Plan Administrator or such other
approach as the Plan Administrator shall reasonably
determine.
(d) Average Actual Deferral Percentage. The average Actual
Deferral Percentage ("Average ADP") for a specified group of
Participants for a Plan Year shall be the average of the Actual
Deferral Percentages of the members of such group. The Actual
Deferral Percentage of an individual is the amount of his
Participant Elected Contributions (excluding for each Non-highly
Compensated Employee any such contributions in excess of the
Maximum Elective Deferral Amount as defined in Section 5.2(c)(1))
and such amount of Employer Matching Contributions and Special
Section 401(k) Employer Contributions, actually paid to the Trust
for each such Employee for such Plan Year divided by the
Employee's Considered Compensation for the Plan Year ("Actual
Deferral Percentage"). As soon as practicable after the end of
the Plan Year, the Committee shall calculate the Average ADP for
the Plan Year for the group of Participants who are Highly
Compensated Employees and for the group of Participants who are
Non-highly Compensated Employees.
Solely for purposes of calculating the Average ADP the
Committee shall have the discretion to determine the portion of a
Participant's (or selected group of Participant's) Participant
Elected Contributions, Employer Matching Contributions or Special
Section 401(k) Employer Contributions to be counted in
calculating the Participant's Actual Deferral Percentage and in
making such determination shall be under no obligation to treat
similarly situated Participants in a like manner so long as the
following requirements (to the extent applicable) are satisfied:
(1) The amount of Special Section 401(k) Employer
Contributions treated as Participant Elected Contributions
for purposes of calculating the Average Deferral Percentage
shall satisfy the requirements of Section 401(a)(4);
(2) The amount of Special Section 401(k) Employer
Contributions treated as Participant Elected Contributions
for purposes of the ADP test and those Special Section
401(k) Contributions counted in the calculation of the ACP
Test satisfies the requirements of Code Section 401(a)(4);
and
(3) The Special Section 401(k) Contributions are
allocated to Participant's Net Balance Account under the
Program as of the last day of the Plan Year for which the
ADP test is being calculated.
(e) Required ADP Test and Adjustment. The Average ADP for
a group of Highly Compensated Employees eligible to be Active
Participants for any Plan Year shall not exceed both (1) and (2)
("Required ADP Test") below:
(1) the Average ADP for the group of Active
Participants who are Non-highly Compensated Employees
multiplied by 1.25, and
(2) the lesser of (A) the Average ADP for Active
Participants who are Non-highly Compensated Employees
multiplied by 2 or (B) such Average ADP for such Active
Participants plus 2%.
If the Required ADP Test for a Plan Year is not met and, if
the Company does not elect to make Special Section 401(k)
Contributions with respect to the Plan Year sufficient to result
in the Average ADP of the Highly Compensated Employees not
exceeding both the amounts in Sections 5.2(e)(1) and (e)(2), then
the Committee shall reduce, in accordance with Section 5.5,
Participant Elected Contributions (and any Employer Matching
Contributions and any Forfeitures allocated therewith allocated
with respect thereto) that Active Participants or a portion of
the Active Participants who are Highly Compensated Employees may
defer so that the Average ADP of Highly Compensated Employees
does not exceed the amounts in Sections 5.2(e)(1) and (e)(2).
The Committee shall reduce and distribute such excess
Participant Elected Contributions and any income, gains or losses
attributable thereto, as determined in accordance with
Section 5.3, to Highly Compensated Employees by first reducing
the Participant Elected Contributions (and any Employer Matching
Contributions and any Forfeitures allocated therewith) of such
Participants with the highest Actual Deferral Percentage to equal
that of the Highly Compensated Employee with the next highest
Actual Deferral Percentage and repeating such reductions until
the ADP for the Highly Compensated Employees does not exceed the
amounts in both Section 5.2(e)(1) and (e)(2) above. The
Committee shall distribute such reduced Participant Elected
Contributions and any income allocable thereto after the end of
the Plan Year with respect to which such reduced Participant
Elected Contributions were made and, if reasonably possible, by
March 15 following the end of such Plan Year but, in any event,
not later than by the end of the following Plan Year. If
Employer Matching Contributions and any Forfeitures allocated
therewith are included in calculating the ADP for a Plan Year,
any such contributions reduced hereunder shall be distributed to
Participants in the same manner as Participant Elected
Contributions are distributed (including any income allocable
thereto). If Employer Matching Contributions and any Forfeitures
allocated therewith are not included in calculating the ADP for
Plan Year, any amount of Employer Matching Contributions and any
forfeitures allocated therewith reduced hereunder because such
contributions were originally allocated with respect to
Participant Elected Matched Contributions which are reduced to
meet the Required ADP Test shall become a Forfeiture and shall be
allocated to other Participant's Employer Matching Contribution
Accounts in proportion to the Employer Matching Contributions and
any Forfeitures allocated therewith to such accounts pursuant to
Sections 7.2(a) and (d).
5.3 Allocation of Income to Certain Distributed Amounts.
Income, gains and losses equal to the sum of the amounts determined
under (a) below shall be allocated to and distributed with any amounts
distributed to a Participant pursuant to Sections 4.1(c), 5.2(e) or
5.4 as follows:
(a) Income for Plan Year. Income, gains and losses for a
completed Plan Year with respect to contributions distributed in
accordance with Section 4.1(c), 5.2(e) or 5.4 shall equal the
income, gains and losses for the Plan Year allocable to a
Participant's Account for such contributions (taking the
contributions allocated to each different type of Account,
separately) multiplied by a fraction the numerator of which is
the amount of such contributions so distributed and the
denominator of which is the total of such Account balance as of
the last day of the Plan Year reduced by all earnings and gains
and increased by all expenses and losses allocable to such
Account for the Plan Year.
(b) Allocation of Distributed Income to Accounts. Income,
gains and losses distributed with any amounts distributed to a
Participant pursuant to Sections 4.1(c), 5.2(e) or 5.4 shall
reduce the income, gains and losses allocated to a Participant's
Participant Elected Contribution Account or Employer Matching
Contribution Account, in accordance with Section 10.13, in an
amount equal to the total amount of such income, gains and losses
distributed.
5.4 Multiple Use of Alternative Limitations. If after any
reductions provided for in Sections 4.1(c) and 5.2(e) are made, the
ACP of Highly Compensated Employees exceeds the amount in Section
4.1(c)(1) but does not exceed the lesser of the amounts in Section
4.1(c)(2) and the Average ADP of Highly Compensated Employees exceeds
the amount in Section 5.2(e)(1) but does not exceed the lesser of the
amounts in Section 5.2(e)(2), the sum of the Average ADP and the
Average ACP, for a Plan Year, of the Highly Compensated Employees who
are Active Participants (i) shall not exceed the greater of (a) or
(b), where:
(a) equals the sum of (1) plus (2) where:
(1) is one hundred and twenty-five percent (125%) of
the greater of (A) the Average ADP for such Plan Year of the
Non-Highly Compensated Employees who are Active
Participants, or (B) the Average ACP for such Plan Year of
such Non-Highly Compensated Employees; and
(2) is two percent plus the lesser of the amount
determined under Section 5.4(a)(1)(A) or the amount
determined under Section 5.4(a)(1)(B), but in no event shall
this amount exceed two hundred percent (200%) of the lesser
of the amounts determined under Section 5.4(a)(1)(A) or
5.4(a)(1)(B); and
(b) equals the sum of (1) plus (2) where
(1) is one hundred and twenty-five percent (125%) of
the lesser of (A) the Average ADP for such Plan Year of the
Non-Highly Compensated Employees who are Active
Participants, or (B) the Average ACP for such Plan Year of
such Non-Highly Compensated Employees; and
(2) is two percent plus the greater of the amount
determined under Section 5.4(b)(1)(A) or 5.4(b)(1)(B). In
no event, however, shall this amount exceed 200 percent of
the greater of the amounts determined under
Section 5.4(b)(1)(A) or 5.4(b)(1)(B).
The Committee may establish, from time to time, such rules,
restrictions and limitations as it may deem appropriate to insure that
the above limitations are met. If the Committee determines that the
reduction or disallowance of Employer Matching Contributions and any
Forfeitures allocated therewith, Participant elections or Participant
Elected Contributions is necessary or desirable with respect to Highly
Compensated Employees, the Committee may reduce or disallow Employer
Matching Contributions and any Forfeitures allocated therewith or
Participant Elected Contributions and the income, gains and losses
thereon as determined pursuant to Section 5.3 for such Highly
Compensated Employees, including elections for Participant Elected
Contributions or such contributions and Employer Matching
Contributions and any Forfeitures allocated therewith already made for
the Plan Year, as provided in Section 4.1(c), 5.2(e) or 5.5.
5.5 Excess Compensation Reduction Elections. Participant
Elected Contributions for any Participant or group of Participants
shall not exceed the maximum amounts permitted under Sections 4.1(c),
5.2(e) and 5.4, as determined by the Committee in its sole discretion.
If any amounts of Employer Matching Contributions and any Forfeitures
allocated therewith of any Participant or group of Participants are
determined by the Committee to be in excess of the amounts permitted
under Section 4.1(c) or 5.4, or if any amounts of Participant Elected
Contributions for any Participant or group of Participants are
determined by the Committee to be in excess of the amounts permitted
under Section 5.2(e) or 5.4 and if the Company has not elected to make
Special Section 401(k) Employer Contributions with respect to the Plan
Year sufficient to satisfy the requirements of Section 4.1(c), 5.2(e)
or 5.4 or if the Committee reasonably expects that Employer Matching
Contributions and any Forfeitures allocated therewith or Participant
Elected Contributions will be in excess of the amounts permitted under
Section 4.1(c), 5.2(e) or 5.4, the Committee may apply one or both of
(a) and (b) below to the extent the Committee, in its discretion,
reasonably estimates to be necessary to satisfy Section 4.1(c), 5.2(e)
or 5.4.
(a) Restrictions on Participant Elected Contributions. The
Committee may reduce prospectively the amount of the Participant
Elected Contributions which may be made by an Employer to the
McDESOP Trust on behalf of an Active Participant or any specified
group of Active Participants who are Highly Compensated Employees
by reducing the future contributions made with respect to such
Participant's or Participants' elections to the extent the
Committee reasonably determines it is necessary to satisfy
Section 5.2(e) or 5.4. In making reductions to future
Participant Elected Contributions hereunder the Committee,
generally, shall have no obligation to treat similarly situated
Participants who are Highly Compensated Employees in the same
manner and, particularly, shall not be obligated to reduce
Participant's future elections in any particular systematic
manner based upon the amount of Participant Elected Contributions
already made for the Plan Year, the percentage of a Participant's
Considered Compensation which Participant Elected Contributions
constitute, or the amount or percentage of Considered
Compensation which a Participant's effective Participant Elected
Contribution election constitutes.
(b) Staggered and Limited Elections for Highly Compensated
Employees. The Committee may, in accordance with uniform and
non-discriminatory rules it establishes from time to time,
require that Active Participants who are among the Highly
Compensated Employees for the Plan Year make Compensation
reduction elections following and/or preceding the completion of
such elections by Employees who are Non-highly Compensated
Employees and the Committee may (1) limit the amount by which
each Participant who is among the Highly Compensated Employees
may elect to reduce his Considered Compensation, and (2) permit
each Employee who is a Non-highly Compensated Employee to elect
to reduce his Considered Compensation within higher limits than
those for Highly Compensated Employees.
(c) Estimated Compensation. For the purposes of
Section 5.5(a) and (b), Employers are permitted to determine that
Participants are Highly Compensated Employees or Non-highly
Compensated Employees based on the Participant's Considered
Compensation for the immediately preceding Plan Year or estimated
Considered Compensation for the current Plan Year in accordance
with uniform and nondiscriminatory rules whenever information
regarding actual Considered Compensation for the Plan Year is not
reasonably available at the time the amount of a contribution
hereunder is determined or limited; provided that subsequent
adjustments shall be made, as necessary, to the extent such
estimates prove to be incorrect.
5.6 Deadline for Participant Elected Contributions. Each
Employer shall contribute on behalf of each Active Participant the
Participant Elected Contributions for each Plan Year to the Trustee as
soon as administratively possible as of the earliest date on which
such contributions can reasonably be segregated from the Employer's
general assets but not later than the earlier of (1) 90 days from the
date on which such amounts would otherwise have been payable to the
Active Participant in cash or (2) the end of the twelve-month period
immediately following the last day of such Plan Year or by such later
date as may be permitted under applicable law, Treasury Regulations
and Rulings of the Internal Revenue Service.
5.7 Application of the Limitations of Sections 5.2(c), 5.2(e),
4.1(c), 5.4 and 9.1. Section 5.2(c) shall be first applied to
contributions under the Program, secondly, Section 5.2(e) shall be
applied to contributions under the Program, thirdly, Section 4.1(c)
shall be applied to contributions under the Program, fourthly,
Section 5.4 shall be applied to contributions under the Program, and
lastly, Section 9.1 shall be applied to contributions under the
Program.
ARTICLE VI
LEVERAGED ESOP PROVISIONS
6.1 Power to Borrow. The Board of Directors in its discretion
may authorize the Trustee of the Trust to borrow funds on behalf of
the Program for the purpose of purchasing Company Stock and for making
repayment of outstanding loans, the proceeds of which have been used
to purchase Company Stock and for which the Program is liable. In the
event the Trustee's borrowing shall cause a lending of money or other
extension of credit to be made between the Program and a Disqualified
Person or a Party in Interest or, if in connection with such
borrowing, a Disqualified Person or Party in Interest shall guarantee
a loan or other extension of credit to the Program, such loan or other
extension of credit to the Program shall, as an "Exempt Loan," meet
the requirements of Section 4975(d)(3) of the Internal Revenue Code
and Section 408(b)(3) of ERISA and regulations thereunder, which
include the following:
(a) The loan shall be for a specific term and not payable
upon demand except in the event of default;
(b) The loan is primarily for the benefit of Participants
and Beneficiaries, at a reasonable rate of interest, and under
terms at the time the loan is made which are at least as
favorable to the Program as the terms of a comparable loan
resulting from arms-length negotiations between independent
parties;
(c) The proceeds of the loan must be used within a
reasonable time after their receipt to acquire Company Stock or
for making repayment of an outstanding Exempt Loan;
(d) The loan shall be without recourse against the Program
and collateral for the loan shall be limited to the shares of
Company Stock acquired with the proceeds of the loan (or Company
Stock into which such shares have been converted) or used as
collateral on an outstanding Exempt Loan which is being repaid
with the proceeds of the loan. No person entitled to payment
under the loan shall have any right to any assets of the Program
other than the collateral, Leveraged ESOP Contributions
(excluding contributions of Company Stock), earnings on such
collateral and contributions (including but not limited to
dividends paid on unallocated Company Stock held in the Leveraged
ESOP Suspense Account) and dividends on Company Stock (or Company
Stock into which such shares have been converted) acquired with
the loan proceeds and held in Participants' Leveraged ESOP
Accounts;
(e) In the event of a default upon the loan, the value of
the Program assets transferred in satisfaction of the loan shall
not exceed the amount of the default and, if the lender is a
Party in Interest or Disqualified Person, shall not exceed an
amount of Plan assets equal to the amount of the payment schedule
with respect to which there is a failure to pay; and
(f) The loan may provide that there shall be no required
payments of principal and/or interest for one or more years and
the Company may from time to time request the Trustee to
renegotiate any such loan to change the payment terms with
respect to payments not then due and payable, to extend the
period of payment, or to reduce or eliminate the amount of any
payment or payments of principal and/or interest not then due and
payable.
These rules shall be changed by amendment to the Program to the
extent changes in applicable law require or permit.
6.2 Accounting for Loan Proceeds and Leveraged ESOP
Contributions. The Committee shall establish with respect to each
loan a separate Leveraged ESOP Suspense Account to record and
separately account for: (a) the proceeds of each loan or other
extension of credit authorized under Section 6.1 and any unallocated
Company Stock purchased with proceeds of such a loan or any loan
refinanced with such loan (and any Company Stock into which such
purchased shares have been converted), (b) Leveraged ESOP
Contributions with respect to such loan, (c) any income, gains or
losses allocated to the Leveraged ESOP Suspense Account with respect
to such loan and (d) any dividends from shares of Company Stock
purchased (and Company Stock into which such purchased shares have
been converted) with the proceeds of the loan (or any loan refinanced
with such loan) which have been allocated to Participants' Accounts
and transferred to the Suspense Account. Subject to the discretion of
the Trustee to reinvest proceeds from the sale of Company Stock
pursuant to Section 6.4(b), earnings of the Leveraged ESOP Suspense
Account with respect to a loan shall be used to repay the loan, and to
the extent not so used shall be released and allocated under
Section 6.3 hereof. Assets shall be released from the Leveraged ESOP
Suspense Account only in accordance with the provisions of Section 6.3
or to repay a loan or for reinvestment in Company Stock pursuant to
Section 6.4(b), provided, however, proceeds of an Exempt Loan may not
be used to repay any loan which is not an Exempt Loan.
6.3 Release from Leveraged ESOP Suspense Account.
(a) Loan Repayment Release. Company Stock acquired with
the proceeds of an Exempt Loan, or other loan authorized under
Section 6.1 or a loan refinanced with such Exempt Loan or other
loan (and Company Stock into which such purchased shares have
been converted) and held in the Leveraged ESOP Suspense Account
under Section 6.2 shall be released as of the last Valuation Date
of a Plan Year immediately following the release under
Section 6.3(b) for such Valuation Date for allocation to
Leveraged ESOP Accounts, of each Active Participant in accordance
with the provisions of Section 6.3(a)(1) below, unless such loan
provides for the annual payment of principal and interest at a
cumulative rate that is not less rapid at any time than level
annual payments of such amounts for ten (10) years, and the
interest paid on such loan is determined under standard loan
amortization tables, in which case such Company Stock shall be
released in accordance with Section 6.3(a)(1) or (2) below, as
may be selected by the Board of Directors in its discretion at
the time such loan is made; provided, however, if such loan is
renewed, extended or refinanced, and if the sum of the expired
duration of the loan, any renewal period, extension period, and
the duration of the refinancing exceeds ten (10) years,
determined as of the date of the renewal, extension or
refinancing, Section 6.3(a)(1) shall apply:
(1) Each Plan Year in which any amount remains
outstanding under an Exempt Loan (or other loan authorized
under Section 6.1), the number of shares of Company Stock
released from the Leveraged ESOP Suspense Account shall
equal the difference between (A) the product (rounded upward
to the nearest whole number of shares) of the number of
shares of Company Stock held and accounted for under the
Leveraged ESOP Suspense Account immediately before the
release increased by the number of shares, if any,
previously released from the Leveraged ESOP Suspense Account
in accordance with Section 6.3(b) for the Plan Year with
respect to such loan, multiplied by a fraction, the
numerator of which is the amount of principal and interest
paid on the Exempt Loan (or other loan authorized under
Section 6.1) for the Plan Year and the denominator of which
is the sum of the numerator plus the principal and interest
to be paid for all future Plan Years (without consideration
of possible extensions or renewal periods) reduced by
(B) the number of shares, if any, previously released from
the Leveraged ESOP Suspense Account in accordance with
Section 6.3(b) for the Plan Year with respect to such loan.
If the interest rate under the Exempt Loan (or other loan
authorized under Section 6.1) is variable, the interest to
be paid in future Plan Years shall be computed by using the
interest rate applicable as of the end of the Plan Year of
payment.
(2) For each Plan Year during the duration of an
Exempt Loan (or other loan authorized under Section 6.1),
the number of shares of Company Stock released from the
Leveraged ESOP Suspense Account shall equal the difference
between (A) the product of the number of shares of Company
Stock held and accounted for under the Leveraged ESOP
Suspense Account immediately before the release increased by
the number of shares, if any, previously released from the
Leveraged ESOP Suspense Account in accordance with
Section 6.3(b) for the Plan Year with respect to such loan,
multiplied by a fraction, the numerator of which is the
amount of principal paid on the Exempt Loan (or other loan
authorized under Section 6.1) for the Plan Year and the
denominator of which is the sum of the numerator plus the
principal to be paid for all future years reduced by (B) the
number of shares, if any, previously released from the
Leveraged ESOP Suspense Account in accordance with Section
6.3(b) for the Plan Year with respect to such loan.
If subsection (1) is applicable and if no amount of
principal and interest is paid with respect to a loan for the
Plan Year, or if subsection (2) is applicable and no amount of
principal is paid for the Plan Year, there shall be no release of
shares of Company Stock from the Leveraged ESOP Suspense Account
maintained with respect to such loan for the Plan Year in
accordance with Section 6.3(a). If an Exempt Loan (or other loan
authorized under Section 6.1) is repaid as a result of a
refinancing by another Exempt Loan (or other loan authorized
under Section 6.1), such repayment shall not be considered a
repayment of principal under Sections 6.3(a)(1) and (2) and the
release of shares shall be determined as provided in Section
6.3(a)(1) and (2), by aggregating principal and interest on the
loan and any refinancings of the loan.
(b) As of each Valuation Date, there shall be released from
the Leveraged ESOP Suspense Account maintained with respect to
each Exempt Loan (or other loan authorized under Section 6.1)
Company Stock in an amount equal to (1) the number of shares
which have a fair market value as of the Valuation Date equal to
the amount of dividends paid to the Trust with respect to shares
of Company Stock which were purchased with the proceeds of such
loan or any loan refinanced with such loan (and Company Stock
into which such purchased shares have been converted) and which
have been allocated to Participants' Accounts, which dividends
shall be received by the Trust since the immediately preceding
Valuation Date, credited to Participants' Accounts and
immediately placed in the Leveraged ESOP Suspense Account to be
used to repay the loan, reduced by (2) the number of any shares
contributed or the number of shares purchased with any cash
contributed to the Trust as Special Dividend Replacement
Contributions in accordance with Section 4.2(d) with respect to
the loan.
(c) Any release from the Leveraged ESOP Suspense Account
provided for in Section 6.3(b) for each Valuation Date during a
Plan Year (including the last Valuation Date for a Plan Year)
shall be made prior to the release from the Leveraged ESOP
Suspense Account provided for in Section 6.3(a).
6.4 Installment Payments on Exempt Loan.
(a) Installment Payments. The Trustee shall make payments
on an Exempt Loan (or other loan authorized under Section 6.1) in
the amounts and at such times as such payments are due under the
terms of such loan and such additional payments on such loan as
the Trustee determines in its discretion, provided, however, such
payments shall be made solely from the Leveraged ESOP Suspense
Account, from amounts of Leveraged ESOP Contributions made in
cash, from dividends with respect to shares of Company Stock
purchased with a loan or a loan refinanced by such loan (or
Company Stock into which such shares have been converted) which
shares have been released from a Leveraged ESOP Suspense Account
and allocated to Participants' Accounts and from dividends or
other earnings with respect to the Leveraged ESOP Suspense
Account maintained with respect to such loan.
(b) Sale of Company Stock Held in Leveraged ESOP Suspense
Account. In the event that any shares of Company Stock acquired
with the proceeds of a loan or a loan refinanced with such loan
(and Company Stock into which such purchased shares have been
converted) and held in a Leveraged ESOP Suspense Account are sold
prior to release from such Leveraged ESOP Suspense Account, the
Trustee, in its sole discretion, may either (1) apply the
proceeds of such sale, or any portion thereof, toward repayment
of such loan or a loan refinanced with such loan or (2) reinvest
the proceeds of such sale, or any portion thereof, in shares of
Company Stock. In exercising its discretion pursuant to Section
6.4(a), the Trustee shall consider the long-term interests of
both current and future Participants and Beneficiaries in
providing benefits under the Program and Trust.
6.5 Non-Terminable Rights and Protections. Any of the
provisions herein to the contrary notwithstanding, the following
protections and rights are non-terminable, except to the extent
required or permitted under applicable law, Treasury Regulations and
Rulings of the Internal Revenue Service, with respect to proceeds of
an Exempt Loan regardless of whether the Program continues to be
maintained as a leveraged ESOP.
(a) Except as provided in this Section 6.5, or except as
otherwise required by applicable law, no security acquired with
the proceeds of an Exempt Loan may be subject to a put, call
(other than a call with respect to Company Stock which is
convertible preferred stock which provides for a reasonable
opportunity for a conversion into common stock of the Company
which is Company Stock after such call is exercised), or other
option, or buy-sell or similar arrangement while held by and when
distributed from the Program, whether or not the Program is then
an ESOP.
(b) If any Company Stock acquired with the proceeds of an
Exempt Loan (or other loan authorized under Section 6.1) or which
is otherwise subject to this provision pursuant to Section
11.2(k) is not readily tradeable on an established market, or
thereafter ceases to be publicly traded and if and only if such
Company Stock should ever be distributed from the Program, the
distributee shall be given an option exercisable only by the
distributee (or the distributee's donees or a person, including
an estate of a distributee, to whom the security passes by reason
of the Participant's death), to put the security to the Company
for a 60 day period beginning on the date of distribution ("First
Put Period") and for another 60 day period commencing on the
first anniversary of the date of distribution ("Second Put
Period"). If such security ceases to be readily tradeable on an
established market (or becomes subject to a trading limitation)
before the end of the Second Put Period, the Company shall notify
the Participant in writing on or before the 10th day after the
date the security ceases to be readily tradeable on an
established market (or becomes subject to a trading limitation)
that the security is subject to a put option to the Company for
any portion of the First Put Period and the Second Put Period
remaining after the date the security ceases to be readily
tradeable on an established market, and such notice shall inform
the distributees of the terms of the put option. The Program
shall have the right, but not the obligation, to assume the
rights and obligations of the Company with respect to the put
option at the time the put option is exercised. A put option
hereunder shall be exercised by the holder notifying the Company
in writing that the put option is being exercised. If during the
First Put Period or the Second Put Period, a distributee is
unable to exercise a put option because the Company is prohibited
from honoring it under applicable Federal or State law
("Non-Exercise Period"), the put option shall be exercisable
during an extended put period ("Extended Put Period"). The
Extended Put Period shall commence on the 10th day after the
Company can honor the put option and notice of this fact is given
to the distributees entitled to an Extended Put Period and shall
extend for a period equal to the number of days in the
Non-Exercise Period but not more than 60 days.
If the Non-Exercise Period was for more than 60 days, a
second Extended Put Period shall occur commencing on the first
anniversary of the first Extended Put Period and shall extend for
the lesser of (1) 60 days or (2) number of days in the
Non-Exercise Period reduced by 60 days.
A put option shall be exercisable at a price equal to the
value of the security determined as of the most recent Valuation
Date following the Participant's exercise of the put option.
Payment under a put option shall not be restricted by the
provisions of a loan or other arrangement, including the
Company's articles of incorporation, unless so required by State
law. If the distributee exercises a put option with respect to
Company Stock received by the Participant as part of an
installment distribution, the Company shall pay for such Company
Stock not later than thirty days after the exercise of such
option. If the distributee exercises a put option with respect
to Company Stock received as part of a distribution to the
Participant within one taxable year of the balance to the credit
of the Participant's vested Net Balance Account, the Company may
pay for such Company Stock not later than the thirtieth day after
the exercise of such option or may elect to pay for such Company
Stock with deferred payments. Payments for shares of Company
Stock put to the Company may be deferred only if adequate
security and a reasonable rate of interest are provided and if
periodic payments are made in substantially equal installments
(at least annually) beginning within 30 days after the date the
put option is exercised and extending for no more than 5 years
after the put option is exercised.
The provisions of this Section 6.5 shall not be terminated or
amended except to the extent required or permitted under applicable
law, Treasury Regulations and Rulings of the Internal Revenue Service.
6.6 Independent Appraisals Required. All valuations of Company
Stock which is not readily tradeable on an established securities
market shall be made as of each Valuation Date by an independent
appraiser meeting requirements similar to the requirements of the
regulations prescribed under Section 170(a)(1) of the Internal Revenue
Code.
ARTICLE VII
ALLOCATIONS OF CONTRIBUTIONS
7.1 Profit Sharing Contribution Allocation Formula.
(a) As of the last Valuation Date of each Plan Year, the
Profit Sharing Contributions made pursuant to Section 3.1(b)(1)
and the net income gains and losses of the Profit Sharing Holding
Fund as provided in Sections 10.13 and 10.14 shall be allocated
to the Profit Sharing Fund Account of each Active Participant who
is a staff or an executive employee or a store manager, in an
amount equal to the product of (1) multiplied by (2) where:
(1) is Profit Sharing Contributions made pursuant to
Section 3.1(b)(1) for the Plan Year, and
(2) is a fraction the numerator of which is the Active
Participant's Considered Compensation for the Plan Year and
the denominator of which is the total Considered
Compensation of all such Active Participants for such Plan
Year.
(b) As of the last Valuation Date of each Plan Year, the
Profit Sharing Contributions made pursuant to Section 3.1(b)(2)
and the net income gains and losses of the Profit Sharing Holding
Fund as provided in Sections 10.13 and 10.14 shall be allocated
to the Profit Sharing Account of each Active Participant who is a
certified swing manager, a primary maintenance employee or crew
or other store hourly employee in an amount equal to the product
of (1) multiplied by (2) where:
(1) is Profit Sharing Contributions made pursuant to
Section 3.1(b)(2) for the Plan Year, and
(2) is a fraction of the numerator of which is the
Active Participant's Considered Compensation for the Plan
Year and the denominator of which is the total Considered
Compensation of all such Active Participants for such Plan
Year.
(c) Allocations to the Profit Sharing Accounts of Active
Participants shall be made as soon as reasonably possible after
the end of a Plan Year after the Company has determined that its
final contribution for the Plan Year has been made to the
McDonald's Corporation Savings and Profit Sharing Master Trust.
Employer Profit Sharing Contributions shall be held in the Profit
Sharing Holding Fund until allocated to the Profit Sharing
Account of each Active Participant. If notwithstanding its
earlier determination that the final contribution for a Plan Year
has been made, additional Employer Profit Sharing Contributions
are contributed for a Plan Year, such contributions shall be
allocated no later than the last day of the next following Plan
Year. Effective the first day of the calendar month next
following the date amounts are allocated pursuant to this
Section 7.1, such amounts shall be invested in accordance with
the investment elections applicable to each respective
Participant's Profit Sharing Account as provided in
Sections 10.7, 10.8 or 10.9.
7.2 Employer Matching Contributions, Additional Employer
Contributions and Special Section 401(k) Employer Contributions.
(a) Allocation of Employer Matching Contributions. As of
each Valuation Date, the Employer Matching Contributions and
Forfeitures held in the McDESOP and Leveraged ESOP Holding Fund
shall be allocated to the Employer Matching Contribution Account
of each Active Participant in an equal percentage (not to exceed
the Matching Percentage as defined in Section 4.1(a)) of each
Participant's Participant Elected Matched Contributions
(excluding Special Participant Elected Matched Contributions)
made for the period since the immediately preceding Valuation
Date. Notwithstanding the foregoing, any amount in the McDESOP
and Leveraged ESOP Holding Fund as of the last Valuation Date of
the Plan Year (even if such contributions for the Plan Year are
made after such Valuation Date as provided in Section 10.15)
after allocations are made pursuant to the preceding sentence,
shall be allocated to Employer Matching Contribution Account of
each Active Participant who is an Employee on such Valuation Date
in an amount equal to such remaining amount multiplied by a
fraction the numerator of which is the amount of Participant
Elected Matched Contributions (excluding Special Participant
Elected Matched Contributions) made on behalf of such Active
Participant for the Plan Year and the denominator of which is the
total amount of Participant Elected Matched Contributions
(excluding Special Participant Elected Matched Contributions)
made on behalf of all such Active Participants for the Plan Year.
(b) Allocation of Special Section 401(k) Employer
Contributions. Special Section 401(k) Employer Contributions to
the Trust for a Plan Year shall be allocated, as of the last
Valuation Date of the Plan Year, in an equal amount to the
Employer Matching Contribution Account of each designated Active
Participant. The designated Active Participants shall be the
smallest group of Non-Highly Compensated Employees who made
Participant Elected Contributions for the Plan Year and to whom
the dollar amount of per individual Special Section 401(k)
Employer Contributions could be allocated which would cause the
Program to pass whichever of the following tests it would not
otherwise pass: the ADP test in Section 5.2(e), the ACP test in
Section 4.1(c) or the multiple use test in Section 5.4.
(c) Allocation of Additional Employer Contributions. As of
the last Valuation Date of each Plan Year as the Board of
Directors may direct, Additional Employer Contributions shall be
allocated to the Employer Matching Contribution Account of each
Active Participant in an amount equal to the amount of the
Additional Employer Contributions for the Plan Year multiplied by
a fraction, the numerator of which is the number of full calendar
months during which the Participant was an Active Participant,
and the denominator of which is the aggregate number of full
calendar months during which all Active Participants were Active
Participants.
7.3 Leveraged ESOP Contributions.
(a) Leveraged ESOP Contributions. Any shares of Company
Stock purchased with the proceeds of a loan (or Company Stock
into which such shares have been converted) designated by the
Board of Directors to be repaid by Compensation Based Leveraged
ESOP Contributions (or a loan refinanced by such loan) and
released from the Leveraged ESOP Suspense Accounts maintained
with respect to such loan, any income from such Leveraged ESOP
Suspense Accounts released pursuant to Sections 6.2 and 6.3, and
any Forfeitures from Leveraged ESOP Accounts for the Plan Year
shall be allocated to each Active Participant's Leveraged ESOP
Account:
(1) as of each Valuation Date, in an amount, if any,
with respect to each loan equal to the amount of dividends
paid with respect to Company Stock (or Company Stock into
which such shares have been converted) which was purchased
with the proceeds of such a loan (or a loan refinanced by
such loan) and which has been allocated to the Participant's
Account, which dividends, since the immediately preceding
Valuation Date, were credited to Participants' Accounts and
immediately transferred to the Leveraged ESOP Suspense
Account pursuant to Section 10.13(b) to be used to make
payments on the loan; and
(2) as of the last Valuation Date of each Plan Year,
in an amount equal to the number of shares of Company Stock
released from the Leveraged ESOP Contribution Suspense
Account in accordance with Section 6.3(a) multiplied by a
fraction the numerator of which is the Considered
Compensation of the Active Participant and the denominator
of which is the total of all Considered Compensation of all
Active Participants.
(b) Additional Leveraged ESOP Contributions. Additional
Leveraged ESOP Contributions for a Plan Year which were
designated in accordance with Section 4.2(c) as Per Capita
Additional Leveraged ESOP Contributions (and any Forfeitures
therefrom) shall be allocated as of the last Valuation Date of
the Plan Year to the Additional Leveraged ESOP Account of each
Active Participant in an amount equal to the total amount of Per
Capita Additional Leveraged ESOP Contributions (and any
Forfeitures therefrom) for the Plan Year divided by the number of
Active Participants. Additional Leveraged ESOP Contributions for
a Plan Year which were designated in accordance with
Section 4.2(c) as Compensation Based Additional Leveraged ESOP
Contributions (and any Forfeitures therefrom) shall be allocated
as of the last Valuation Date of such Plan Year to the Additional
Leveraged ESOP Account of each Active Participant in an amount
equal to the total amount of Additional Leveraged ESOP
Contributions (and any Forfeitures therefrom) multiplied by a
fraction the numerator of which is the Considered Compensation of
such Active Participant and the denominator of which is the total
Considered Compensation of all Active Participants for the Plan
Year. Per Capita Additional Employer Leveraged ESOP
Contributions and Compensation Based Additional Employer
Leveraged ESOP Contributions shall be separately accounted for in
Participants' Additional Leveraged ESOP Accounts.
(c) Special Dividend Replacement Contributions. Any
Special Dividend Replacement Contributions made to the Program
pursuant to Section 4.2(d) shall be credited to Participant's
Accounts to replace dividends which pursuant to Section 6.3(b)
are credited to the Leveraged ESOP Suspense Account to be used to
repay the Exempt Loan the proceeds of which purchased the shares
of Company Stock with respect to which such dividends were paid.
7.4 Participant Elected Contributions. As of each Valuation
Date, the Participant Elected Contributions in the McDESOP and
Leveraged ESOP Holding Fund shall be credited to the Participant
Elected Contribution Accounts of the Participants for whom such
contributions were made.
7.5 Timing of Allocations. Amounts allocated to or transferred
to Participants' Accounts as of a Valuation Date shall be credited to
the Accounts as of such Valuation Date but after the adjustments are
made for Trust income as provided in Sections 10.12, 10.13 and 10.14.
Amounts contributed to the Program shall be credited as of the date
of contribution to the following Accounts and Funds: Profit Sharing
Holding Fund, McDESOP and Leveraged ESOP Holding Fund, and Rollover
Holding Account as provided in Section 10.23 and the Leveraged ESOP
Suspense Account as provided in Section 6.2.
ARTICLE VIII
ROLLOVERS AND TRUSTEE TRANSFERS
8.1 Participant Rollovers. A Participant may elect through
procedures approved by the Committee to make Rollovers to the Program.
If any Rollover includes property other than money, the Trustee may
in its sole discretion refuse to accept such Rollover or may condition
its acceptance of such Rollover on such terms and conditions as it
deems reasonable. Each Participant's Rollover shall be held in his
Rollover Holding Account until the next following Valuation Date at
which time his Rollover Holding Account is transferred to the
Participant's Rollover Account and invested in accordance with his
investment elections provided for in Section 10.8.
8.2 Limited Participation. An Employee who is not eligible to
participate in the Program solely by reason of failing to meet the
eligibility requirements of Section 2.1 and who reasonably expects to
become a Participant when such requirements are met, may be a
Participant in the Program solely for the limited purpose of making a
Rollover subject to the same conditions on such Rollovers as any other
Participant.
8.3 Withdrawal of Rollovers. At the election of the
Participant, amounts in his Rollover Account and Rollover Holding
Account may be withdrawn as provided in Section 11.16.
8.4 Rollover Not Forfeitable. A Participant's Rollover Account
and Rollover Holding Account shall be fully vested and
non-forfeitable.
ARTICLE IX
LIMITATIONS ON CONTRIBUTIONS
BECAUSE OF FEDERAL LEGISLATION
9.1 Limitations on Contributions. Any of the provisions herein
to the contrary notwithstanding, a Participant's Annual Additions (as
defined in paragraph (a) below) for any Plan Year shall not exceed his
Maximum Annual Additions (as defined in paragraph (b) below) for the
Plan Year. If a Participant's Annual Additions would but for the
provisions of this Section 9.1, exceed his Maximum Annual Additions
(the "Annual Excess"), the Participant's Annual Additions for the Plan
Year shall be reduced under Section 9.1(d) by the amount necessary to
eliminate such Annual Excess. Rollovers shall not be included as part
of a Participant's Annual Additions.
(a) "Annual Additions" of a Participant for a Plan Year
means the sum of the following:
(1) Employer Contributions allocated to his Profit
Sharing Account for the Plan Year;
(2) Participant Elected Contributions, Employer
Matching Contributions, Additional Employer Contributions,
Special Section 401(k) Contributions and any Forfeitures
allocated therewith for the Plan Year allocated to the
Participant;
(3) any amount of Leveraged ESOP Annual Additions, as
determined under Section 9.1(c), allocated to the
Participant;
(4) all other employer contributions and forfeitures
(excluding Forfeitures allocated to the Participant's
Leveraged ESOP Account) for such Plan Year allocated to the
Participant's accounts for such Plan Year under the Program
or any other Related Defined Contribution Plan not already
included under Section 9.1(a)(1), 9.1(a)(2) or 9.1(a)(3);
(5) the amount of nondeductible participant
contributions under the Program or any Related Plan made by
the Participant for the Plan Year; and
(6) solely with respect to the limitation under
Section 9.1(b)(2) contributions allocated to any individual
medical account as provided in Code Section 415(l)(1).
(b) "Maximum Annual Additions" of a Participant for a Plan
Year means the lesser of (1) or (2) below:
(1) 25% of the Participant's Considered Compensation,
or
(2) $30,000, adjusted in subsequent years for cost of
living adjustments determined in accordance with regulations
prescribed by the Secretary of Treasury or his delegate
pursuant to the provisions of Section 415(d) of the Internal
Revenue Code.
(c) "Leveraged ESOP Annual Additions" means:
(1) If the Participant is an Active Participant under
the Leveraged ESOP portion of the Program, and if no more
than one-third (1/3) of the total amounts deductible under
Section 404(a)(9) of the Internal Revenue Code for the Plan
Year is allocated to Highly Compensated Employees, an amount
for each Exempt Loan equal to the product of (A) the
Employer Leveraged ESOP Contributions used to repay each
loan for the Plan Year, reduced, for any Plan Year for which
the loan repaid is an Exempt Loan as defined in Section 6.1,
by the amount used to pay interest on the Exempt Loan,
multiplied by (B) a fraction, the numerator of which is the
Participant's Considered Compensation for the Plan Year, and
the denominator of which is the Considered Compensation of
all Active Participants for the Plan Year; provided that, if
a Participant's allocations to his Leveraged ESOP Account
are reduced in order to reduce the Annual Excess in
accordance with the provisions of this Article IX, the
Participant's Considered Compensation for purposes of both
the numerator and the denominator of this fraction shall be
reduced to an amount equal to the Ptiiccipant's Considered
Compensation, multiplied by a fraction, the numerator of
which is the Participant's allocation to his Leveraged ESOP
Account for the Plan Year after applying the Annual Excess
reduction provisions hereunder and the denominator of which
is such allocation to his Leveraged ESOP Account for the
Plan Year before applying the Annual Excess reduction
provisions hereunder.
(2) If the Participant is an Active Participant with
respect to the ESOP for the Plan Year and if
Section 9.1(c)(1) does not apply, an amount for each loan
equal to the sum of (A) Forfeitures allocated to the
Participant's Leveraged ESOP Account under the McDESOP
portion of the Program, and (B) the sum of the products of
the Leveraged ESOP Contributions used to repay each loan for
the Plan Year (including the amount used to repay interest
on such loans), multiplied by (i) in the case of Leveraged
ESOP Contributions, a fraction, the numerator of which is
the Participant's Considered Compensation for the Plan Year
and the denominator of which is the Considered Compensation
of all Active Participants for the Plan Year; provided that,
if a Participant's allocations to his Leveraged ESOP Account
are reduced in order to reduce the Annual Excess in
accordance with the provisions of this Article IX, the
Participant's Considered Compensation for purposes of both
the numerator and the denominator of this fraction shall be
reduced to an amount equal to the Participant's Considered
Compensation, multiplied by a fraction, the numerator of
which is the Participant's allocation to his Leveraged ESOP
Account for the Plan Year, after applying the Annual Excess
reduction provisions hereunder and the denominator of which
is such allocation to his Leveraged ESOP Account for the
Plan Year before applying the Annual Excess reduction
provisions hereunder.
(3) The amount of Leveraged ESOP Contributions deemed
to be used to pay interest on a loan for a Plan Year for
purposes of Section 9.1(c)(2)(A) and (B) shall be the amount
of Leveraged ESOP Contributions made for the Plan Year
multiplied by a fraction the numerator of which is the
amount of all interest payments made by the Trust for the
Plan Year with respect to such loan (including any
refinancing of such loan) from all sources and the
denominator of which is the amount of all payments of both
principal and interest made by the Trust for the Plan Year
with respect to such loan (including any refinancing of such
loan) from all sources.
(d) Elimination of Annual Excess. If a Participant has an
Annual Excess for a Plan Year, such excess shall not be allocated
to the Participant's Accounts, but shall be eliminated as
follows:
(1) If any Annual Excess remains after application of
the preceding paragraph, the Participant's Employer
Contributions allocable to such Participant's Profit Sharing
Account shall be reduced to the extent such reductions
reduce the Annual Excess.
(2) If any Annual Excess remains after application of
the preceding paragraph, the Participant's Leveraged ESOP
Annual Additions (other than those with respect to Dividend
Replacement Contributions) shall be reduced by reducing the
allocations made as of a given Valuation Date reducing
allocations with respect to Forfeitures before allocations
with respect to Employer Contributions for each loan
starting first with the most recent loan and then with other
loans in the reverse of the order in which made to the
extent which reductions reduce the amount of the Annual
Excess.
(3) If any Annual Excess remains after application of
the preceding paragraph, Participant Elected Contributions
and Employer Matching Contributions shall be reduced by
reducing those contributions most recently credited to the
Participant's Accounts first (followed by the next most
recent and so forth) and with respect to contributions
credited as of a Valuation Date reducing contributions in
the order listed, as follows: Employer Matching
Contributions, Participant Elected Unmatched Contributions
and Participant Elected Matched Contributions to the extent
such reductions reduce the amount of the Annual Excess.
(4) If any Annual Excess remains after application of
the preceding paragraph, the Participant's allocations of
Additional Employer Contributions shall be reduced to the
extent such reductions reduce the amount of the Annual
Excess.
(5) If any Annual Excess remains after application of
the preceding paragraph, the Participant's allocations of
Special Section 401(k) Employer Contributions shall be
reduced to the extent such reductions reduce the amount of
the remaining Annual Excess.
(6) If any Annual Excess remains after application of
the preceding paragraph, the Participant's allocations to
his Additional Leveraged ESOP Account shall be reduced to
the extent such reductions reduce the amount of the Annual
Excess.
(7) If any Annual Excess remains after application of
the preceding paragraph, any Special Dividend Replacement
Contributions credited to the Participant's Leveraged ESOP
Account shall be reduced to the extent such reductions
reduce the amount of the remaining Annual Excess.
Any allocations of Employer Contributions and Forfeitures reduced
or eliminated under this Section 9.1(d), as above provided,
shall, subject to the limits of this Section 9.1, be reallocated
to the Accounts of the other Participants not having such
reductions as of the last day of that Plan Year in the same
manner as such Employer Contributions and Forfeitures were
initially allocated under Article VII. The amount of any
Participant Elected Contributions reduced or eliminated under
this Section 9.1 which have been contributed to the Program shall
be allocated as (and in lieu of) Employer Matching Contributions
in the Plan Year for which or next following the Plan Year for
which the reduction is made. Any Employer Contributions and
Forfeitures which, under the limits of this Section 9.1, cannot
be reallocated to the Accounts of other Participants in the Plan
Year shall, subject to the limits of this Section 9.1, be held in
an unallocated suspense account and reallocated in a subsequent
Plan Year. If the Program shall be terminated, any amounts held
in a suspense account shall be reallocated to the accounts of all
Participants in accordance with Article VII subject to the
limitations of Section 9.1anndd any such amounts which cannot be
reallocad tto Participants in the Plan Year of the termination
shall be returned to the Employers in such proportions as shall
be determined by the Committee.
(e) Limitation in Case of Employee Participation in Both
Defined Benefit and Defined Contribution Plans. If a Participant
participates in any defined benefit plan of the Employer (or any
Related Defined Benefit Plan), the sum of the Defined Benefit
Plan Fraction (as defined in Section 415(e)(2) of the Internal
Revenue Code) and the Defined Contribution Plan Fraction (as
defined in Section 415(e)(3) of the Internal Revenue Code) for
such Participant shall not exceed 1.0 (called the "Combined
Fraction"). If the Combined Fraction of such Participant exceeds
1.0, the Participant's Defined Benefit Plan Fraction shall be
reduced by limiting the Participant's annual benefits payable
from the Related Defined Benefit Plan in which he participates to
the extent necessary to reduce the Combined Fraction of such
Participant to 1.0, and to the extent the Combined Fraction
continues to exceed 1.0, by reducing the Participant's Maximum
Annual Additions to the extent necessary to reduce the Combined
Fraction to 1.0. In calculating the Participant's Defined
Contribution Fraction employee contributions as permitted under
the Program or a Related Plan before January 1, 1987, shall be
counted as Annual Additions only to the extent that they were
counted under the Program as then in effect.
9.2 Employer Contribution Reductions. If a Participant's
Participant Elected Contributions or his allocations of Employer
Contributions and Forfeitures are reduced or eliminated under
Section 9.1, the amount shall be provided to the Participant under
McEqual, McCAP I or McCAP II, or other non-qualified plans maintained
by the Company, to the extent therein provided. Amounts of
Participant Elected Contributions and Employer Matching Contributions
expected to be within the limitations under Section 9.1 shall be
contributed to the Program and credited hereunder. Amounts of such
contributions expected to be in excess of the limitations under
Section 9.1 shall be tentatively credited to McEqual, McCAP I or
McCAP II or other non-qualified plans maintained by the Company. If
it is subsequently determined that additional amounts of Participant
Elected Contributions or Employer Matching Contributions should be
contributed hereto to attain the limitations under Section 9.1, in
order to put the Participant in the same position he would have been
in had such amounts been contributed contemporaneously to the Program,
contributions to the Program will reflect, to the extent of the limits
of Section 9.1, the income, gains and losses which would have been
credited to the Participant's Accounts hereunder had such amounts been
credited hereto instead of being tentatively credited to McEqual,
McCAP I, McCAP II or other non-qualified plans maintained by the
Company. The effect of adjustments to contributions for such income,
gains and losses may be that some Participants hereunder will be
credited with Participant Elected Contributions in excess of the
limits stated in Sections 4.3(a) and 5.1 and in amounts which are more
than or less than the amounts of such contributions elected by the
Participant, and may have rates of Employer Matching Contributions
which are larger or smaller than the rate established by the Company
for the Plan Year in accordance with Section 4.1. In determining the
amounts to be credited to a Participant's accounts during a Plan Year
under McEqual, McCAP I, McCAP II and other non-qualified plans maintained
by the Company, the Committee may make assumptions based
upon reasonable estimates of the amount of the Participant's
Considered Compensation, his Participant Elected Contributions, levels
of Employer Contributions hereunder and other relevant factors and, as
necessary, make subsequent adjustments to the extent the estimates
prove to be incorrect.
ARTICLE X
TRUSTEE AND TRUST FUNDS
10.1 Trust Agreements. The Company and the Trustee have entered
into one or more Trust Agreements which provide for the investment of
the assets of the Program and administration of the Trust Funds. The
Trust Agreement, as from time to time amended, shall continue in force
and shall be deemed to form a part of the Program, and any and all
rights or benefits which may accrue to any person under the Program
shall be subject to all the terms and provisions of the Trust
Agreement.
10.2 Trustee's Duties. The powers, duties and responsibilities
of the Trustee of the Trust shall be as stated in the respective Trust
Agreement and as may be delegated to, and accepted by, the Trustee
from the Committee and Board of Directors. Nothing contained in the
Program either expressly or by implication shall be deemed to impose
any additional powers, duties or responsibilities upon the Trustee.
All Employer Contributions, Participant Contributions, Rollovers and
Participant Elected Contributions shall be paid into a Trust and all
withdrawals permitted and benefits payable under the Program shall be
paid from the Trust.
10.3 Trust Expenses. Except to the extent paid by an Employer,
all clerical, legal and other expenses of the Program and the Trust
and the Trustee's fees shall be paid by the Trust and shall be
proportionately charged to the Profit Sharing, McDESOP, Leveraged
ESOP, Stock Sharing and other parts of the Trust Fund except to the
extent directly attributable to a specific portion of a Trust Fund in
which case it shall be directly charged to that portion of the Trust
Fund.
10.4 Trust Entity. The Trust under this Program from its
inception shall be a separate entity aside and apart from the
Employers or their assets. The Trusts and the corpus and income
thereof, shall not be subject to the rights or claims of any creditor
of any Employer.
10.5 Right of the Employers to Trust Assets. Subject to the
provisions of Section 9.1, the Employers shall have no right or claims
of any nature in or to the Trust Fund except the right to require the
Trustee to hold, use, apply, and pay such assets in its possession in
accordance with the Program for the exclusive benefit of the
Participants or their Beneficiaries and for defraying the reasonable
expenses of administering the Program and Trust, provided that:
(a) if, and to the extent that, a deduction for Employer
contributions under Section 404 of the Internal Revenue Code is
disallowed, employer contributions conditioned on deductibility
shall be returned to the appropriate Employer within one year
after the disallowance of the deduction; and
(b) if, and to the extent that, an Employer contribution is
made through mistake of fact, such employer contribution shall be
returned to the appropriate Employer within one year of the
payment of the contribution and any Participant Elected
Contributions shall be distributed to the Partipaannts with
respect to which such contributions were made.
Notwithstanding any other provision of ts SSection 10.5, if,
upon application of (a) or (b) above, Employer contributions would be
returned to an Employer, then the Employer shall distribute the value
of any portion of such contributions to the appropriate Participants.
All Employer Contributions are conditioned on their being
deductible under Section 404 of the Internal Revenue Code.
10.6 Trust Investment Funds. Excluding those assets held in the
Holding Funds, as provided in Section 10.23, assets of the Trust Fund
shall be held as follows:
(a) Profit Sharing Plan. The assets held in Participant's
Profit Sharing Accounts and any amounts held in Participant's
Diversification Accounts shall be held in the following
Investment Funds:
(1) The Diversified Stock Fund invested in common
stocks, and securities convertible into common stocks, of
corporations other than McDonald's Corporation or its
Domestic or Foreign Affiliates, and in any other securities
which represent an equity investment, provided, however,
that the Diversified Stock Fund may be invested in pooled or
common trust funds or open-end investment companies without
regard to whether assets of such funds or investment
companies are invested in securities of McDonald's
Corporation or its Domestic or Foreign Affiliates;
(2) The Profit Sharing McDonald's Common Stock Fund
invested in common stock of McDonald's Corporation;
(3) The Insurance Contract Fund or such other fund
designated by the Committee which shall be invested (i) in
contracts issued by an insurance or other company (or
companies), (ii) directly in debt securities that have fixed
obligations to pay interest and principal on specified dates
or which have similar investment characteristics (which may
have equity features triggered by performance, the passage
of time, or similar characteristics or may be securities
which are derivatives of such securities) ("Fixed Income
Obligations") or (iii) in pooled or common trust funds,
regulated investment companies, or open-ended investment
companies generally invested in Fixed Income Obligations
without regard to whether assets of such common trust funds,
regulated investment companies, or open-ended investment
companies are invested in securities of McDonald's
Corporation or its Domestic or Foreign Affiliates. The
contracts issued by insurance or other companies held by the
Insurance Contract Fund (iv) may be investment contracts or
(v) may be investment management agreements which may
provide separate book value guarantees pursuant to which the
insurance or other company guarantees (A) the book value of
a pool or segregated group of fixed income obligations held
in the Insurance Contract Fund and (B) specified amounts of
income under various conditions as provided in such
agreement ((iv) and (v) collectively shall be referred to as
"Assets Subject to Guarantee"). With respect to Assets
Subject to Guarantee, the Program shall use book value
accounting and Participants' Accounts shall contain and
shall be entitled only to their pro rata share of book value
and guaranteed income which for all purposes hereunder will
be treated as fair market value unless the Committee
determines that the guarantees no longer apply, a market
value distribution has occurred under the contract, or there
has been a default on the guarantee.
(4) The Multi-Asset Fund invested in domestic common
stocks, debt securities that have a fixed obligation to pay
interest and principal on specified dates or which have
substantially similar investment characteristics, real
estate, international common stocks, and securities
convertible into domestic common stocks, of corporations
other than McDonald's Corporation or its Domestic or Foreign
Affiliates, and in any other securities which represent an
equity investment, provided, however, that the Multi-Asset
Fund may be invested in pooled or common trust funds or
open-end investment companies without regard to whether
assets of such funds or investment companies are invested in
securities of McDonald's Corporation or its Domestic or
Foreign Affiliates; and
(5) The Money Market Fund invested in United States
Government debt securities which mature or become payable
within two years and which are the direct obligation of or
guaranteed by the United States Government, including bonds,
notes, certificates of indebtedness, and treasury bills; in
commercial paper rated according with such guidelines as the
Board of Directors may from time to time approve; and in
certificates of deposit in those banks designated in the
agreement with the Investment Manager or, if there is no
such agreement or if the agreement fails to designate such
banks, in those banks designated under the McDonald's
Corporation Investment Policy.
In order to maintain appropriate or adequate liquidity and
pending or pursuant to investment directions from an Investment
Manager, the Trustee of the Trust is authorized to hold such
portions as it deems necessary of the Diversified Stock Fund, the
Profit Sharing McDonald's Common Stock Fund, the Insurance
Contract Fund, the Money Market Fund, and the Multi-Asset Fund in
cash, a short-term investment fund (a "STIF Fund"), or liquid
short-term cash equivalent investments or securities (including,
but not limited to United States government treasury bills,
commercial paper, and savings accounts and certificates of
deposit, including those of the Trustee or custodian, if the
Trustee or custodian is a bank, and common or commingled trust
funds invested in such securities, including those of the Trustee
or custodian).
(b) Leveraged ESOP. The assets of the Leveraged ESOP
portion of the Trust (other than any amounts which have been
transferred to a Participant's Diversification Account pursuant
to Section 10.10) shall be invested in Company Stock which is
common stock of McDonald's Corporation held in the McDESOP
McDonald's Common Stock Fund, provided that it shall at all times
be possible to determine the number of such shares of Company
Stock which are allocated to a Participant's Leveraged ESOP
Accounts.
In order to maintain adequate liquidity, pending the
investment of funds, or the use of funds to make payments on a
loan, or for funds which could not be appropriately invested
eher because of the small amount involved or the orrtt time
duration for which the investment is to be made, the Trustee is
authorized to hold portions of the Leveraged ESOP in cash, a STIF
Fund or liquid short-term cash equivalent investments or
securities (including, but not limited to United States
government treasury bills, commercial paper, and savings accounts
and certificates of deposit, including those of the Trustee or
custodian, if the Trustee or custodian is a bank, and common or
commingled trust funds invested in such securities, including
those of the Trustee or custodian).
(c) (1) McDESOP. The assets of the McDESOP portion of the
Trust (other than any amounts which have been transferred to
a Participant's Diversification Account pursuant to Section
10.10) shall be held in the McDESOP McDonald's Common Stock
Fund invested in Company Stock which is common stock of
McDonald's Corporation.
(2) McDESOP Diversification. Participant Elected
Contributions which a Participant has elected to diversify
pursuant to Section 10.10 shall be credited to the
Participant's McDESOP Contribution Diversification Account
and invested in the Profit Sharing Plan Trust Investment
Funds listed in Section 10.6(a) as provided in Section 10.11
as of the first business day of the calendar month following
the month in which (1) the Diversification Election was made
for amounts diversified in accordance with Sections 10.10
and 10.11 and (2) the compensation (from which such
Participant Elected Contributions were taken) was paid or as
of such earlier date as the Committee shall provide. Until
such date as the Committee shall provide otherwise,
Participant Elected Contributions and Employer Matching
Contributions which the Participant has elected to diversify
pursuant to Section 10.10 shall be invested in the McDESOP
McDonald's Common Stock Fund until the Diversification
Election is implemented pursuant to Section 10.11. In the
case of future contributions subject to a Diversification
Election pursuant to Section 10.10, the Diversification
Election shall be implemented as of the next date on which
Investment Elections are implemented in accordance with
Section 10.8 or 10.9(a), as applicable, after the date such
contributions are made to the Program.
10.7 Investment of Participant's Employer Profit Sharing
Contributions. The provisions of Sections 10.7(a) and 10.7(b) shall
apply to Employer Profit Sharing Contributions as follows:
(a) Each Participant's share of Employer Profit Sharing
Contributions and the earnings thereon shall be invested in the
Profit Sharing McDonald's Common Stock Fund in an amount equal to
the Participant's share of Employer Profit Sharing Contributions
multiplied by the Automatic McDonald's Stock Proportion. The
"Automatic McDonald's Stock Proportion" is a percentage, if any,
announced by the Board of Directors for the Plan Year. The
remainder of the Participant's Employer Profit Sharing
Contributions and the earnings thereon for the Plan Year shall be
invested in accordance with Section 10.8 or 10.9, as applicable;
provided that if in accordance with a Participant's elections
pursuant to Section 10.8, a percentage of his Employer Profit
Sharing Contributions and the earnings thereon for the Plan Year
greater than the Automatic McDonald's Stock Proportion would be
invested in the Profit Sharing McDonald's Common Stock Fund, the
Participant's Employer Profit Sharing Contributions and the
earnings thereon with respect to the Profit Sharing Plan for the
Plan Year shall be invested in accordance with the Participant's
elections pursuant to Section 10.8.
(b) A Participant may elect, at such time and in such
manner as the Committee shall designate for each Plan Year not to
have the Automatic McDonald's Stock Proportion of his Employer
Profit Sharing Contributions and Forfeitures and the earnings
thereon with respect to the Profit Sharing Plan for the Plan Year
invested in the Profit Sharing McDonald's Common Stock Fund. If
a Participant elects not to have the Automatic McDonald's Stock
Proportion of his Employer Profit Sharing Contributions and
Forfeitures with respect to the Profit Sharing Plan for the Plan
Year invested in the Profit Sharing McDonald's Common Stock Fund,
his Employer Profit Sharing Contributions, such Forfeitures and
the earnings thereon shall be invested in accordance with
Sections 10.8 or 10.9, as applicable.
10.8 Investment Election with Regard to a Participant's Profit
Sharing, Diversification, Investment Savings and Rollover Accounts.
Four times each Plan Year (or on such more frequent basis as the
Committee shall permit), each Participant shall have the right to
elect, on such forms and in accordance with such rules and procedures
as the Committee may from time to time prescribe, to have each of
(a) his Profit Sharing Account (including any amounts which have
previously been invested in the Profit Sharing McDonald's Common Stock
Fund pursuant to Section 10.7) and his Diversification Accounts, if
any, (b) his Investment Savings Account, or (c) his Rollover Account
invested in the Diversified Stock Fund, the Money Market Fund, the
Profit Sharing McDonald's Common Stock Fund, the Insurance Contract
Fund, the Multi-Asset Fund or other similar fund designated from time
to time by the Committee or in any combination of them; provided that
amounts which have been invested in the Profit Sharing McDonald's
Common Stock Fund in accordance with Section 10.7 shall remain
invested in the Profit Sharing McDonald's Common Stock Fund until a
new investment election made by the Participant in accordance with
this Section 10.8 is effective.
If a Participant makes a Leveraged ESOP Diversification Election,
McDESOP Future Contribution Diversification Election, or McDESOP
Diversification Election in accordance with Section 10.10, his
Diversification Account, if any, shall be invested in accordance with
his Profit Sharing Account investment election in effect at the time
his diversification election is effective or in accordance with
Section 10.9(a) if no such investment election is in effect and shall
be invested in accordance with any subsequently effective Investment
Election as provided above. The Participant's election as to the
percentage of his Profit Sharing Account and Diversification Account
to be invested in each Investment Fund, shall be made in increments of
10 percent (10%) up to 100 percent (100%). A Participant may elect to
invest as much as 100% of his Profit Sharing Account and
Diversification Account in the Profit Sharing McDonald's Common Stock
Fund. Subject to Section 10.7, a Participant's investment election
shall be effective until his next investment election is effective.
1100.9 Failure to Make an Investment Election.
(a) Profit Sharing Account IIf a Participant fails to
make an investment election for his Profit Sharing Account and
his Diversification Account during any Plan Year, then such
Accounts shall be invested in accordance with such Participant's
immediately preceding investment election made with respect to
such Accounts in accordance with Section 10.8; provided that any
amounts invested in the Profit Sharing McDonald's Common Stock
Fund in accordance with Section 10.7 shall remain invested in the
Profit Sharing McDonald's Common Stock Fund until a new
investment election made by the Participant in accordance with
Section 10.8 is effective. If a Participant has never made an
investment election with respect to such Accounts, then the
amount, if any, invested in the Profit Sharing McDonald's Common
Stock Fund in accordance with Section 10.7 shall remain invested
in the Profit Sharing McDonald's Common Stock Fund and the
remainder of the Participant's Profit Sharing Account, the
Participant's LESOP Diversification Account and the McDESOP
Diversification Account shall be invested one hundred percent
(100%) in the Money Market Fund.
(b) Investment Savings Fund Account and Rollover Account.
If a Participant fails to make an investment election for his
Investment Savings Account and/or his Rollover Account during any
Plan Year, then such Account(s) shall be invested in accordance
with such Participant's immediately preceding investment election
made with respect to such Account(s). If a Participant has never
made an investment election with respect to such Account(s) then
such Account(s) shall be invested 100 percent (100%) in the Money
Market Fund.
10.10 Diversification of McDESOP and Leveraged ESOP Contributions.
(a) Age Diversification of Leveraged ESOP Account Balances.
(1) Diversification Elections by Qualified
Participant. Commencing with the first day of the month
after a Participant becomes a Qualified Participant and
during each Annual Election Period and, in addition, at the
same times and subject to the same administrative
requirements as apply to Investment Elections under Section
10.8 (other than the limitation that only four elections be
made in a Plan Year), each Qualified Participant shall be
permitted to make a diversification election with respect to
his Qualified Account ("Leveraged ESOP Diversification
Election").
(2) Definitions. As used in Section 10.10(a), the
following terms shall have the meanings indicated:
(A) "Qualified Participant" means a Participant
(including a Participant who has had a Termination of
Employment) who has attained age 55 or the Beneficiary
of a deceased Participant who would have attained the
age of 55 if he were alive.
(B) "Annual Election Period" means the 90 day
period after the last day of each Plan Year commencing
with the Plan Year in which the Participant first
becomes a Qualified Participant.
(C) "Qualified Account" means a Qualified
Participant's Leveraged ESOP Account.
(D) "Maximum Diversification Percentage" means:
(i) In the case of a Qualified Participant
who has not attained age 60 and who has not had a
Termination of Employment, 25%;
(ii) In the case of a Qualified Participant
who has attained age 60 and has not had a
Termination of Employment, 50%; and
(iii) In the case of a Qualified
Participant who has had a Termination of
Employment, 100%.
(E) "Leveraged Diversification Election" means an
election by a Qualified Participant to transfer to his
Leveraged ESOP Diversification Account, an amount not
exceeding the difference between
(i) the Maximum Diversification Percentage
(or lesser percentages in five percent (5%)
increments) of the sum of (a) the value of Company
Stock credited to the Participant's Qualified
Account plus (b) the amounts previously
transferred under this Section 10.10 from such
Qualified Account to the Participant's
Diversification Accounts ("Prior Diversification
Transfers"), reduced by
(ii) the Participant's Prior Diversification
Transfers.
If a Participant has made a Leveraged ESOP
Diversification Election and has not made a
subsequent Leveraged ESOP Diversification Election
with a lower percentage election than his prior
Leveraged ESOP Diversification Election, a
percentage of the value of all future allocations
to the Participant's Qualified Account equal to
the percentage of the Participant's Leveraged ESOP
Diversification Election shall be transferred to
the Participant's Leveraged ESOP Diversification
Account. If a Participant who has made a
Leveraged ESOP Diversification Election makes a
new Leveraged ESOP Diversification Election at a
percentage (including to zero) lower than the
percentage of the earlier Leveraged ESOP
Diversification Election, no portion of
allocations to the Participant's Qualified Account
shall be transferred to the Diversification
Account until the product of the new lower
percentage elected multiplied by the sum of the
Qualified Account plus Prior Diversification
Transfers exceeds the Prior Diversification
Transfers, at which time such excess, and
thereafter, a percentage of all future allocations
to the Participant's Qualified Account equal to
the percentage of the Participant's Leveraged ESOP
Diversification Election shall be transferred to
Participant's Diversification Account. No amount
transferred to a Participant's Diversification
Account may be transferred back to the
Participant's Leveraged ESOP Account.
(3) Investment of Amounts Subject to Leveraged ESOP
DDiversification Election. The amount subject to a
Participant's Leveraged ESOP Diversification Election shall
be transferred to the Participant's Leveraged ESOP
Diversification Account under the Program and thereafter
shall be invested in accordance with the Participant's
elections pursuant to Section 10.8 or 10.9(a) but determined
without regard to Section 10.7 provided that such transfer
shall occur no later than 90 days after the date on which
the Participant becomes a Qualified Participant, attains age
60 or the end of each Annual Election Period during which
the Participant makes a Leveraged ESOP Diversification
Election or at such earlier dates as the Committee, pursuant
to Section 10.11 shall permit.
(b) Diversification of McDESOP Future Participant Elected
Contributions. A Participant may make an election ("McDESOP
Future Contribution Diversification Election") with respect to
his future Participant Elected Contributions to have up to 100
percent of the amount of such contributions, in increments of 5
percent, credited to his McDESOP Diversification Account. Once
he has made a McDESOP Future Contribution Diversification
Election, a Participant may change his election with respect to
future Participant Elected Contributions, subject to
Section 10.11, but each such change shall only effect Participant
Elected Contributions made to the Program after the date the
election is effective and before the date a new McDESOP Future
Contribution Diversification Election becomes effective.
(c) Age Diversification of McDESOP Accounts. Beginning
with the first day of the month following the month in which a
Participant attains 50 years of age, the Participant (or the
Beneficiary of a Participant who would have attained age 50 if he
had not died) may elect ("McDESOP Diversification Election") to
diversify by transferring to his McDESOP Diversification Account
up to 100 percent (100%) (in increments of five percent (5%)) of
his:
(1) Participant Elected Contribution Account; and
(2) Employer Matching Contribution Accounts.
The diversification amount to be transferred from a
Participant's Participant Elected Contribution Account shall be
an amount equal to the difference between (A) the diversification
percentage elected by the Participant multiplied by the sum of
(i) the Participant's Participant Elected Contribution Account,
and (ii) the amounts previously transferred from the
Participant's Participant Elected Contribution Account to the
Participant's McDESOP Diversification Account ("Prior Elected
Contribution Transfers") reduced by (B) the amount of the
Participant's Prior Elected Contribution Transfers. The
Diversification Amount to be transferred from a Participant's
Employer Matching Contribution Accounts shall be an amount equal
to the difference between (A) the diversification percentage
elected by the Participant multiplied by the sum of (i) the
Participant's Employer Matching Contribution Accounts and
(ii) the amounts previously transferred from the Participant's
Employer Matching Contribution Accounts to the Participant's
McDESOP Diversification Account ("Prior Matching Contribution
Transfers") reduced by (B) the amount of the Participant's Prior
Matching Contribution Transfers. If a Participant has made a
Diversification Election and has not made a subsequent
Diversification Election with a lower percentage, a percentage of
the value of all future allocations to the Participant's
Participant Elected Contribution Account and Employer Matching
Contribution Accounts respectively equal to the percentage of the
Participant's Diversification Election shall be transferred to
the Participant's McDESOP Diversification Account.
If a Participant who has made a McDESOP Diversification
Election, makes a new McDESOP Diversification Election at a
percentage (including zero) lower than the percentage of the
earlier McDESOP Diversification Election, no portion of the
allocations to the Participant's Participant Elected Contribution
Account and Employer Matching Contribution Accounts,
respectively, shall be transferred to the McDESOP Diversification
Account until the respective products of the new lower percentage
elected multiplied by (A) the sum of the Participant Elected
Contribution Account plus Prior Elected Contribution Transfers
and (B) the sum of the Employer Matching Contribution Accounts
plus Prior Matching Contribution Transfers exceed (A) the Prior
Elected Contribution Transfers and (B) Prior Matching
Contribution Transfers, at which time each such respective
excess, and thereafter, a percentage of all future allocations
respectively to the Participant's Participant Elected
Contribution Account and Employer Matching Contribution Accounts
equal to the percentage of the Participant's McDESOP
Diversification Election shall be transferred to the
Participant's McDESOP Diversification Account. A McDESOP
Diversification Election shall be made at the same time and with
the same effective dates and such other rules as investment
elections under Section 10.11. Once a Participant has made a
McDESOP Diversification Election of a given percentage it will
continue in effect until he makes a new election. A Participant
can elect to reduce the percentage of his McDESOP Diversification
Election to a larger or a lesser percentage (including to zero);
however, amounts already credited to his McDESOP Diversification
Account shall not be transferred back to his Participant Elected
Contribution Account and his Employer Matching Contribution
Accounts.
(d) Distributions from Diversification Accounts. The
provisions of the Program shall apply to amounts subject to a
Diversification Election under Section 10.10 in the same manner
as to the Participant Elected Contribution Accounts or Employer
Matching Contribution Accounts, except that the balance in a
Participant's McDESOP Diversification Account shall be invested
in the Trust Investment Funds in the same manner as the
Participant elects to invest his Profit Sharing Account pursuant
to Section 10.8 or as provided in Section 10.9(a), whichever is
applicable, but determined without regard to Section 10.7.
Contributions credited to a Participant's McDESOP Contribution
Diversification Account shall be credited to the Investment Funds
available under the Profit Sharing Plan in the same proportions
as the Participant elects pursuant to Section 10.8 or as provided
in Section 10.9(a) whichever is applicable, but determined
without regard to Section 10.7. A Participant to whom a
distribution is payable under Article X shall have the right to
elect to receive any distributions made from his McDESOP
Diversification Account in McDonald's common stock.
The foregoing provisions shall apply only to the extent that a
Partipaannt does not receive distributions of amounts under Section
11.13(b) during a Qualified Election Period.
10.11 Effective Date of Participant's Investment and
Diversification Elections. Each Participant's investment election or
Diversification Election submitted by the 25th of a calendar month,
pursuant to Section 10.8 and a Diversification Election made pursuant
to Section 10.10, shall be made effective as of the first day of the
next calendar month or as soon thereafter as is administratively
convenient. Diversification Elections with respect to future
contributions made in accordance with Section 10.10 shall be
implemented the first day of the calendar month after the month in
which such contributions are made to the Program or as soon thereafter
as is administratively convenient. This Section 10.11 is intended to
give the Committee the authority to implement Participants' Investment
Elections and Diversification Elections as soon as possible with due
regard for requiring advance notice of elections. The Committee may
use such methods as making transfers between Investment Funds based
upon estimates followed by corrective adjustments made when exact data
becomes available and, in the event of inability to effectuate
elections because of data processing, communications or other systems
breakdowns, the Committee may effectuate such elections as soon as is
reasonable under the existing circumstances.
10.12 Trust Income. As of the close of business on each Valuation
Date, the Trustee shall determine the fair market value of the Trust
Fund and of each separate Investment Fund. The fair market value of
Assets Subject to Guarantee, as defined in Section 10.6(a)(3), shall
be book value for all purposes hereunder unless the Committee
determines that the book value guarantees no longer apply, a market
value distribution has occurred under the contract or there has been a
default on the guarantee. The fair market value of the Trust Fund and
the Investment Funds shall be recorded and communicated in writing to
the Committee by the Trustee. The Trustee's determination of fair
market value shall be final and conclusive on all persons.
10.13 Adjustment of Participant Account Balances and Leveraged
ESOP Suspense Accounts. As of each Valuation Date, the Committee
shall determine the adjustment required to be made to the value of
each Participant's Accounts and the Leveraged ESOP Suspense Accounts
to make the total of the portion of all such Account balances which
are invested in an Investment Fund equal to the total value of that
Investment Fund.
(a) Valuation of the Portion of Profit Sharing Accounts,
Investment Savings Accounts, Rollover Accounts, Diversification
Accounts, Participant Elected Contribution Accounts and Employer
Matching Contribution Accounts invested in an Investment Fund.
The value of the portion of each of a Participant's Accounts
invested in an Investment Fund as of a Valuation Date shall be
equal to the product for each Investment Fund of (1) multiplied
by (2) where:
(1) is the value of an Investment Fund as of the
Valuation Date, and
(2) is a fraction, the numerator of which is the value
of the portion of each of a Participant's Accounts invested
in such Investment Fund as of the Valuation Date reduced by
any distributions therefrom on or since the immediately
preceding Valuation Date and the denominator of which is the
value of such Investment Fund as of the immediately
preceding Valuation Date reduced by any distributions
therefrom since the immediately preceding Valuation Date.
(b) Valuation of the Portion of the Leveraged ESOP Suspense
Account and of Participants' Leveraged ESOP Accounts and Stock
Sharing Accounts invested in Company Stock. Each Valuation Date,
Participants' Leveraged ESOP Accounts and Stock Sharing Accounts
and the Leveraged ESOP Suspense Accounts shall be credited with
the dividends and other distributions and earnings of shares of
Company Stock credited thereto; provided that any dividends
credited to Participants' Leveraged ESOP Accounts which are to be
used to repay an Exempt Loan shall immediately after being so
credited to Participants' Accounts be transferred to the
Leveraged ESOP Suspense Account and held therein a separate
account until used to repay a loan and further provided that the
amount of such dividends transferred to the Leveraged ESOP
Suspense Account for a Plan Year shall not exceed the fair market
value of the Company Stock (determined on the Valuation Date
allocated) allocated to Participants' Leveraged ESOP Accounts
pursuant to Section 6.3(b) for the Plan Year. Earnings on
Forfeitures from the Leveraged ESOP portion of the Program shall
be allocated to Participants' Leveraged ESOP Accounts as of each
Valuation Date in the proportion that dividends and other
distributions and earnings are allocated in accordance with the
preceding sentence. The income under Section 16.6 (d) shall be
allocated to Participant's Stock Sharing Accounts in the
proportion that each Participants Stock Sharing Account balance
is to the total of all Participants' Stock Sharing Account
balances. Notwithstanding the foregoing, the records of such
accounts may be maintained in cash provided that it is at all
times possible to determine the number and the basis of the
shares Company Stock credited to a Participant's Accounts in the
Leveraged ESOP and the Stock Sharing Plan and to the Leveraged
ESOP Suspense Account.
The Accounts of Participants as adjusted according to
Section 10.13 shall determine the value of the interest of each
Participant in the Trust for all purposes subject to the crediting of
any contributions as provided in Article VII until a subsequent
determination is made by the Committee.
10.14 Allocation of Income to Holding Funds.
(a) Profit Sharing Holding Fund. Any net income and gains
(after reduction by losses and by expenses not paid by an
Employer) of the Profit Sharing Holding Fund for a Plan Year
shall be allocated to each Participant's Profit Sharing Accounts
in the proportion that the amount of Profit Sharing Contributions
allocated to each Participant in accordance with Section 7.1
bears to the total amount of Profit Sharing Contributions
allocated under Section 7.1 to all Participants.
(b) McDESOP and Leveraged ESOP Holding Fund. Any net
income and gains (after reduction by losses and by expenses not
paid by an Employer) of the McDESOP and Leveraged ESOP Holding
Fund for a Plan Year shall be allocated to Participants'
Leveraged ESOP Accounts, Stock Sharing Accounts, and Participant
Elected Contribution Accounts in the proportion that amounts
identified with the McDESOP, Leveraged ESOP, and Stock Sharing
portions of the Program are transferred to the McDESOP and
Leveraged ESOP Holding Fund. The amounts so allocated with
respect to Participants' McDESOP Accounts shall be allocated to
individual Participant's Participant Elected Contribution
Accounts by addingucchhmoouunts to the numerator of the fraction
described in Section 10.13(a)(2) as of the last Valuation Date of
the Plan Year for the purpose of determining the value of such
accounts. The amounts allocated to Participants' Leveraged ESOP
Accounts shall be added to earnings on Forfeitures from the
Leveraged ESOP as of the last Valuation Date of the Plan Year and
shall be allocated therewith in accordance with Section 10.13(b).
The amounts allocated to the Stock Sharing Accounts shall be
allocated in accordance with Section 10.13(b).
(c) Rollover Holding Fund. Any net income and gains (after
reduction by losses and by expenses not paid by an Employer) of
the Rollover Holding Fund for a Plan Year shall be allocated to
Participant's Profit Sharing Accounts pursuant to Section
10.13(a).
10.15 Separate Accounting in the Trust Fund. The Committee shall
create and maintain separate accounts for each Participant as
described in Section 1.1. Every adjustment to a Participant's
Accounts shall be considered as having been made on the relevant
Valuation Date, regardless of the date of actual entry or receipt by
the Trustee of Employer Contributions and Participant Elected
Contributions for a Plan Year.
10.16 Trust Investment. The assets of a Trust Fund may at any one
time be invested up to 100% exclusively in Company Stock subject to
the provisions of the Trust.
10.17 Separate Accounting for Leveraged ESOP Suspense Account.
The Committee shall create and maintain a separate account, called an
Leveraged ESOP Suspense Account, to record and to separately account
for (a) each loan or other extension of credit made pursuant to
Section 6.1, (b) all Leveraged ESOP Contributions to the Program to
repay each such loan or extension of credit, (c) net income, gains or
losses charged to such Leveraged ESOP Contributions and Leveraged ESOP
Suspense Account under Sections 10.13 and 10.6(b), and (d) all
payments made on such loan or other extension of credit until such
loan or other extension of credit is repaid, in accordance with
Sections 6.1, 6.2 and 6.3.
10.18 Correction of Error. In the event of any error, including
but not limited to an error in the adjustment of a Participant's
Accounts or an error in including or excluding persons as
Participants, the Committee, in its sole discretion, may correct such
error by either crediting or charging the adjustment required, or such
adjustment as the Committee in its sole discretion shall determine to
be equitable, to make such correction to or against Forfeitures or to
or against income and expenses of the Trust for the Plan Year in which
the correction is made, or if an Employer contributes an amount to
correct any such error, from such amount.
Corrections of Participant Elected Contributions and Employer
Matching Contributions which an individual should have been permitted
to make, but because of an error in Program administration was not
permitted to make, shall be made as provided in the preceding sentence
by crediting the individual's Participant Elected Contribution Account
and Employer Matching Contribution Account respectively with (a)
Participant Elected Contributions equal to the average percentage of
compensation which was contributed for the preceding Plan Year as such
contributions by highly compensated employees or non-highly
compensated employees (whichever the individual is classified as) and
(b) the amount of Employer Matching Contributions and Forfeitures
which would have been credited to such individual's Employer Matching
Contribution Account with respect to such Employer Matching
Contributions. After the preceding correction is made, the
Participant's Participant Elected Contribution Account and Employer
Matching Contribution Account shall be credited with a rate of return
which is equal to the rate of return the Participant's accounts would
have received had the accounts been invested in the manner in which
such accounts were invested at the time the Participant was first
given the opportunity to make Participant Elected Contributions.
Except as provided in this Section, the Accounts of other
Participants shall not be readjusted on account of such error.
10.19 Statement of Accounts. As soon as practicable after the
last day of each Plan Year, the Committee shall deliver to each
Participant a statement of his Net Balance Account.
10.20 Purchase or Sale of Company Stock. The Trustee, on behalf
of the Program, may (a) sell Company Stock to a Party in Interest or a
Disqualified Person if such sale is for at least the fair market value
of the Company Stock and (b) purchase Company Stock from a Party in
Interest or a Disqualified Person, if such purchase is for no more
than the fair market value of the Company Stock and (c) no commission
is charged with respect to such sale or acquisition; provided that
such sale or acquisition is for the price of the Company Stock
prevailing on an established securities market, if the Company Stock
is readily tradeable on such market and determined by an independent
appraiser, if the Company Stock is not readily tradeable on an
established securities market.
10.21 Shareholder Rights in Company Stock. A fundamental purpose
of the Program and the Trust is to obtain for the Company, its
shareholders, Participants and future Participants the benefits
resulting from Participants having the right to vote shares of Company
Stock and to determine whether shares of Company Stock should be sold
or retained in response to a public or private tender offer. A key
purpose of the Program is to encourage Participants to feel and to act
like owners of the Company by assuring them the opportunity to share
the economic benefit of ownership of Company Stock and the opportunity
to direct the manner in which shares held by the Program are voted at
all shareholder meetings and to determine whether shares of Company
Stock should be sold or retained in response to a public or private
tender offer. The broad employee participation in the Program at all
levels of the Company and limitations on maximum benefits to
Participants who are officers, shareholders or highly compensated
employees assure that such voting and decisions by Participants
represent the overall knowledge and experience of a broad
representative cross-section of employees of the Company. It,
therefore, is anticipated that the votes and other decisions of
Participants will be fairly representative of both present and future
Participants' interests. Accordingly it has been concluded that
Participants are best able to determine questions concerning voting
and whether to sell or retain shares of Company Stock in a public or
private tender offer with respect to shares allocated to their own
accounts, as each person is uniquely able to determine his best
interests based upon both his unique knowledge of his own situation
and his unique knowledge of the Company. Moreover, because the
overall broad group of employees who are Participants is fairly
representative of both present and future Participants' interests it
is beevveed that such Participants as a group are uniquely able to
determine the best interests of future Participans who benefit from
future allocations of Company Stock under the Program. Further, such
participation in fundamental shareholder decisions by Participants is
expected to result in increased commitment to the success of the
Company further enhancing financial rewards of plan participation for
such Participants, as well as enhancing shareholder and Company
values. In order to assure that each Participant will express his or
her unrestrained best judgment concerning how these rights should be
exercised independent of any considerations associated with such
Participant's employment status with the Company, Participants
exercise such rights through a method that assures the confidentiality
of their votes and other decisions.
(a) Allocated Shares. With respect to shares (and
fractional shares) of Company Stock which have been allocated to
Participants' Accounts (including shares held in the Profit
Sharing McDonald's Stock Fund with respect to amounts credited to
Participant's Profit Sharing Account and Diversification
Accounts), each Participant or Beneficiary, as a named fiduciary,
shall have the right to direct the Trustee as to the manner of
voting and the exercise of all other rights which a shareholder
of record has with respect to such shares (including, but not
limited to, the right to sell or retain such shares in a public
or private tender offer). In voting or exercising such other
rights with respect to such shares the Participants and
Beneficiaries shall consider their own individual long-term best
interests in providing benefits under the Program and Trust
rather than a short term gain. In the event that a Participant
shall fail to direct the Trustee as to the manner of voting of
such shares of Company Stock allocated to the Participant's
Accounts or as to the exercise of other rights in respect of such
shares, the Trustee shall vote such shares or exercise such
rights with respect to such shares in accordance with Section
10.21(b).
(b) Unallocated Shares and Allocated Shares Not Directed.
With respect to shares (and fractional shares) of Company Stock
which are either not allocated to Participants' Accounts or are
allocated to the Accounts of Participants who fail (or whose
Beneficiaries fail) to provide any direction pursuant to Section
10.21(a), each Participant who is an Employee, as a named
fiduciary, shall have the right to direct the Trustee as to the
manner of voting the number of such shares (and fractional
shares), and the exercise of all other rights which a shareholder
of record has with respect to such shares (including, but not
limited to, the right to sell or retain such shares in a public
or private tender offer), as is equal to the product of (i) the
sum of the number of unallocated shares and undirected shares
multiplied by (ii) a fraction, the numerator of which is the
number of shares (and fractional shares) of Company Stock which
have been allocated to the Accounts of such Participant and the
denominator of which is the total number of shares (and
fractional shares) of Company Stock which have been allocated to
the Accounts of all Participants who give directions to the
Trustee pursuant to this Section 10.21(b). In voting or
exercising such other rights with respect to such shares such
Participants shall consider the long term interests of both
current and future Participants and Beneficiaries in providing
benefits under the Program and Trust rather than a short term
gain.
(c) Named Fiduciaries. The Trustee shall notify each
Participant and Beneficiary who is authorized pursuant to Section
10.21(a) and (b) to direct the Trustee as to the manner of voting
and the exercise of other shareholder rights with respect to
shares (and fractional shares) of Company Stock that such
Participant or Beneficiary is a named fiduciary, within the
meaning of Section 402(a)(2) of ERISA, with respect to such
shares (and fractional shares), and shall instruct each such
Participant and Beneficiary that is exercising such authority to
direct the Trustee, with respect to shares of Company Stock
allocated to his Accounts, he should consider his own individual
long-term best interests in providing benefits under the Program
and, with respect to shares of Company Stock voted pursuant to
Section 10.21(b), he should consider the long-term interests of
both current and future Participants and Beneficiaries in
providing benefits under the Program and Trust rather than a
short term gain.
(d) Confidentiality. The Trustee shall solicit the
directions of Participants and Beneficiaries in accordance with
Section 10.21(a) or (b) and shall follow such directions by
delivering aggregated votes to the Company or otherwise
implementing such directions in any convenient manner which
preserves the confidentiality of the votes or other directions of
individual Participants or Beneficiaries. Any designee of the
Trustee who assists in the solicitation or tabulation of the
directions of Participants or Beneficiaries shall certify that he
will maintain the confidentiality of all directions given.
10.22 Cash Distributions with Respect to Company Stock. If there
is a discrepancy between (1) the amount received by the Trust upon the
sale of Company Stock or credited to a portion of the Trust upon the
transfer of Company Stock from one portion of the Trust to another,
for the purpose of making cash distributions to Participants or
Beneficiaries and (2) the value of such Company Stock on the Valuation
Date as of which such stock is valued for the purpose of determining
the amount of the Participant's cash distributions, such discrepancy
shall be credited to or charged against the Trust Income of the
portion of the Trust Fund (i.e., accounts in the Profit Sharing
portion of the Program, the Leveraged ESOP Accounts, McDESOP Accounts
and Stock Sharing Accounts) which held the stock before sale or
transfer as of the Valuation Date next following the sale or transfer.
10.23 Holding Funds.
(a) Profit Sharing Holding Fund. Profit Sharing
Contributions made to the Program shall be held in the Profit
Sharing Holding Fund until allocated to Participant's accounts in
accordance with Section 7.1. Such contributions as provided in
Section 3.1(a) and 3.1(b) shall be separately accounted for.
Amounts which in accordance with Article XI are currently
distributable in cash to Participants or Beneficiaries with
respect to the Profit Sharing portion of the Plan shall be
transferred to the Profit Sharing Holding Fund during the
calendar month next following the calendar month within which
such amount became distributable. The Profit Sharing Holding
Fund shall be held (a) in a checking account of the Trustee in
the name of the Trust with, if the Trustee or custodian ia bbank
or a Trust Company, th TTrrustee's orussttodian's banking
department, or (b) in a STIF Fund or in such types of investments
or pooled, common, commingled or collective trust funds,
including, if the Trustee or custodian is a bank, those of the
Trustee or custodian, as the Committee may from time to time
authorize the Trustee to invest in such respective amounts and
proportions and in such manner as the Committee shall from time
to time determine.
(b) McDESOP and Leveraged ESOP Holding Fund. Participant
Elected Contributions and Matching Contributions made to the
Program shall be held in the McDESOP and Leveraged ESOP Holding
Fund until credited to Participant's accounts in accordance with
Sections 7.4 and 7.2, respectively, and amounts which are
distributable to a Participant or Beneficiary in cash from the
McDESOP portion of the Program shall, at the direction of the
Committee, be transferred to the McDESOP and Leveraged ESOP
Holding Fund during the calendar month next following the
calendar month within which such amount became distributable.
The McDESOP and Leveraged ESOP Holding Fund shall be held (a) in
a checking account of the Trustee in the name of the Trust with,
if the Trustee or custodian is a bank, the banking department of
the Trustee or custodian, or (b) in the STIF Fund or in such
types of investments or pooled, common, commingled or collective
trust funds including, if the Trustee or custodian is a bank,
those of the Trustee or custodian, as the Committee may from time
to time authorize the Trustee to invest in such respective
amounts and proportions and in such manner as the Committee shall
from time to time determine.
(c) Rollover Holding Fund. Rollover Contributions to the
Program made in a calendar month shall be held in the Rollover
Holding fund until the next Valuation Date when such
contributions shall be invested in accordance with the
Participant's investment elections.
(d) Committee Action. The Committee may authorize one or
more of its members, or their designees, to sign, manually, or by
facsimile signature, any and all checks, drafts, and orders,
including orders or directions in informal or letter form,
against any funds in the Holding Funds and the Trustee is
authorized to honor any and all checks, drafts and orders so
signed. As of each Valuation Date, income, gains, losses and
expenses (to the extent not paid by an Employer) of the Holding
Funds shall be determined separately from the remainder of the
Trust and the net income or losses of the Holding Funds, for each
Plan Year shall be added to the net income of the Trust Fund for
such Plan Year as provided in Section 10.14 and any net losses of
the Holding Funds for the Plan Year shall be paid by the Company.
ARTICLE XI
DISTRIBUTION OF BENEFITS
11.1 Distributions, General.
(a) Except as provided in Section 11.11 (for lump sum
distributions of amounts not more than $3,500) and subject to
Section 11.8 (with respect to withholding of taxes), upon the
Participant's Termination of Employment on or after Vesting
Retirement Date, Disability or for any other reason other than
death, distributions shall be made in accordance with Section
11.2.
(b) Except as provided in Section 11.11 (for lump sum
distributions of amounts not more than $3,500) and subject to
Section 11.8 (with respect to withholding of taxes), upon the
Participant's death, distributions shall be made in accordance
with Section 11.3.
(c) If a Participant or Beneficiary is otherwise entitled
to a distribution because of retirement on or after Vesting
Retirement Date, Disability, death or other Termination of
Employment, the Committee shall require that immediate
distribution of small vested Accrued Benefits shall be made in
accordance with and subject to the limitations of Section 11.11,
notwithstanding the provisions of Sections 11.2 and 11.3.
(d) A Participant or Beneficiary who has not had a
Termination of Employment shall receive a distribution not later
than his Required Beginning Date as provided in Section 11.13.
(e) A Participant shall be entitled to elect to receive
in-service withdrawals from Investment Savings Accounts, Rollover
Accounts and Stock Sharing Accounts as provided in Section 11.16.
11.12 Payment of Net Balance Account on Disability, or on
Retirement or Other Termination of Employment.
(a) Form of Payment of Accounts.
(1) Retirement or Disability. Subject to
Sections 11.11 and 11.14, if a Participant retires on or
after his Vesting Retirement Date or has a Termination of
Employment on account of a Disability and if the Participant
makes no election pursuant to Section 11.2(b), the Trustee
shall distribute to the Participant the vested portion of
his Net Balance Account credited to his Accounts held in the
Program in a single non-periodic distribution within a
reasonable time after the Valuation Date next following the
later of (i) such event or (ii) the last day of the Plan
Year in which he attains the age of 70-1/2. A Participant
whose Net Balance Account is payable pursuant to the
preceding sentence may elect to receive payment in whichever
of the following methods the Participant shall elect in
writing:
(A) A single non-periodic payment;
(B) Substantially equal installments, not less
frequently than annually, over a period certain
determined in accordance with Section 11.12, either
directly from the Program, or by purchase of a
nontransferable period certain annuity contract
purchased from an insurance company which is authorized
to do business in any state and which has an A plus
rating by A.M. Best Company or a comparable rating by a
comparable service which rates insurance companies,
payable for such period of time as the Participant
shall elect; or
(C) In the form of a nontransferable life annuity
contract in an amount which can be purchased from an
insurance company designated by the Participant which
is authorized to do business in any state and which has
an A plus rating by A.M. Best Company or a comparable
rating by a comparable service which rates insurance
companies, with the Participant's vested Net Balance
Account credited to his Accounts or with the portion of
the Participant's vested Net Balance Account which the
Participant elects to receive in the form of a
nontransferable life annuity contract.
(2) Ternaattion for assoons Other than Retirement or
Disability or Death. If a Participant has a Termination of
Employment for reasons other than retirement on or after his
Vesting Retirement Date, Disability or death, the Trustee
shall distribute the Participant's vested Net Balance
Account subject to the Participant's election to receive
nonperiodic or installment distributions, as follows:
(A) Profit Sharing Account. The vested
portion of the Participant's Profit Sharing
Account shall be distributed to the Participant in
cash or in McDonald's common stock, in accordance
with Section 11.2(f), within a reasonable time
after the Participant elects to receive or to
commence receiving a distribution of such account.
(B) Investment Savings Account. The
Participant's Investment Savings Account shall be
distributed to the Participant in cash or in McDonald's
common stock, in accordance with Section 11.2(f) within
a reasonable time after the Participant elects to
receive or to commence receiving a distribution of such
account.
(C) Rollover Account and Rollover Holding
Account. The Participant's Rollover Account and
Rollover Holding Account shall be distributed to
the Participant in cash or in McDonald's common
stock, in accordance with Section 11.2(f) within a
reasonable time after the Participant elects to
receive or to commence receiving a distribution of
such account.
(D) McDESOP Accounts. The Participant's McDESOP
Accounts, including the vested portion of all accounts
identified in Sections 1.1(b) and in 1.1(c) shall be
distributed to the Participant in cash or in McDonald's
common stock as provided in Section 11.2(g) within a
reasonable time after the Participant elects to receive
or to commence receiving a distribution of such
account.
(E) Stock Sharing Accounts. The Participant's
Stock Sharing Accounts, including the vested portion of
all accounts identified in Section 1.1(d) shall be
distributed to the Participant in cash or in McDonald's
common stock as provided in Section 11.2(i) within a
reasonable time after the Participant elects to receive
or to commence receiving a distribution of such
account.
(F) Distributions in Default of Election. In the
absence of an election by a Participant to receive a
distribution of his entire vested Net Balance Account
or to commence to receive installment distributions at
least equal to the greater of the Minimum Distribution
Amount, as defined in Section 11.12(d), and the amount
determined under Section 11.2(d)(3), his entire vested
Net Balance Account shall be distributed or commence to
be distributed within a reasonable time after the end
of the calendar year in which he attains the age of 70
1/2, but not later than his Required Beginning Date.
A Participant entitled to elect to receive a
distribution or to commence receiving distributions pursuant
to this Section 11.2(a)(2) is not entitled to elect an
annuity form of distribution.
(3) Break in Service. If a Participant has a Break in
Service without having a Termination of Employment, the
Trustee shall distribute the portion of his vested Net
Balance Account in the Profit Sharing Plan in cash and in a
single non-periodic payment within a reasonable time after
the earlier of the Valuation Date next following the date
the Participant elects to receive such distribution or after
the Participant attains the age of 70-1/2, but not later
than his Required Beginning Date; provided that if the
Participant completes one year of Eligibility Service
following the Break in Service, he shall not be permitted
further elections to receive distributions made pursuant to
Article XI, except as he may otherwise be entitled to
receive in-service distributions pursuant to Section 11.16,
until he again has a Break in Service or Termination of
Employment.
(b) Elections by Retired or Disabled Participants. As
permitted in Section 11.2(a)(1), with respect to a distribution
on account of a Participant's Termination of Employment on or
after his Vesting Retirement Date or on account of Disability, a
Participant may elect separately with respect to the portion of
his Net Balance Account held in the Profit Sharing, McDESOP
leveraged ESOP, Stock Sharing, Rollover and Investment Savings
portions of the Program, on such form as may be provided or
approved by the Committee, the form of benefit and the date
(including an immediate or a delayed date) of commencement of
benefits. The actual date of distribution shall be determined in
accordance with the administrative procedures established by the
Plan Administrator but shall be no earlier than the day following
the Valuation Date which next follows the date the completed
election form is submitted to the Plan Administrator. To the
extent that such a Participant is receiving a portion of his
benefit in a form other than an annuity purchased from an
insurance company, he may from time to time make or change his
benefit elections to accelerate or to delay the date and the rate
of distribution on such a form as may be provided or approved by
the Committee, subject to such rules as the Committee shall
specify and to the limits stated in Sections 11.2(d) and 11.2(e),
hereof. In the absence of any election, a Participant who has a
Termination of Employment on or after his Vesting Retirement Date
or on account of Disability shall be deemed to have elected to
receive the vested portion of his Net Balance Account in a single
non-periodic payment paid within a reasonable time after the end
of the calendar year in which he attains age 70-1/2, but not
later than his Required Beginning Date.
(c) Types of Annuities. If the Participant elects to
receive his benefit in the form of an annuity contract as
permitted under Section 11.2(a)(1), each Participant, subject to
Sections 11.2(d) and 11.2(e) shall have the right to direct the
Trustee to purchase an available nontransferable annuity contract
from an insurance company designated by the Participant which is
authorized to do business in any state and which has an A plus
rating by A.M. Best Company or a comparable rating by a
comparable service which rates insurance companies. The benefit
under such annuity contract shall be paid to the Participant
prior to his death, and if a joint and survivor annuity is
provided, unless such joint annuitant shall be the Participant's
spouse, the periodic benefit payable to the Participant's
Beneficiary shall not be greater than the following percentage of
the benefit paid to the Participant:
Excess of age of employee Applicable
over age of beneficiary percentage
------------------------- ----------
10 years or less 100
11 96
12 93
13 90
14 87
15 84
16 82
17 79
18 77
19 75
20 73
21 72
22 70
23 68
24 67
25 66
26 64
27 63
28 62
29 61
30 60
31 59
32 59
33 58
34 57
35 56
36 56
37 55
38 55
39 54
40 54
41 53
42 53
43 53
44 and greater 52
(d) Limitations on Participant Elections. Notwithstanding
the provisions of Section 11.9 or any elections made by the
Participant,
(1) Period for Installment or Annuity Payments.
Except as provided in Section 11.14, installment payments
and period certain payments under any annuity contract
purchased from an insurance company shall be made or shall
commence not later than the Required Beginning Date and
shall be made over a period not in excess of (A) the lesser
of the period determined under Section 11.2(d)(3) or (B) the
Participant's life expectancy or the joint and last survivor
life expectancy of the Participant and his Beneficiary (such
life expectancies to be determined in accordance with
Section 11.12(e)). In the case of payments made in the form
of a life annuity, payments shall be made over a period not
in excess of the life of the Participant or the lives of the
Participant and his Beneficiary.
(2) Annuity Payments. If benefits are paid under an
annuity contract, payments shall be non-increasing or shall
increase only as follows:
(A) with any percentage increase in a specified
and generally recognized cost-of-living index;
(B) to the extent of the reduction in the
Participant's payments to provide for a survivor
benefit upon death of the beneficiary whose life was
being used to determine the period over which benefits
are being paid; or
(C) to provide cash refunds of Participant
Contributions upon the Participant's death.
(3) Minimum Distribution Incidental Benefit
Requirements. If benefits are paid in installments,
payments for the calendar year in which the Participant
attains the age of 70-1/2 and in each calendar year
thereafter shall equal at least the dollar value of the
Participant's vested Net Balance Account as of the last
Valuation Date of the immediately preceding Plan Year
divided by the following Applicable Divisor:
Attained Age of Participant Applicable
on Birthday in Calendar Year Divisor
---------------------------- ----------
70 26.2
71 25.3
72 24.4
73 23.5
74 22.7
75 21.8
76 20.9
77 20.1
78 19.2
79 18.4
80 17.6
81 16.8
82 16.0
83 15.3
84 14.5
85 13.8
86 13.1
87 12.4
88 11.8
89 11.1
90 10.5
91 9.9
92 9.4
93 8.8
94 8.3
95 7.8
96 7.3
97 6.9
98 6.5
99 6.1
100 5.7
101 5.3
102 5.0
103 4.7
104 4.4
105 4.1
106 3.8
107 3.6
108 3.3
109 3.1
110 2.8
111 2.6
112 2.4
113 2.2
114 2.0
115 1.8
If benefits are paid in the form of an annuity with a period
certain feature, the number of years over which such period
certain payments are made shall not exceed the lesser of
(1) the Participant's or the Participant's and Beneficiary's
joint and last survivor life expectancy as determined in
Section 11.12(e) or (2) the number of years shown in the
Applicable Divisor column above.
(e) Qualified Joint and Survivor Annuities.
(1) Notwithstanding the foregoing provisions of this
Section 11.2, in the case of a Participant who has elected
pursuant to Section 11.2(a)(1) to receive one or more of his
Accounts in a life annuity, such distribution shall be in
the form of a Qualified Joint and Survivor Annuity purchased
by the Trust from an insurance company designated by the
Participant which is authorized to do business in any state
and which has an A plus rating by A.M. Best Company or a
comparable rating by a comparable service which rates
insurance companies, unless the Participant with his
spouse's consent as provided in Section 11.10 elects to
receive a different form of annuity or another form of
benefit. The term "Qualified Joint and Survivor Annuity"
means an immediate annuity payable, for a married
Participant, to the Participant for life and, if the
Participant's spouse survives the Participant, a survivor
annuity payable to the spouse for life in an amount equal to
50 percent (50%) of the annuity payable to the Participant
and, for an unmarried Participant, a single life annuity
payable to the Participant for life. The amount of the
benefits payable under a Qualified Joint and Survivor
Annuity shall be the amount which can be purchased from an
insurance company with the vested portion of the one or more
of his Accounts which the Participant elects to receive in
the form of a life annuity.
(2) If a Participant who has elected to receive all or
a portion of his vested Net Balance Account in the form of a
life annuity dies before the annuity starting date, such
portion of his vested Net Balance Account shall be paid to
his surviving spouse in the form of a Qualified
Preretirement Survivor Annuity payable to the surviving
spouse for life ("QPSA") unless either the Participant, with
his spouse's consent in accordance with Section 11.10, has
elected to waive the QPSA or the spouse elects pursuant to
Section 11.3(a)(3) to waive the QPSA and to receive another
form of benefit; provided that if the Trust has paid for an
annuity to provide a life annuity benefit elected by the
Participant and the Participant dies before his annuity
starting date under the contract, the QPSA shall be provided
by the annuity contract and the surviving spouse shall have
no claim against the Trust with respect to the Accounts
which he has elected to receive in the form of a life
annuity. Any portion of a Participant's vested Net Balance
Account in excess of the value of a QPSA, if paid directly
by the Program, or remaining after the payment of annuity
premiums to an insurance company, if paid by an insurance
company, shall be distributed to the Participant's
Beneficiary as provided in Section 11.3.
(3) A Participant who elects to receive benefits in
the form of a life annuity and to whom benefits would be
payable in the form of a Qualified Joint and Survivor
Annuity pursuant to this Section 11.2(e) shall have the
right to waive a Qualified Joint and Survivor Annuity (such
waiver shall be consented to by the Participant's spouse in
writing in accordance with Section 11.10) and the QPSA by
delivering written notice to the Committee, at any time
within the 90 day period prior to the annuity starting date,
to receive all or a portion of such benefits in a different
form of annuity or another form of benefit. If a
Participant elects to receive benefits in the form of a life
annuity, the Committee shall within a reasonable period of
time provide the Participant, by personal delivery or first
class mail, with a written explanation of:
(A) the terms and conditions of the Qualified
Joint and Survivor Annuity and the QPSA;
(B) the Participant's right to make, and the
effect of, an election to waive the Qualified Joint and
Survivor Annuity and the QPSA;
(C) the rights of the Participant's spouse to
consent to the Participant's election to waive the
Qualified Joint and Survivor Annuity and the QPSA and
the effect of consenting to such waiver; and
(D) the Participant's right to make, and the
effect of, a revocation of an election to waive the
Qualified Joint and Survivor Annuity and the QPSA.
Any election made by a Participant to receive a life annuity
form of benefit pursuant to this Section 11.2(e) may be revoked
by such Participant (with his spouse's consent) by delivering
written notice to the Committee at any time prior to the
Participant's annuity starting date and, once revoked, may be
made again at any time by delivering written notice to the
Committee prior to the Participant's annuity starting date. If a
Participant, who has elected a life annuity form of benefit and
who has not waived (with his spouse's consent) the QPSA, dies
before his annuity starting date, his surviving spouse may elect
pursuant to (A) through (D) and Section 11.10 to waive the QPSA.
(f) Form of Profit Sharing Distributions. If the method of
distribution selected by a Participant includes either a
nonperiodic payment or installment payments or a combination of
nonperiodic payments and installments, the Participant may elect,
on such form and in such manner as the Committee shall provide or
permit, to receive the Profit Sharing Plan portion of his vested
Net Balance Account distributed in cash or in shares of
McDonald's common stock or in any combination of the two as
elected by the Participant; provided however that, in the absence
of an election to receive shares of McDonald's common stock, such
distributions shall be made in cash and, further provided, that
the portion of such distribution distributed in the form of
shares of McDonald's common stock shall not, except as otherwise
provided below, exceed the value (if any) of the Participant's
interest in the Profit Sharing McDonald's Common Stock Fund.
Until such time as a Participant's vested Net Balance
Account has been distributed, transferred to a Holding Fund in
accordance with Section 10.23 or forfeited in accordance with
Section 11.4, any portion of the Participant's Net Balance
Account remaining in the Profit Sharing Plan portion of the
Program shall continue to be invested in accordance with
Section 10.7 and the Participant's (or his Beneficiary's)
investment elections in accordance with Sections 10.8 and 10.9,
as applicable.
(g) McDESOP Accounts. If the sum of the portion of a
Participant's vested balances in his Participant Elected
Contribution Account, Employer Matching Contribution Account and
McDESOP Diversification Account to the extent it is attributable
to amounts diversified from his Participant Elected Contributions
or Employer Matching Contribution Account and is invested in
McDonald's common stock, consists of $1500 or more as of the
Valuation Date immediately preceding a distribution, such amounts
shall be distributed in the form of shares of McDonald's common
stock, unless the Participant (or his Beneficiary) elects a
distribution in cash. If the sum of the portion of a
Participant's vested balance in his Participant Elected
Contribution Account, Employer Matching Contribution Account and
his Diversification Account to the extent it is attributable to
his Participant Elected Contributions or Employer Matching
Contributions and is invested in McDonald's common stock is less
than $1500 as of the Valuation Date immediately preceding the
distribution, such Accounts shall be distributed in cash, unless
the Participant (or his Beneficiary) elects to receive a
distribution in shares of McDonald's common stock.
(h) Leveraged ESOP Accounts. If the sum of the portion of
a Participant's vested balance in his Leveraged ESOP Accounts and
his Leveraged ESOP Diversification Account to the extent it is
invested in McDonald's common stock consists of $1500 or more as
of the Valuation Date immediately preceding the date of
distribution, such accounts shall be distributed in the form of
shares of McDonald's common stock, unless the Participant (or his
Beneficiary) elects a distribution in cash. If the sum of the
portion of a Participant's vested Net Balance Account in his
Leveraged ESOP Account and his Leveraged ESOP Diversification
Account to the extent it is attributable to his Employer
Leveraged ESOP Contributions and is invested in McDonald's common
stock has a value of less than $1500 as of the Valuation Date
immediately preceding the distribution, such Accounts shall be
distributed in cash, unless the Participant (or his Beneficiary)
elects to receive a distribution in shares of McDonald's common
stock.
(i) Stock Sharing Accounts. If a distribution from a
Participant's Stock Sharing Accounts has a value of $1500 or more
as of the Valuation Date preceding the date of distribution, the
distribution shall be in the form of shares of common stock of
the Company unless the Participant or Beneficiary elects to
receive payment in cash. If the amount to be distributed from a
Participant's Stock Sharing Accounts has a value of less than
$1500, the distribution shall be in the form of cash unless the
Participant elects to receive payment in the form of shares of
common stock of the Company.
(j) If any distribution in shares of McDonald's common
stock described in this Section 11.2 would not be in whole
shares, the value of any fractional share shall be distributed in
cash. A Participant or Beneficiary who is entitled to a
distribution may elect to receive a cash distribution in lieu of
McDonald's common stock or a McDonald's common stock distribution
in lieu of cash by filing a written election with the Committee
on forms approved by the Committee and in a manner prescribed by
the Committee on or before the Valuation Date coincident with or
next preceding the date of distribution.
Until such time as a Participant's vested Net Balance
Account has been distributed, transferred to a Holding Fund in
accordance with Section 10.23, or forfeited in accordance with
Section 11.4, (A) any portion of his Net Balance Account in his
Diversification Account shall continue to be invested as provided
in Section 10.10, and (B) any portion of his Net Balance Account
remaining in the McDESOP, Leveraged ESOP or Stock Sharing
portions of the Program shall continue to be invested in Company
Stock and held therein.
(k) Put Option. If any Company Stock distributed from a
Participant's Participant Elected Contribution Account, Employer
Matching Contribution Account, McDESOP Diversification Account,
Leveraged ESOP Diversification Account or Stock Sharing Account
is not readily tradeable on an established market when
distributed, the distributee shall have the put option rights
which are described in Section 6.5(b) with respect to such
shares.
(l) Distributions After Rehire. If a Participant who has
had a Termination of Employment subsequently becomes an Employee,
such Participant shall not be entitled to elect distributions
until he again becomes eligible to receive distributions as
provided in Section 11.2.
11.3 Payment of Net Balance Account on Death of Participant.
(a) Form of Payment. The Net Balance Account of a
Participant who dies before having a Termination of Employment
shall be fully vested. The Net Balance Account of a Participant
who dies after having a Termination of Employment for reasons
other than a Termination of Employment on or after Vesting
Retirement Date, death or Disability shall be vested as provided
in Section 11.4(b). If a Participant dies before his entire
vested Net Balance Account has been paid from the Program, except
to the extent otherwise provided in Section 11.2(e)(2) in cases
in which the Participant has elected an annuity form of
distribution, distributions shall be made as follows:
(1) If the Participant has a surviving spouse, the
Trustee shall distribute the vested portion of the
Participant's Net Balance Account to the Participant's
surviving spouse as the Participant's Beneficiary in
accordance with Section 11.3(a)(3) unless the Participant
(with his spouse's consent in accordance with Section 11.10)
has named another Beneficiary.
(2) If the Participant does not have a surviving
spouse or if the Participant (with his spouse's written
consent in accordance with Section 11.10) has named another
Beneficiary, the Trustee shall distribute the vested portion
of the Participant's Net Balance Account in accordance with
Section 11.3(a)(3) to the Beneficiary named by the
Participant in accordance with Section 11.6.
(3) The Participant's vested Net Balance Account shall
be distributed within a reasonable time after the Valuation
Date following the Participant's death or at such later date
as the Beneficiary may elect under Section 11.3(b).
Distributions to the Participant's Beneficiary shall be in
whichever of the following methods of payment the
Beneficiary, by written notice to the Committee, shall elect
unless the Participant has elected in a written notice
delivered to the Committee not to permit such Beneficiary
elections in which case the Participant shall elect the
method of payment, from the following:
(A) A single non-periodic payment;
(B) Substantially equal installments, not less
frequently than annually, over a period certain,
directly from the Profit Sharing Plan portion of the
Program; or
(C) In the form of a nontransferable annuity
contract purchased from an insurance company designated
by the Beneficiary which is authorized to do business
in any state and which has an A plus rating by A.M.
Best Company or a comparable rating by a comparable
service which rates insurance companies payable to the
Beneficiary over his life.
In the absence of any election by a Participant or a
Beneficiary as to time and manner of payment, the Participant and
the Beneficiary shall be deemed to have elected to receive the
benefit in an immediate single sum payment. Distributions shall
be made to a Participant's Beneficiary in cash or in Company
Stock under the conditions provided in Sections 11.2(f) and
11.2(g).
(b) Beneficiary's Elections. With respect to a
distribution on account of a Participant's death, his
Beneficiary, as designated pursuant to Section 11.6, may elect
the form of benefit and the date of commencement of benefits,
unless the Participant has elected not to permit such Beneficiary
elections. If the Participant has not elected otherwise, the
Beneficiary may also elect, with respect to benefits not being
received in the form of an annuity, to accelerate or to delay the
receipt of benefits. Such elections shall be made in writing on
a form provided or approved by the Committee and are subject to
such rules as the Committee shall specify and to the limits
stated in Sections 11.3(c), 11.3(d), 11.3(e) and 11.3(f), as
applicable. Once a Beneficiary has made benefit elections, he
may in the same manner and subject to the same conditions, with
respect to benefits not being received in the form of an annuity
contract purchased from an insurance company, change the election
at any time, and with respect to any election delay or accelerate
the receipt of benefits from time to time.
(c) Period of Distribution - Death After Distributions
Commence. Notwithstanding any other provisions of this Program
and any elections made by the Participant or his Beneficiary,
except an election made in accordance with Section 11.13(a), if a
Participant dies on or after his Required Beginning Date but
before his entire vested Net Balance Account has been
distributed, and on or after the date upon which distribution of
his vested Net Balance Account has commenced in installments over
a period certain:
(1) not in excess of the life expectancy of the
Participant or the joint and last survivor life expectancy
of the Participant and his Beneficiary and such life
expectancy was not subject to redetermination under Section
11.12(b), the balance of the Participant's vested Net
Balance Account shall be distributed to his Beneficiary at
least as rapidly as under the method of distribution in
effect on the date of the Participant's death; or
(2) not in excess of the life expectancy or life
expectancies which are subject to periodic redetermination
in accordance with Section 11.12(b), the balance of the
Participant's vested Net Balance Account shall be
distributed to his Beneficiary (A) by the last day of the
Plan Year following the Plan Year in which the Participant
died, if the period was based solely upon the Participant's
life expectancy and (B) over a period not longer than the
Beneficiary's remaining life expectancy as determined under
the method of determining life expectancy used for the
Beneficiary at the time benefit payments commenced to the
Participant, if the period was based upon the joint and last
survivor life expectancy of the Participant and the
Beneficiary. The remaining life expectancy of a Beneficiary
for purposes of the preceding sentence shall be (1) if such
life expectancy is not subject to redetermination, the
Beneficiary's life expectancy at the time installment
payments commenced to be made to the Participant reduced by
one year for each year over which such payments have been
made or (2) if such life expectancy is subject to
redetermination, the Beneficiary's life expectancy as
redetermined at the applicable times following the
Participant's death.
(d) Period of Distribution - Death Before Distributions
Commence. Notwithstanding any elections made by a Participant or
Beneficiary, if Section 11.3(c) is not applicable, and a
Participant dies before his entire vested Net Balance Account has
been distributed or commenced to be distributed, the
Participant's vested Net Balance Account shall be distributed not
later than December 31 of the calendar year which contains the
fifth anniversary of the Participant's death; except that if his
Beneficiary is an individual, the Participant's vested Net
Balance Account may be distributed over a period not exceeding
the Beneficiary's life expectancy (or, if there are multiple
Beneficiaries, the Beneficiary with the shortest life expectancy)
determined as of the date of the Participant's death, and if the
Beneficiary is a trust, the Participant's vested Net Balance
Account may be distributed over a period not exceeding the life
expectancy, determined as of the Participant's death, of the
beneficiary of the trust or estate who then has the shortest life
expectancy, beginning no later than December 31 of the calendar
year after the calendar year of the Participant's death to the
extent permitted under Section 11.3(h). Notwithstanding the
foregoing, if the Beneficiary is the Participant's surviving
spouse, distribution shall be made or shall commence not later
than December 31 of the calendar year in which the Participant
would have attained the age of 70-1/2 years.
(e) Death of Surviving Spouse Who Is Beneficiary Before
Benefit Payments Commence. If the surviving spouse of a
Participant is the Beneficiary, and the surviving spouse dies
before distributions have begun to the surviving spouse in
accordance with Section 11.3(c)(1) or (2), the rules of Sections
11.3(c) and 11.3(d) shall apply as though such surviving spouse
were the Participant, substituting the date of death of such
spouse for the date of the Participant's death to determine the
dates therein. Distributions are considered to have begun to the
surviving spouse on the later of the dates specified in Section
11.3(c)(1) or (2).
(f) Death of Beneficiary After Benefit Payments Commence.
If a Beneficiary has commenced to receive distributions under
Section 11.3(d), and such Beneficiary dies before the entire
vested Net Balance Account has been distributed, any subsequent
Beneficiary whose status as a Beneficiary was contingent on the
death of the first Beneficiary shall receive distributions at
least as rapidly as under the distribution method in effect upon
the first Beneficiary's death.
(g) Amount Paid to a Child. Any amount paid to a child, in
accordance with regulations prescribed by the Secretary of the
Treasury, shall be treated as if it had been paid to the
Participant's surviving spouse if such amount will become payable
to the surviving spouse upon such child reaching majority (or
such other events as the Secretary of the Treasury may by
regulations prescribe).
(h) Trust as Beneficiary. Notwithstanding the foregoing
provisions of Section 11.3, if a trust is designated the
Beneficiary under the Program and
(1) if the following requirements are met, the
Beneficiary or Beneficiaries of the trust shall be
considered the Beneficiary in accordance with applicable
regulations and rulings for the purpose of determining the
period over which distributions in the form of installments
or annuities may be distributed. The applicable trust
requirements are:
(A) the trust is a valid trust under state law,
or would be but for the fact that there is no corpus;
(B) the trust is irrevocable, as of the
Participant's death;
(C) the beneficiaries of the trust with respect
to the trust's interest in the Participant's vested Net
Balance Account are identifiable; and
(D) a copy of the trust instrument is provided to
the Plan Administrator; and
(2) If the above listed requirements are not met and
the Participant dies on or after the Participant's Required
Beginning Date, the Participant shall be treated as not
having designated a Beneficiary for purposes of determining
the period over which distributions may be made and
distributions shall be made to the trust at least as rapidly
as over the longest period over which distributions could
have been made under Section 11.3(c) if the Participant had
no Beneficiary.
(3) If the above listed requirements are not met, and
the Participant dies before his Required Beginning Date, the
Participant shall be treated as not having designated a
Beneficiary for purposes of the exception to the requirement
in Section 11.3(d) that distributions be made within five
years and distributions shall be made within the five year
period designated in Section 11.3(d).
11.4 Vesting and Forfeitures.
(a) A Participant who has a Termination of Employment on or
after his Vesting Retirement Date or who has a Termination of
Employment on account of Disability or death shall be fully
vested in his Net Balance Account.
(b) If a Participant has a Break in Service or has a
Termination of Employment with the Employer for reasons other
than retirement on or after his Vesting Retirement Date, death,
or Disability, such Participant shall be fully vested in his
(1) Investment Savings Account; (2) his Rollover Account;
(3) Rollover Holding Account; (4) Participant Elected
Contribution Account; (5) Employer Matching Contribution Account;
(6) McDESOP Diversification Account; and (7) Stock Sharing
Account. Such Participant shall be vested in his Profit Sharing
Account, Leveraged ESOP Account and Leveraged ESOP
Diversification Account in accordance with the following table
wherein the first column represents the Credited Service of the
Participant, and the second column represents the Vested
Percentage of the Participant's Profit Sharing Account, Leveraged
ESOP Account and Leveraged ESOP Diversification Account:
Years of Credited Service Vested Percentage
------------------------- -----------------
less than 2 years 0
2 years but less than 3 5
3 years but less than 4 20
4 years but less than 5 40
5 years but less than 6 60
6 years but less than 7 80
7 years and over 100
(c) The portion of the Participant's Profit Sharing
Account, Leveraged ESOP Account and Leveraged ESOP
Diversification Account which is not vested as of his Termination
of Employment or the occurrence of a Break in Service shall
become a Forfeiture at the earlier of (1) the first day of the
Plan Year immediately following the Plan Year in which the
Participant has five consecutive Breaks in Service or (2) as of
the Valuation Date immediately following the Valuation Date as of
which the Vested Percentage of the Participant's Profit Sharing
Account, Leveraged ESOP Account and Leveraged ESOP
Diversification Account, respectively, are distributed. Subject
to Section 11.3(d) and 11.3(e), (A) Forfeitures occurring with
respect to a Participant's Profit Sharing Account shall be
credited to the McDESOP and Leveraged ESOP Holding Fund as of the
Valuation Date following the date the amount of such Forfeiture
is determined but not later than the sixth Valuation Date after
the date as of which the amounts became a Forfeiture and (B) from
Participants' Leveraged ESOP Accounts and Leveraged ESOP
Diversification Account shall be allocated for the Plan Year
among all Active Participants as provided in Section 7.3 for
Forfeitures from Participants' Leveraged ESOP Accounts. A
Participant whose Vested Percentage is zero at the time of his
Termination of Employment or Break in Service shall be deemed to
have had a distribution of the Vested Percentage of his Profit
Sharing Account, Leveraged ESOP Account and Leveraged ESOP
Diversification Account as of the Valuation Date immediately
following the date on which the Participant has a Termination of
Employment or Break in Service.
(d) If a Participant, (1) who had a Termination of
Employment, resumes employment with an Employer before he has a
Break in Service or, (2) who had a Termination of Employment or
Break in Service occurring on or after January 1, 1985, earns one
Year of Eligibility Service following the Break in Service (but
before having five consecutive Breaks in Service), the amount of
the Participant's Profit Sharing Account, Leveraged ESOP Account
and Leveraged ESOP Diversification Account, if any, forfeited
under Section 11.4(c) shall be reinstated to the respective
Accounts out of Forfeitures from the Profit Sharing portion and
the leveraged ESOP portion of the McDESOP portion of the Program,
respectively, for the Plan Year in which such resumption of
employment occurs or such one Year of Eligibility Service is
earned, whichever is applicable. To the extent that Forfeitures
for such Plan Year are not sufficient, the amount to be
reinstated shall be charged against income of the Profit Sharing
Holding Fund and the McDESOP and Leveraged ESOP Holding Fund,
respectively. Thereafter, in the case of a Participant who
received a distribution and had his Forfeiture reinstated, the
Participant's Vested Percentage in his Profit Sharing Account,
Leveraged ESOP Account or Leveraged ESOP Diversification Account
shall be equal to an amount determined by subtracting the amount
distributed (the "Distributed Amount") on the Participant's
Termination of Employment or Break in Service from the product of
(1) the Participant's Vested Percentage determined pursuant to
Section 11.4 multiplied by (2) the sum of (a) the Distributed
Amount and (b) the value of the Participant's Profit Sharing
Account, Leveraged ESOP Account or Leveraged ESOP Diversification
Account, respectively.
(e) The amount, if any, forfeited under Section 11.4(c)
shall not be reinstated if a Participant is rehired or again
becomes a Participant and if the Participant (1) had a Break in
Service before January 1, 1985 or (2) did not have a Break in
Service before January 1, 1985 and had five consecutive Breaks in
Service. If all or a portion of the Vested Percentage of a
Participant's Profit Sharing Account, Leveraged ESOP Account or
Leveraged ESOP Diversification Account prior to his Termination
of Employment or Break in Service was not distributed prior to
his resumption of service and he was not 100% vested in such
accounts upon Termination of Employment or Break in Service,
then: (1) the Vested Percentage of the Participant's Profit
Sharing Account, Leveraged ESOP Account or Leveraged ESOP
Diversification Account at the time of Forfeiture which was not
distributed shall be held in a "Pre-Break Profit Sharing
Account," "Pre-Break Leveraged ESOP Account" or "Pre-Break
Leveraged ESOP Diversification Account," respectively, which
shall be 100% vested; and (2) the Participant's Profit Sharing
Contributions and the net earnings thereon and Leveraged ESOP
Contributions and the net earnings thereon attributable to
service after the Break in Service or five (5) consecutive Breaks
in Service, as applicable, shall be held in a "Post-Break Profit
Sharing Account," and "Post-Break Leveraged ESOP Account,"
respectively, which shall be vested in accordance with Section
11.4(b). Any amounts transferred to the Participant's Leveraged
ESOP Diversification Account from the Participant's Pre-Break
Leveraged ESOP Account shall be held in the Participant's
Pre-Break Leveraged ESOP Diversification Account and amounts
transferred from the Participant's Post-Break Leveraged ESOP
Account shall be held in the Participant's Post-Break Leveraged
ESOP Diversification Account.
(f) Each Participant who is a certified swing manager,
primary maintenance employee, crew member or other hourly
restaurant employee who is an Employee on July 1, 1992, shall be
fully vested in his Leveraged ESOP Account as of July 1, 1992.
11.5 Payment of Employer Profit Sharing Contribution for Year of
Termination of Employment. If a Participant (or the Beneficiary
thereof) who is an Active Participant for the Plan Year in which or
immediately before which he has a Termination of Employment receives
an allocation of Employer Profit Sharing Contributions pursuant to
Section 7.1, an allocation of Company Stock released from the
Leveraged ESOP Suspense Account pursuant to Section 7.3 or an
allocation of Employer Matching Contributions and Forfeitures pursuant
to Section 7.2 after he has received a single sum distribution of his
Net Balance Account, the vested portion of any such allocation shall
be distributed to the Participant or, in the event of his death, to
his Beneficiary within a reasonable time after the later of the close
of the Plan Year or the Valuation Date following the Participant's
election to receive such distribution. If such Participant or
Beneficiary has not received a single sum distribution of his vested
Net Balance Account, any such allocations pursuant to Sections 7.1,
7.2 and 7.3 for the Plan Year shall be credited to the Participant's
respective Accounts and the vested portion of such contributions shall
be distributed as a part of such account in the manner provided in
Section 11.2 or 11.3, whichever shall apply.
11.6 Designation of Beneficiary and Form of Beneficiary Benefit.
Subject to Sections 11.3 and 11.10, the Participant may (1) designate
his Beneficiary, (2) elect the form of his Beneficiary's benefit and
(3) elect to prohibit Beneficiary elections under Section 11.3(b) on
forms provided by and filed with the Committee; provided that a
beneficiary designation completed and filed with the Committee before
January 1, 1989, under the McDonald's Corporation Savings and Profit
Sharing Plan shall be deemed to apply to the Profit Sharing Plan
portion of the Program and a beneficiary designation completed and
filed with the Committee before January 1, 1989, under the McDonald's
Matching and Deferred Stock Ownership Plan shall be deemed to apply to
the McDESOP and Leveraged ESOP portions of the Program. A beneficiary
designation form filed with the Committee on or after January 1, 1989
and before January 1, 1996 shall be deemed to apply to the Profit
Sharing, McDESOP and Leveraged ESOP portions of the Program and to
replace all prior Beneficiary designations unless the Beneficiary
designation provides otherwise. A Beneficiary designation filed by a
Participant under the Stock Sharing Plan before January 1, 1996 shall
be deemed to apply to the Stock Sharing portion of the Program. A
Beneficiary designation filed with the Committee on or after January
1, 1996, shall be deemed to apply to the entire Program and to replace
all prior Beneficiary designations except to the extent such
Beneficiary designation provides otherwise. The Participant may
submit separate Beneficiary designations for the Profit Sharing,
McDESOP, Leveraged ESOP and Stock Sharing portions of the Program
change his Beneficiary designation and his elections concerning his
Beneficiary's benefit from time to time by filing the beneficiary
designation form with the Committee. No designation of Beneficiary or
election concerning a Beneficiary's benefit or change of such
designation or election shall be effective until filed with the
Committee. If a Participant shall fail to file a valid Beneficiary
designation, if all persons designated on the Beneficiary designation
form predecease the Participant (or, in the case of a Beneficiary
other than an individual, cease to exist prior to the Participant's
death) or to the extent that the Participant's Beneficiary designation
form fails to dispose of his entire interest, the Trustee shall
distribute the Participant's vested Net Balance Account to the
following persons in the following order of precedence:
(a) His surviving spouse;
(b) With respect to the Profit Sharing Plan portion of the
Program, his Beneficiary designated under McDESOP portion of the
Program; with respect to the McDESOP and Leveraged ESOP portion
of the Program, his Beneficiary designated under the McDonald's
Corporation Savings and Profit Sharing Plan or the Profit Sharing
Plan portion of the Program; and with respect to the Stock
Sharing portion of the Program, those persons designated by the
Participant to receive his death benefits under the Participant's
Group Life Insurance Program of the Employer or, in the absence
of such designation, under the Profit Sharing Plan portion of the
Program.
(c) The person or entity who receives the Participant's
McDonald's group term life insurance benefits;
(d) His lawful descendants including adopted children per
stripes;
(e) His parents in equal shares, or (if only one parent
survives him) his surviving parent;
(f) The lawful descendants of his parents, per stripes;
(g) His estate.
In the absence of a Participant's election to prohibit the Beneficiary
elections allowed in Section 11.3(b), his Beneficiary shall be
permitted to make such elections.
11.7 Incompetency, Distribution of Benefits.
(a) If a Participant or Beneficiary is declared an
incompetent or is a minor, and a conservator, guardian or other
person legally charged with his care is appointed or if such
Participant is not a minor and has executed a so-called durable
power of attorney and if the Committee is given written notice of
such appointment or power of attorney, any benefits to which such
Participant or Beneficiary is entitled shall be distributable to
such conservator, guardian or other person legally charged with
his care or to the attorney-in-fact under the power of attorney.
(b) If a Participant or Beneficiary is incompetent, a minor
or, in the opinion of the Committee, would fail to derive benefit
from distribution of his accounts and if a conservator, guardian
or other person legally charged with his care has not been
appointed or if the Committee has not been given written notice
of such appointment, the Committee may (1) require the
appointment of a conservator or guardian, (2) distribute the
Participant's Accounts to relatives of the Participant or
Beneficiary for the benefit of the Participant or Beneficiary, or
(3) distribute such Accounts directly to or for the benefit of
the Participant or Beneficiary.
(c) The decision of the Committee in such matters shall be
final, binding and conclusive upon the Employer and the Trustee
and upon each Employee, Participant, Beneficiary and every other
person or party interested or concerned, and neither the
Employer, the Committee nor the Trustee shall be under any duty
to see to the proper application of such distribution made to or
for a Participant or Beneficiary, or conservator, guardian or
relative of a Participant or Beneficiary.
11.8 Deduction of Taxes from Accounts Payable. The Trustee or
the Committee may deduct from the amount to be distributed such amount
as the Trustee or the Committee, in its sole discretion, deems proper
to protect the Trustee, the Committee and the Trust against liability
for the payment of death, succession, inheritance, income, or other
taxes, and out of the money so deducted, the Trustee may discharge any
such liability and pay the amount remaining to the Participant, the
Beneficiary or the deceased Participant's estate, as the case may be.
11.9 Deadline for Payment of Benefits. Except to the extent that
a Participant in accordance with the Program otherwise elects and
except to the extent it is not administratively feasible, payment of
benefits shall be made or commence not later than sixty (60) days
after the latest of (a) the close of the Plan Year in which the
Participant attains age fifty-five (55), (b) the close of the Plan
Year in which occurs the tenth (10th) anniversary of the Plan Year in
which the Participant commenced participation, and (c) the close of
the Plan Year in which the Participant has a Termination of
Employment; provided that, a Participant, who is entitled to receive a
distribution pursuant to this Section 11.9, must submit a claim for
benefits before any distributions will be made hereunder.
11.10 Spousal Consent to a Beneficiary or a Waiver.
(a) A valid spousal consent to the Participant's naming of
a Beneficiary other than his spouse or to the Participant's
Waiver of a Qualified Joint and Survivor Annuity or a Qualified
Preretirement Survivor Annuity shall be:
(1) in a writing acknowledging the effect of the
consent;
(2) witnessed by a notary public;
(3) effective only with respect to a specific
Beneficiary and, in the case of a waiver of a Qualified
Joint and Survivor Annuity or Qualified Preretirement
Survivor Annuity, shall specify an optional form of benefit
unless the spouse voluntarily in such consent expressly
permits subsequent designations of beneficiaries or
elections of optional forms of benefit without further
spousal consent and acknowledges the spouse's right to limit
the consent to a specific Beneficiary and optional form of
benefit, where applicable; and
(4) effective only for the spouse who exercises the
consent;
provided that notwithstanding the provisions of this Article XI,
the consent of a Participant's spouse shall not be required if it
is established to the satisfaction of a Plan representative that
such consent may not be obtained because there is no spouse,
because the spouse cannot be located or because of such other
circumstances as the Secretary of the Treasury may by regulations
prescribe.
(b) To the extent provided in any Qualified Domestic
Relations Order (as defined in Section 414(p) of the Internal
Revenue Code), the former spouse of a Participant shall be
treated as the surviving spouse of such Participant for purposes
of Section 11.3 and for providing consent in accordance with
Section 11.10(a).
11.11 Single Sum Payment without Election. Notwithstanding any
provisions of this Article XI (except Section 11.14 to the extent
therein provided) to the contrary, if the Participant or Beneficiary
is entitled to a distribution because of the Participant's Break in
Service (but not in the case of a Break in Service without a
Termination of Employment), retirement on or after his Vesting
Retirement Date, death, Disability, or other Termination of
Employment, and if the value of the vested portion of a Participant's
Net Balance Account under the Program does not exceed $3,500, the
Committee shall direct the immediate distribution of such benefit
prior to the annuity starting date or other date of distribution or
commencement of distribution, regardless of any election or consent of
the Participant, his spouse, or other Beneficiary. If the Net Balance
Account under the Program of an alternate payee under a Qualified
Domestic Relations Order, as provided under Section 16.5, does not
exceed $3,500, the Committee shall direct the immediate distribution
of such benefit regardless of any election of the alternate payee
absent a contrary provision in the Qualified Domestic Relations Order.
11.12 Installment Payments. Notwithstanding anything in
Sections 11.2 or 11.3 to the contrary and subject to Section 11.4:
(a) Elected Installments Paid to Participant. If a
Participant elects installment payments, they shall be
substantially equal installments, paid at least annually, over a
period certain as elected by the Participant which period shall
not be in excess of the life expectancy of the Participant or the
joint and last survivor life expectancy of the Participant and
his Beneficiary, if such Beneficiary is an individual
("Applicable Life Expectancy") determined as of the date such
payments commence; provided that if elected by the Participant
pursuant to Section 11.12(e), life expectancy may be
redetermined.
(b) Required Installments Paid to Participant. The
Applicable Life Expectancy of a Participant, who according to the
records of the Employer has attained the age of 70-1/2 and who
elects to receive installments but who fails to make a
permissible election with respect to the period over which
installments shall be paid or fails to provide the Committee with
any requested proof of his age or the age of his Beneficiary by
such deadline as the Committee shall require, shall be deemed to
be the life expectancy of the Participant as reasonably
determined from the records of the Employer; provided that if a
Participant subsequently provides the Committee with proof that
his age is greater than the Employer's records indicated, the
Committee shall redetermine the Participant's Applicable Life
Expectancy based upon the corrected information and shall
distribute to the Participant any amounts which would have been
required to be distributed if the Participant's correct age had
been used to determine his Applicable Life expectancy for the
purpose of determining the Minimum Distribution Amount for any
installment distributions which have already been made.
(c) Installments Commencing After Participant's Death. If
installments commence to be paid after the Participant's death to
the Participant's Beneficiary who is an individual, they shall be
substantially equal installments, paid at least annually, over a
period certain not in excess of the life expectancy of such
individual ("Applicable Life Expectancy") determined as of the
date such payments commence; provided that if the Participant's
Beneficiary is his surviving spouse, such Beneficiary may elect
to have his life expectancy redetermined as provided in
Section 11.12(e).
(d) Minimum Distribution Amount. Installment payments are
substantially equal if the amount of each installment distributed
in a calendar year is not less than an amount ("Minimum
Distribution Amount") equal to the balance of the person's Net
Balance Account as of the last day of the preceding calendar year
divided by the Applicable Life Expectancy. In calculating the
Minimum Distribution Amount for each calendar year after the
calendar year in which the Participant attained the age of 70-1/2
or for each calendar year after payments to the Beneficiary have
commenced (either of which is called the "First Year"), the
Applicable Life Expectancy shall be reduced by one for each
calendar year which has elapsed commencing with the First Year.
(e) Determination of Life Expectancy. The life expectancy
of a Participant and of his spouse and the joint and last
survivor life expectancy of the Participant and his spouse may be
redetermined for purposes of determining the amounts required to
be distributed pursuant to Section 11.2(c), 11.2(d) or 11.12(a),
if elected by the Participant (or his spouse, if the Participant
is deceased and if his spouse is the Participant's Beneficiary)
in accordance with such uniform and nondiscriminatory rules as
the Committee shall establish, but may not be redetermined more
frequently than annually. Life expectancies shall not be
redetermined unless the Participant (or spouse) so elects by the
date distributions are required to commence under the Program.
Unless subject to redetermination, life expectancies are
calculated using the Participant's or Beneficiary's birth date in
the calendar year in which the Participant attains the age of
70-1/2, in the case of benefits commencing during the
Participant's lifetime and in the case of payments to the
Beneficiary, as of the date such payments commence. In the case
of annuity payments, however, life expectancy is determined in
the calendar year in which annuity payments commence. If a
Participant's or his spouse's life expectancy is not being
redetermined, it shall be reduced by one for each year after the
calendar year in which it was determined for the purpose of
determining the amount of installment payments hereunder. All
life expectancies shall be determined using the expected return
multiples in Tables V and VI of Treas. Reg. SubSection 1.72-6 or
any successor tables issued from time to time by the Internal
Revenue Service.
11.13 Required Minimum Distributions to Employed Participants.
(a) A Participant who has attained his Required Beginning
Date but has not had a Termination of Employment shall commence
receiving installment payments for the calendar year in which he
becomes 70-1/2 not later than April 1 of the following year and
installment payments for each calendar year after the calendar
year in which he became 70-1/2, not later than the last day of
each such year.
(b) The amount distributed for the year in which such
Participant becomes 70-1/2 and in each calendar year thereafter
shall be not less than the Minimum Distribution Amount determined
under Section 11.12(a).
(c) A Participant who has not had a Termination of
Employment and who expects to attain his Required Beginning Date
in the next calendar year, may elect at such time and on such
form as the Committee shall permit to receive his first
distribution required pursuant to Section 11.13(a) in the year in
which he becomes 70-1/2 years of age.
(d) If the vested Net Balance Account of a Participant who
receives a distribution of the Minimum Distribution Amount under
this Section 11.13 is $3500 or less, the Participant may elect to
receive his entire vested Net Balance Account at the same time
that such Minimum Distribution Amount is paid. A Participant,
who elects to receive his entire vested Net Balance Account
pursuant to the preceding sentence, may elect to have such
election apply each subsequent Plan Year until he changes the
election with respect to a future Plan Year. Effective
November 1, 1994, the first sentence of this Section 11.13(d)
shall be applied without regard to the requirement that the
Participant's vested Net Balance Account be $3,500 or less.
11.14 Transitional Rules.
(a) TEFRA 242(b) Elections. Effective for all Participants
and Beneficiaries whether or not the Participant was an Employee
after the Effective Date of the Program, notwithstanding any
other provision herein, distributions to Participants or
Beneficiaries made from the Profit Sharing Plan portion of the
Program, except for the Participant's Diversification Account,
are subject to any valid election under TEFRA Section 242(b) made
under the McDonald's Corporation Savings and Profit Sharing Plan
by a Participant prior to January 1, 1984 to have the
distribution of the Participant's benefits deferred or extended
beyond the period otherwise permitted under the provisions of
this Article XI which was then permitted under applicable law
until the Participant (or his Beneficiary) revokes the election
by an act recognized as a revocation under TEFRA 242(b); provided
that if the Participant's spouse is not the Beneficiary of 100
percent of his vested Accrued Benefit under the Program, the
Participant's spouse shall have consented to the naming of
another Beneficiary in accordance with Section 11.10.
(b) Distributions to Certain Participants and Beneficiaries
in Pay Status. Effective for all Participants and Beneficiaries
whether or not the Participant was an Employee after January 1,
1984, for any distribution which would not have disqualified the
Trust under Code Section 401(a)(9) as in effect prior to
amendment by the Tax Reform Act of 1984, which was permitted
under the Program as in effect on the date such distributions
commenced, and which either
(1) commenced prior to and continued on or after
January 1, 1984, distributions may continue to the
Participant or the Beneficiary to whom such distribution is
being made under the method of distribution in effect;
provided that the method of distribution was specified in a
writing including the time at which the distribution was to
commence, the period over which such distributions will be
made and, in the case of any distribution upon the
Participant's death, a list of the Beneficiaries of the
Participant in order or priority; or
(2) commenced prior to the first Plan Year beginning
in 1985, distributions may continue to the Participant or
the Beneficiary to the extent permitted under applicable
law, regulations and rulings.
11.15 Sale of Restaurant - Special Vesting Rules. Notwithstanding
any of the provisions herein to the contrary, a Participant who is not
100% vested in his Profit Sharing Account and his Leveraged ESOP
Account and who has a Termination of Employment on account of a sale
on or after December 1, 1986 but prior to January 1, 1993 of a
McDonald's restaurant to a joint venture partnership in which the
Company owns an interest ("Joint Venture") shall have a single
opportunity to elect, in accordance with such procedures as the
Committee shall establish, to receive a distribution of his benefits
as provided in Article XI (or to retain the ability to make an
election to receive such a distribution at any time) or
(notwithstanding the provisions of Section 11.11 to the contrary),
solely for purposes of determining the Participant's Vested Percentage
in his Profit Sharing Account and his Leveraged ESOP Account, to
continue to be credited with Credited Service for employment with the
Joint Venture. If the Participant elects to continue to be credited
with Credited Service for employment with the Joint Venture, his
Accounts will subsequently be distributed by applying Article XI as if
the Joint Venture were his sole Employer for the purpose of
determining when such Participant thereafter has a Termination of
Employment. Service for periods of employment with the Joint Venture
shall be determined by crediting each such electing Participant with
one Year of Credited Service for each subsequent consecutive
October 31 that such Participant is employed by the Joint Venture;
provided that a Participant shall not receive more than one Year of
Credited Service for a single Plan Year.
11.16 In-Service Withdrawals.
(a) Investment Savings and Rollover Accounts. A
Participant may, upon written notice to the Committee, given
before the administrative cutoff date prior to the end of any
calendar month, withdraw all or any portion of such Participant's
Investment Savings Account, Rollover Account and Rollover Holding
Account valued as of the Valuation Date of the calendar month in
which such notice is given. Distribution of such withdrawals
shall be made within the next calendar month. The Committee may,
from time to time, establish such rules and procedures as it
deems appropriate to administer or limit the withdrawal of
Participant and Rollovers under this Section 11.16 provided,
however, that in no event shall the Committee limit Participants'
rights of withdrawal to less than one withdrawal per Plan Year.
To the extent administratively feasible the period of notice
required for withdrawal or distribution can be relaxed, reduced
or eliminated upon appropriate request to the Committee.
(b) Stock Sharing Accounts. A Participant may, on a form
at such time and in such manner as the Committee shall prescribe,
elect to have distributed to him in cash or in shares of common
stock of the Company, the shares which have been allocated to his
Stock Sharing Account for eighty-four (84) months following the
month in which such shares were allocated to his Stock Sharing
Account, providedhaat such withdrawals shall consist of whole
shas.. As of the Effective Date all shares of common stock of
the Company purchased with contributions to the Stock Sharing
Plan have been held for more than 84 months and therefore may be
distributed.
11.17 Direct Rollovers.
(a) Notwithstanding any provision of the Program to the
contrary that would otherwise limit a Distributee's election
under this Section 11.17, a Distributee whose benefit is
distributable pursuant to another provision of the Program may
elect, at the time and in the manner prescribed by the Committee,
to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the
Distributee in a Direct Rollover; subject to such reasonable
administrative requirements as the Committee may from time to
time establish which may include, but shall not be limited to,
requirements consistent with Treasury Regulations and other
guidance issued by the Internal Revenue Service permitting de
minimis standards for amounts eligible to be rolled over or paid
partly to the Participant and partly rolled over. A Participant
may make an election pursuant to this Section 11.17 only after
the Distributee has met otherwise applicable requirements for
receipt of a distribution under the Program, including but not
limited to any applicable requirements that the Participant's
spouse or (pursuant to a Qualified Domestic Relations Order as
defined in Section 16.5) former spouse consent to the
Participant's waiver of a Qualified Joint and Survivor Annuity or
Qualified Preretirement Survivor Annuity.
If a Participant or Beneficiary elects to receive a Direct
Rollover or a distribution in a form other than an annuity as
provided in Section 11.2(a)(1)(C) or 11.3(a)(3)(C), such
distribution may be made or commence to be made less than 30 days
after the notice required under Section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
(1) the Committee shall clearly inform the Participant
or Beneficiary that he has a right to a period of at least
30 days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(2) the Participant or Beneficiary after receiving the
notice affirmatively elects a distribution.
(b) In the absence of the adoption by the Committee of any
requirements to the contrary, the following shall apply:
(1) A Distributee whose Eligible Rollover Distribution
is less than $200 upon the Valuation Date immediately
preceding the date of distribution shall not be permitted to
elect to have all or any portion of the distribution made in
the form of a Direct Rollover.
(2) A Distributee who elects a Direct Rollover in an
amount equal to at least $500 may also elect to have the
remaining portion of his distribution paid to the
Distributee.
(3) A Distributee shall be permitted to divide an
Eligible Rollover Distribution into separate distributions
to be paid to two or more Eligible Retirement Plans in two
or more Direct Rollovers.
(4) A Distributee's election to make or not to make a
Direct Rollover with respect to a payment in a series of
periodic payments shall apply to all subsequent payments in
the series until the Distributee changes his election.
(5) If a Distributee, who has been notified as to the
availability of the Direct Rollover option, fails to elect a
Direct Rollover with respect to an Eligible Rollover
Distribution, such Distributee shall be deemed to have
elected not to make a Direct Rollover.
(c) As used in this Section 11.17, the following terms
shall have the following meanings:
(1) "Eligible Rollover Distribution" means any
distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover
Distribution does not include: any distribution that is one
of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint
life expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of ten
years or more; any distribution to the extent such
distribution is required under Section 11.13; and the
portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer
securities).
(2) "Eligible Retirement Plan" means an individual
retirement account described in Section 408(a) of the
Internal Revenue Code, an individual retirement annuity
described in Section 408(b) of the Internal Revenue Code, an
annuity plan described in Section 403(a) of the Internal
Revenue Code, or a qualified trust described in Section
401(a) of the Internal Revenue Code, that accepts the
Distributee's Eligible Rollover Distributions. However, in
the case of an Eligible Rollover Distribution to a
Participant's surviving spouse or surviving former spouse
who is a Distributee pursuant to a Qualified Domestic
Relations Order, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity.
(3) "Distributee" means a Participant. In addition, a
Participant's surviving spouse and a former spouse who is
the alternate payee under a Qualified Domestic Relations
Order are Distributees with regard to the interest of such
spouse or former spouse.
(4) "Direct Rollover" means a payment by the Program
to the Eligible Retirement Plan specified by the
Distributee.
ARTICLE XII
SUBSIDIARY PARTICIPATION
12.1 Adoption of Program and Trust. Any Commonly Controlled
Entity, Subsidiary or Domestic or Foreign Affiliate of the Company (or
other business entity in which the Company owns an interest) may, with
the approval of the Board of Directors and under such terms and
conditions as the Board of Directors may prescribe, adopt the Program
and Trust by resolution of its board of directors (or approval of
other appropriate persons in the case of a noncorporate entity);
provided that the Leveraged ESOP portion of the Program can be adopted
only by a corporation which is a Commonly Controlled Entity or another
corporation included with the Company in a group defined in (a) or (b)
below:
(a) a corporation whi is part of a group of corporations
in icchh a common parent owns directly stock possessing at least
50 percent of the voting power of all classes of stock and at
least 50 percent of each class of non-voting stock in a first
tier subsidiary and such subsidiary (and all other corporations
below it in the chain) which would meet the 80 percent test of
Section 1563(a) of the Code if the first tier subsidiary were the
common parent); and
(b) a corporation which is part of a group of corporations
in which a common parent owns directly stock possessing all of
the voting power of all classes of stock and all of the
non-voting stock in the first tier subsidiary and the first tier
subsidiary owns directly stock possessing at least 50 percent of
the voting power of all classes of stock, and at least 50 percent
of each class of non-voting stock, in a second tier subsidiary of
the common parent and such second tier subsidiary (and all other
corporations below it in the chain which would meet the 80
percent test of Section 1563(a) of the Code if the second tier
subsidiary were a common parent).
12.2 Withdrawal from Program by Participating Employer. While it
is not the present intention of any Employer to withdraw from the
Program, any Employer other than the Company shall have the right, at
any time, upon the approval of and under such conditions as may be
provided by the Board of Directors, to withdraw from the Program and
Trust by delivering to the Committee and the Trustee written notice of
its election so to withdraw.
Upon receipt of such notice by the Committee, the Accounts of
Participants employed by the withdrawing Employer as of the date of
withdrawal shall be fully vested and shall not thereafter be subject
to Forfeiture unless such Participant shall transfer to another
Employer as of the date of the withdrawal. In the event of the
withdrawal of an Employer, such Employer shall elect and notify the
Committee of its election, whether the Net Balance Accounts of the
Participants employed by such Employer (a) shall be immediately
distributable by the Trustee, (b) shall be retained in the Program and
become distributable when such employees die, or otherwise terminate
their employment with the Employer, or (c) if the Employer establishes
a plan which meets the requirements of Section 401(a) of the Code
which plan permits a transfer from this Program to it by transfer of
the Net Balance Accounts of Participants who are employees of such
Employer to such Employer's plan to be held in separate accounts under
such plan for the benefit of the respective Participants; provided
that a distribution shall not be made to a Participant who is not
otherwise entitled to a distribution in accordance with Article XI
unless there has been a disposition of substantially all the assets
used by the Employer in a trade or business and the Employee continues
employment with the corporation acquiring such assets or the Company
has disposed of its interest in the Employer and the Employee
continues employment with the former Employer.
ARTICLE XIII
ADMINISTRATION OF The Program
13.1 Appointment and Removal of, and Resignation by, Trustee.
The Board of Directors shall have the power to appoint a successor to
a Trustee (including any one or more individuals acting as Trustee)
which has resigned or been removed, to direct the Trustee to enter
into a custodial agreement providing for deposit of all or any part of
the Trust Fund with the custodian, and, with the consent of the
Trustee, to appoint a co-Trustee. The Trustee may resign at any time
upon thirty (30) days' written notice (or such shorter period of time
as the Board of Directors shall permit by written consent) to the
Company and the Committee. The Board of Directors shall have the
power to remove the Trustee, with or without cause, upon written
notice to the Trustee.
The appointment of a successor Trustee or co-Trustee shall become
effective upon acceptance in writing of such appointment by the
successor Trustee or co-Trustee and upon acceptance of such
appointment by the successor Trustee, the Trustee shall assign,
transfer and pay over to the successor Trustee the Trust Fund. The
successor Trustee or co-Trustee may be either a corporate Trustee or
an individual, and, except as required by federal law, the successor
Trustee or co-Trustee shall not be personally liable for anything done
or omitted to be done by a predecessor Trustee or co-Trustee prior to
the appointment of the successor or co-Trustee or be required to
examine the accounts, records or acts of any predecessor Trustee or
co-Trustee. Each successor Trustee appointed to and accepting a
Trusteeship hereunder shall have all the rights, title, powers,
duties, exemptions and limitations of the original Trustee.
13.2 Appointment of Committee; Tenure in Office. The
administrative committee ("Committee") shall consist of not less than
five (5) members who shall be appointed by the Board of Directors.
The Board of Directors shall have power to determine the period during
which any Committee member shall serve and, in its discretion, may
remove any member of the Committee at any time without assigning any
reason therefore. A Committee member may resign at any time by
written notice to the Chief Executive Officer or any Executive Vice
President of the Company. Upon a vacancy occurring, owing to the
death, resignation or removal by the Board of Directors of any member
of the Committee, a successor shall be appointed by the Board of
Directors. Until a vacancy in the Committee is filled by the Board of
Directors, the remaining members of the Committee shall continue to
act as the Committee. The Board of Directors shall certify to the
Trustee and the Committee the names of the members of the Committee
and, thereafter, any change in its membership.
13.3 Named Fiduciaries. The Company, the Board of Directors, the
Committee and every Participant, Beneficiary or Employee of the
Company, its subsidiaries or affiliates who becomes a fiduciary by
virtue of the delegation of duties, responsibilities and authority
with respect to the administration and operation of the Program in
accordance with Article XIII shall be "named fiduciaries" as provided
in Section 402(a) of ERISA, and shall, accordingly, be afforded the
protection provided for in Section 405(c)(2) of ERISA with respect to
named fiduciaries.
13.4 Delegation of Responsibilities. The Committee and the Board
of Directors shall have the authority, as it may deem advisable, to
delegate, from time to time, by instrument in writing all or any part
of its responsibilities under the Program (including the power to
delegate) to such person or persons as it may deem suitable, and in
the same manner to revoke any such delegation of responsibility.
Periodically the delegate shall report to the Committee or Board of
Directors concerning the discharge of his delegated responsibilities.
Any action of the delegate in the exercise of such delegated
responsibilities shall have the same force and effect for all purposes
hereunder as if such action had been taken by the Committee or the
Board of Directors. Neither the Committee, the Board of Directors nor
any of their members shall be liable for the acts or omissions of such
delegate except as otherwise required by Federal law.
The Committee's authority to delegate in accordance with this
Section 13.4 shall include, but not be limited to, authority to
delegate all or any part of the responsibilities set forth in
Section 13.5 to any department or employee of the Company or other
Employer including but not limited to the Legal Department, the Tax
Department, the Accounting Department, the Human Resources Department,
the Information Services Department or the Payroll Department.
13.5 Committee Duties. The Committee on behalf of the
Participants and all other Beneficiaries of the Program and the Trust
shall administer and operate the Program and the Trust Agreement in
accordance with the terms of the Program and the Trust Agreement and
shall periodically report to the Board of Directors on the
administration and operation of the Program. The Committee shall have
all powers necessary to discharge its duties, including, but not by
way of limitation, the following:
(a) To periodically review and monitor the performance of
the Investment Managers, as defined in Section 4.4 of the Trust
Agreement, and provide recommendations to the Board of Directors
for the appointment or removal of the Program's Investment
Managers;
(b) To prepare and furnish to the Board of Directors its
recommendations with respect to the establishment of and, from
time to time, changes in the general investment objectives and
guidelines for the management and investment of the assets of the
Program;
(c) To prepare and furnish the Board of Directors with
periodic reports on the performance of the Investment Funds and
the general administration of the Program;
(d) To review and monitor the performance of the Trustee
with respect to the responsibilities set forth in the Trust
Agreements;
(e) To construe and interpret the Program, decide all
questions concerning eligibility for participation and questions
relating to the amount and manner of payment of benefits
hereunder and all such determinations shall be conclusive and
binding upon Participants, spouses and other Beneficiaries;
(f) To receive from the Company and Employer or have
prepared by the Company and Employer such records and information
as shall be necessary for the proper administration of the
Program;
(g) To have prepared and furnished to Participants or
Beneficiaries all information required under Federal law or
provisions of this Program to be furnished to them;
(h) To have prepared and filed or published with the
Department of Labor and the Department of Treasury or other
governmental agency all reports or other information required
under federal law;
(i) To have maintained records of the Trust Fund with
respect to the Net Balance Accounts of Participants;
(j) To determine all questions arising in the
administration of the Program, including those relating to the
eligibility of persons to become Participants; the rights of
Participants and their Beneficiaries; and Employer Contributions;
and its decision thereon shall be final and binding upon all
persons hereunder; and
(k) To review the performance of any person to whom duties
and responsibilities have been delegated under Section 13.4.
13.6 Committee Action by Majority -- Authorization of Members to
Execute Documents. The Committee may act at a meeting (including a
meeting at which some or all of the members of the Committee are
present by telephone) by the consent of a majority of its members, or
without a meeting by the unanimous written consent of its members.
No member of the Committee shall vote or decide upon any matter
relating specifically to himself or to his specific rights or benefits
under the Program.
The Committee may authorize any of its members to execute on its
behalf any document which reflects an action or decision of the
Committee and the Committee shall notify the Trustee in writing of the
names of its members so authorized. Until the Committee revokes or
alters such authorization by a written notice to the Trustee, the
Trustee may accept and rely upon any document executed by such members
as reflecting action by the Committee.
13.7 Secretary. The Committee shall appoint a Secretary (who
may, but need not, be a member of the Committee) to keep records of
the acts and resolutions of the Committee. The Secretary may also
perform such other duties which may, from time to time, be delegated
to him in writing by the Committee.
13.8 Member as Participant. A member of the Committee who is
also a Participant or a Beneficiary shall receive any benefit to which
he may be entitled as a Participant or Beneficiary in the Program so
long as such benefit is computed and paid on a basis that is
consistent with the terms of the Program as applied to all other
Participants and Beneficiaries.
13.9 Rules and Decisions. The Committee may, from time to time,
adopt or amend such rules and regulations as it deems necessary or
desirable which are consistent with the provisions or the purposes of
the Program. All rules and decisions of the Committee shall be
applied to all Participants in similar circumstances in a uniform and
non-discriminatory manner. In adopting, amending or applying its
rules and regulations, the Committee shall be entitled to, but need
not, rely upon information furnished by a Participant or Beneficiary,
a delegate, an Employer or Employee, the Trustee or the Company. All
rules and regulations of the Committee shall be conclusive and binding
upon Participants, spouses and Beneficiaries.
13.10 Agents and Counsel. The Committee and its delegates shall
have the authority to appoint or employ individuals to assist or to
advise in the administration of the Program and any other agent deemed
advisable, including but not limited to, independent certified public
accountants and legal and actuarial counsel, who may but need not be the
accountants or the legal or the actuarial counsel of the Company.
13.11 Authorization of Benefit Distribution. The Committee shall
issue directions to the Trustee concerning all distributions to be
made from the Trust Fund pursuant to the provisions of the Program.
All such directions shall be in accordance with the Program.
13.12 Claims Procedure.
(a) Each Participant or Beneficiary (for purposes of this
Section called a "Claimant") may submit his claim for benefits to
the Plan Administrator in writing in such form as is permitted by
the Committee. A Claimant shall have no right to seek review of
a denial of benefits, or to bring any action in any court to
enforce a claim for benefits, prior to his filing a claim for
benefits and exhausting his rights to review in accordance with
this Section.
When a claim for benefits has been filed properly, such
claim for benefits shall be evaluedd and the Claimant shall be
notified of the approval or the denial within ninety (90) days
after the receipt of such claim unless special circumstances
require an extension of time for processing the claim. If such
an extension of time for processing is required, written notice
of the extension shall be furnished to the Claimant prior to the
termination of the initial ninety (90) day period, and such
notice shall specify the special circumstances requiring an
extension and the date by which a final decision will be reached
(which date shall not be later than one hundred and eighty (180)
days after the date on which the claim was filed). A Claimant
shall be given a written notice in which he shall be advised as
to whether the claim is granted or denied, in whole or in part.
If a claim is denied, in whole or in part, the Claimant shall be
given written notice which shall contain (1) the specific reasons
for the denial, (2) references to pertinent Plan provisions on
which the denial is based, (3) a description of any additional
material or information necessary to perfect the claim and an
explanation of why such material or information is necessary, and
(4) the Claimant's rights to seek review of the denial.
(b) If a claim is denied, in whole or in part, the Claimant
shall have the right to request that the Committee review the
denial, provided that he files a written request for review with
the Committee within sixty (60) days after the date on which he
received written notification of the denial (or such longer
period as the Committee for good cause may permit). A Claimant
(or his duly authorized representative) may review pertinent
documents and submit issues and comments in writing to the
Committee. Within sixty (60) days after a request for review is
received, the review shall be made and the Claimant shall be
advised in writing of the decision on review, unless special
circumstances require an extension of time for processing the
review, in which case the Claimant shall, within such initial
sixty (60) day period, be given a written notification specifying
the reasons for the extension and when such review shall be
completed (provided that such review shall be completed within
one hundred and twenty (120) days after the date on which the
request for review was filed). The decision on review shall be
forwarded to the Claimant in writing and shall include specific
reasons for the decision and references to Plan provisions upon
which the decision is based. A decision on review shall be final
and binding on all persons for all purposes. If a Claimant shall
fail to file a request for review in accordance with the
procedures herein outlined, such Claimant shall have no rights to
review and shall have no right to bring action in any court, and
the denial of the claim shall become final and binding on all
persons for all purposes.
13.13 Information to be Furnished to Committee. The Company and
Employers shall furnish the Committee or its delegate such evidence,
data and information as the Committee or its delegate may reasonably
request. Participants and their Beneficiaries shall also furnish to
the Committee such evidence, data or information as the Committee or
its delegate shall request.
13.14 Plan Administrator. The Committee may appoint a Plan
Administrator who may (but need not) be a member of the Committee; and
in the absence of such appointment, the Committee shall be the Plan
Administrator.
13.15 Fiduciary as Participant. A fiduciary who is also a
Participant or a Beneficiary shall receive any benefit to which he may
be entitled as a Participant or Beneficiary in the Program so long as
such benefit is computed and paid on a basis that is consistent with
the terms of the Program as applied to all other Participants and
Beneficiaries.
13.16 Fiduciary Responsibility. If a Plan fiduciary acts in
accordance with ERISA, Title I, Subtitle B, Part 4:
(a) in determining that a Participant's spouse has
consented to the naming of a Beneficiary other than the spouse,
in relying on a Participant's election to waive a Qualified Joint
and Survivor Annuity or a qualified survivor annuity or a
revocation of such an election, or in determining that the
consent of the Participant's spouse may not be obtained because
there is no spouse, the spouse cannot be located or other
circumstances prescribed by the Secretary of the Treasury by
regulations, then to the extent of payments made pursuant to such
consent, revocation or determination, the Program and its
fiduciaries shall have no further liability;
(b) in treating a domestic relations order as being (or not
being) a Qualified Domestic Relations Order, or, during any
period in which the issue of whether a domestic relations order
is a Qualified Domestic Relations Order is being determined (by
the Committee, by a court of competent jurisdiction, or
otherwise), in segregating in a separate account in the Program
or in an escrow account the amounts which would have been payable
to the alternate payee during such period if the order had been
determined to be a Qualified Domestic Relations Order, in paying
the amounts segregated or held in escrow to the person entitled
thereto if within 18 months the domestic relations order (or a
modification thereof) is determined to be a Qualified Domestic
Relations Order, in paying such amounts to the person entitled
thereto if there had been no order, if within 18 months the
domestic relations order is determined not to be qualified or if
the issue is not resolved within 18 months and in prospectively
applying a domestic relations order which is determined to be
qualified after the close of the 18-month period, then the
obligation of the Program and its fiduciaries to the Participant
and each alternate payee shall be discharged to the extent of any
payment made pursuant to such acts.
ARTICLE XIV
AMENDMENT, TERMINATION, MERGER AND CONSOLIDATION OF PLAN
14.1 Amendment. The Board of Directors shall have the right, at
any time and from time to time, to amend, in whole or in part, any or
all of the provisions of the Program and the Trust Agreement, provided
that no amendment shall authorize or permit any part of the Trust Fund
to be used for or diverted to purposes other than for the exclusive
benefit of the Participants or their beneficiaries, or permit any
portion of the Trust Fund to revert to or become the property of any
Employer, except as may be permitted under applicable law, regulations
and rulings. No amendment shall deprive any Participant or any
Beneficiary of a deceased Participant of any of the benefits or of an
optional form of benefit to which he is entitled under this Program
with respect to contritiioons prevussly made or, except to the extent
permitted in regulations and rulings issued by the Secretary of the
Treasury, shall eliminate an optional form of benefit with respect to
contributions previously made, nor shall any amendment decrease any
Participant's Accounts provided that no amendment made in conformance
to provisions of the Internal Revenue Code or any other statute
relating to employee's trusts, or any official regulations or rulings
issued pursuant thereto, shall be considered prejudicial to the rights
of any Participant or Beneficiary. No amendment which affects the
rights, duties or responsibilities of the Trustee may be made without
the Trustee's written consent.
The Committee shall have the same authority with respect to the
adoption of amendments to the Program and the Trust Agreement as the
Board of Directors in the following circumstances:
(a) to adopt amendments to the Program or Trust which the
Committee determines are necessary or desirable for the Program
to comply with or to obtain benefits or advantages under the
provisions of applicable law, regulations or rulings or
requirements of the Internal Revenue Service or other government
administrative agency or of changes in such law, regulations,
rulings or requirements; and
(b) to adopt any other procedural or cosmetic amendment
that the Committee determines to be necessary or desirable that
does not materially change benefits to Participants or their
Beneficiaries or materially increase the Employers' contributions
to the Program.
The Committee shall provide notice of amendments adopted by the
Committee to the Board of Directors on a timely basis.
14.2 Termination of Program By the Company. Although it is the
intention of the Company that this Program be permanent, the Company
reserves the right to terminate the Program and the Trust at any time,
by delivering to the Committee, the Trustee and each Employer
hereunder, written notice of termination.
Upon termination of the Program or permanent discontinuance of
Employer Contributions to the Program, the interest in his Net Balance
Account of each Participant who is an Employee at the time of the
termination, shall become fully vested. Such vested Accounts, shall,
however, be subject to readjustment as provided in Sections 10.14,
10.15, 10.16, 10.17 and 10.19. In the event of termination of this
Program, the Board of Directors may direct that the Trustee continue
the Trust for a specified period of time, or for such period of time,
as the Trustee, in its sole discretion, may deem to be in the best
interest of the Participants or their Beneficiaries. In the absence
of specific direction from the Board of Directors, the Trust assets
shall be distributed by the Trustee to Participants under the options
set forth in Section 11.2 hereof or to Beneficiaries under the options
set forth in Section 11.3; provided, however, that Participant Elected
Contributions shall be distributed only if (a) the Participant has a
Termination of Employment, death or Disability, or has attained the
age of 59-1/2, (b) the Program is terminated without the Employer's
establishment or maintenance of another defined contribution plan
(excluding a leveraged ESOP as defined in Code Section 4975(e)(7)) or
(c) the Employer disposes of substantially all of its assets used in a
trade or business or disposes of its interest in a subsidiary and the
Employee continues employment with the corporation acquiring the
assets or the subsidiary and if, in the case of a distribution made
pursuant to Section 14.2(b) or (c) the distribution is made in the
form of a single distribution of the entire balance to the credit of
the Participant in a single taxable year. Upon the partial
termination of the Program the interest of each Participant whose
employment is terminated on account of, or who is affected by, such
partial termination shall become fully vested and such Participant's
benefits shall be distributable to the extent permitted in the
preceding sentence. Sales of McDonald's Restaurants by the Company or
another Employer will not constitute a partial termination unless such
sale under all other facts and circumstances constitutes a partial
termination.
14.3 Merger, Consolidation, or Transfer of Assets. This Program
shall not be merged or consolidated with, nor shall any assets or
liabilities be transferred to, any other plan, unless the benefits
payable to each Participant if the Program were terminated immediately
after such action would not be less than the benefits which would have
been payable to each such Participant if the Program had been
terminated immediately before such action.
14.4 Transfer of Assets from Plans of Subsidiaries. The Board of
Directors may, in its sole and exclusive discretion, authorize and
direct the transfer to the Trust of all (or any designated portion) of
the assets of any defined contribution plan (the "Transferred Assets")
which is a Related Plan. The Transferred Assets, to the extent
allocable to persons who are Participants in the Program, shall be
held, managed and distributed for the benefit of participants of the
Related Plan (the "Transferred Assets") subject to such terms and
conditions as the Board of Directors and the board of directors (or
persons having authority similar to the board of directors of a
corporation) of the Commonly Controlled Entity, if applicable, of the
Company shall provide.
(a) The Trustee shall accept, under such terms and
conditions as the Board of Directors shall provide for, all
Transferred Assets.
(b) Except as otherwise expressly provided by the Board of
Directors and the board of directors (or persons having authority
similar to the board of directors of a corporation) of the
Commonly Controlled Entity, if applicable, all Participants'
interests in the Transferred Assets shall be 100 percent (100%)
vested and non-forfeitable.
(c) The Committee shall keep separate records of account
for each Participant's interests in the Transferred Assets.
(d) Except as otherwise expressly provided herein, the
Transferred Assets shall be held, managed, invested and
distributed in the same manner (and subject to the same
restrictions) as Rollovers as provided in Article VIII of the
Program.
(e) Each Participant's Transferred Assets shall be
distributable in the same manner as a Participant's Rollover
Account; provided that the Participant can also elect any benefit
option which was available with respect to the Transferred Assets
under the Related Plan.
ARTICLE XV
TOP HEAVY PROVISIONS
15.1 Application. The definitions in Section 15.2 shall apply
under this Article XV and the special rules in Section 15.3 shall
apply, notwithstanding any other provisions of the Program, for any
Plan Year in which the Program is a Top Heavy Plan and for such other
Plan Years as may be specified herein. Anything in this Article XV to
the contrary notwithstanding, if the Program is a multlee employer
plan as described in Internal Revenue Code Section 413(c), the
provisions of this ArticleV sshall be applied separately to each
Employer (together with the businesses which with that Employer are
Commonly Controlled Entities or members of an Affiliated Service
Group) taking account of benefits under the plan provided to employees
of the Employer, Commonly Controlled Entity or members of an
Affiliated Service Group because of service with that Employer or
Commonly Controlled Entity.
15.2 Special Top Heavy Definitions. The following special
definitions shall apply under this Article XV.
(a) "Aggregate Employer Contributions" means the sum of all
Employer Contributions and Forfeitures under this Program
allocated for a Participant to the Program and employer
contributions and forfeitures allocated for the Participant to
all Related Defined Contribution Plans in the Aggregation Group;
provided, however, that Participant Elected Contributions,
Employer Matching Contributions and Special Section 401(k)
Contributions shall not be included for Non-Key Employees.
(b) "Aggregation Group" means the group of plans in a
Mandatory Aggregation Group, if any, that includes the Program,
unless inclusion of Related Plans in the Permissive Aggregation
Group in the Aggregation Group would prevent the Program from
being a Top Heavy Plan, in which case "Aggregation Group" means
the group of plans consisting of the Program and each other
Related Plan in a Permissive Aggregation Group with the Program.
(1) "Mandatory Aggregation Group" means each plan
(considering the Program and Related Plans) that, during the
Plan Year that contains the Determination Date or any of the
four preceding Plan Years,
(A) had a participant who was a Key Employee, or
(B) was necessary to be considered with a plan in
which a Key Employee participated in order to enable
the plan in which the Key Employee participated to meet
the requirements of Section 401(a)(4) and Section 410
of the Internal Revenue Code.
If the Program is not described in (A) or (B) above, it
shall not be part of a Mandatory Aggregation Group.
(2) "Permissive Aggregation Group" means the group of
plans consisting of (A) the plans, if any, in a Mandatory
Aggregation Group with the Program, and (B) any other
Related Plan, that, when considered as a part of the
Aggregation Group, does not cause the Aggregation Group to
fail to satisfy the requirements of Section 401(a)(4) and
Section 410 of the Internal Revenue Code. A Related Plan in
(B) of the preceding sentence may include a simplified
employee pension plan, as defined in Internal Revenue Code
Section 408(k), and a collectively bargained plan, if when
considered as a part of the Aggregation Group such plan does
not cause the Aggregation Group to fail to satisfy the
requirements of Section 401(a)(4) and Section 410 of the
Internal Revenue Code considering, if the plan is a multiple
employer plan as described in Internal Revenue Code Section
413(c), benefits under the plan only to the extent provided
to employees of the employer because of service with the
employer and, if the plan is a simplified employee pension
plan, only the employer's contribution to the plan.
(c) "Determination Date" means, with respect to a Plan
Year, the last day of the preceding Plan Year or, in the case of
the first Plan Year, the last day of such Plan Year. If the
Program is aggregated with other plans in the Aggregation Group,
the Determination Date for each other plan shall be, with respect
to any Plan Year, the Determination Date for each such other plan
which falls in the same calendar year as the Determination Date
for the Program.
(d) "Key Employee" means, for the Plan Year containing the
Determination Date, any person or the beneficiary of any person
who is an employee or former employee of an Employer, a Commonly
Controlled Entity or member of an Affiliated Service Group as
determined under Internal Revenue Code Section 416(i) and who, at
any time during the Plan Year containing the Determination Date
or any of the four (4) preceding Plan Years (the "Measurement
Period"), is a person described in paragraph (1), (2), (3) or
(4), subject to paragraph (5).
(1) An officer of the Employer, Commonly Controlled
Entity or member of an Affiliated Service Group who:
(A) in any Measurement Period is an officer
during the Plan Year and has annual Considered
Compensation for the Plan Year in an amount greater
than fifty percent (50%) of the amount in effect under
Section 415(b)(1)(A) of Internal Revenue Code for the
calendar year in which such Plan Year ends ($120,000 in
1996, adjusted in subsequent years as determined in
accordance with regulations prescribed by the Secretary
of the Treasury or his delegate pursuant to the
provisions of Section 415(d) of the Internal Revenue
Code); and
No more than a total of fifty (50) persons (or, if lesser,
the greater of three (3) persons or ten percent (10%) of all
persons or beneficiaries of persons who are employees or
former employees) shall be treated as Key Employees under
this paragraph (1) for any Measurement Period. In the case
of an Employer, Commonly Controlled Entity or member of an
Affiliated Service Group which is not a corporation in any
Measurement Period, the term "officer" as used in this
subsection (d) shall include administrative executives as
described in Section 1.416-1(T-13) of the Treasury
Regulations.
(2) One (1) of the ten (10) persons who, during a Plan
Year in the Measurement Period:
(A) have annual Considered Compensation from the
Employer, Commonly Controlled Entity or member of an
Affiliated Service Group for such Plan Year greater
than the amount in effect under Section 415(c)(1)(A) of
the Internal Revenue Code for the calendar year in
which such Plan Year ends (the greater of $30,000 for
1996 or one-fourth of the dollar limitation in effect
under Section 415(b)(1)(A) of the Internal Revenue
Code, adjusted in subsequent years as determined in
accordance with regulations prescribed by the Secretary
of the Treasury or his delegate pursuant to the
provisions of Section 415(d) of the Internal Revenue
Code); and
(B) own (or are considered as owning within the
meaning of Internal Revenue Code Section 318) in sh
Plan Year, the largest percentage interests in the
Employer, Commoy CControlled Entity or member of an
Affiliated Service Group, in such Plan Year, provided
that no person shall be treated as a Key Employee under
this paragraph unless he owns more than one-half
percent (1/2%) interest in the Employer, Commonly
Controlled Entity or member of an Affiliated Service
Group.
No more than a total of ten (10) persons or beneficiaries of
persons who are employees or former employees shall be
treated as Key Employees under this paragraph (2) for any
Measurement Period.
(3) A person who, for a Plan Year in the Measurement
Period, is a more than five percent (5%) owner (or is
considered as owning more than five percent (5%) within the
meaning of Internal Revenue Code Section 318) of the
Employer, Commonly Controlled Entity or member of an
Affiliated Service Group.
(4) A person who, for a Plan Year in the Measurement
Period, is a more than one percent (1%) owner (or is
considered as owning more than one percent (1%) within the
meaning of Internal Revenue Code Section 318) of the
Employer, a Commonly Controlled Entity or member of an
Affiliated Service Group and has an annual Considered
Compensation for such Plan Year from the Employer, Commonly
Controlled Entity or member of an Affiliated Service Group
of more than $150,000.
(5) If the number of persons who meet the requirements
to be treated as Key Employees under paragraph (1) or (2)
exceed the limitation on the number of Key Employees to be
counted under paragraph (1) or (2), those persons with the
highest annual Considered Compensation in a Plan Year in the
Measurement Period for which the requirements are met and
who are within the limitation on the number of Key Employees
will be treated as Key Employees.
If the requirements of paragraph (1) or (2) are met by a
person in more than one (1) Plan Year in the Measurement
Period, each person will be counted only once under
paragraph (1) or (2):
(A) under paragraph (1), the Plan Year in the
Measurement Period in which a person who was an officer
and had the highest annual Considered Compensation
shall be used to determine whether the person will be
treated as a Key Employee under the preceding sentence;
(B) under paragraph (2), the Plan Year in the
Measurement Period in which the ownership percentage
interest is the greatest shall be used to determine
whether the person will be treated as a Key Employee
under the preceding sentence.
Notwithstanding the above provisions of paragraph (5), a
person may be counted in determining the limitation under
both paragraphs (1) and (2). In determining the sum of the
Present Value of Accrued Benefits for Key Employees under
subsection (h) of this Section, the Present Value of Accrued
Benefits for any person shall be counted only once.
(e) "Non-Key Employee" means (1) a person or the
beneficiary of a person with an account balance in the Program or
an account balance or accrued benefit in any Related Plan in the
Aggregation Group or (2) an employee, a former employee or the
beneficiary of such person who has received a distribution during
the Measurement Period and (3) who during the Measurement Period
is not a Key Employee.
(f) "Present Value of Accrued Benefits" means, for any Plan
Year, an amount equal to the sum of (1), (2) and (3) for each
person who, in the Plan Year containing the Determination Date,
was a Key Employee or a Non-Key Employee.
(1) Subject to (4) below, the value of a person's Net
Balance Account under the Program and his accrued benefit
under each Related Defined Contribution Plan in the
Aggregation Group, determined as of the valuation date
coincident with or immediately preceding the Determination
Date, adjusted for contributions due as of the Determination
Date, as follows:
(A) in the case of a plan not subject to the
minimum funding requirements of Section 412 of the
Internal Revenue Code, by including the amount of any
contributions actually made after the valuation date
but on or before the Determination Date, and, in the
first plan year of a plan, by including contributions
made after the Determination Date that are allocated as
of a date in that first plan year; and
(B) in the case of a plan that is subject to the
minimum funding requirements, by including the amount
of any contributions that would be allocated as of a
date not later than the Determination Date, plus
adjustments to those amounts as required under
applicable rulings, even though those amounts are not
yet required to be contributed or allocated (e.g.,
because they have been waived) and by including the
amount of any contributions actually made (or due to be
made) after the valuation date but before the
expiration of the extended payment period in
Section 412(c)(10) of the Internal Revenue Code.
(2) Subject to (4) below, the sum of the actuarial
present values of a person's accrued benefits under each
Related Defined Benefit Plan in the Aggregation Group,
expressed as a benefit commencing at Vesting Retirement Date
(or the person's attained age, if later) determined based on
the following actuarial assumptions:
(A) Interest rate 5%; and
(B) Post Retirement Mortality: 1984 Unisex
Pension Table;
and determined in accordance with Internal Revenue Code
Section 416(g), provided, however, that if a defined benefit
plan in the Aggregation Group provides for different or
additional actuarial assumptions to be used in determining
the present value of accrued benefits thereunder for the
purpose of determining the top heavy status thereof, then
such different or additional actuarial assumptions shall
apply with respect to each defined benefit plan in the
Aggregation Group, and further provided that the accrued
benefit of any Non-Key Employee shall be determined under
the method which is used for accrual purposes for all
Related Defin BBeenefit Plans or, if no single accrual
meodd is used in all such plans, such accrued benefit shall
be determined as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under Section
411(b)(1)(C) of the Internal Revenue Code.
The present value of an accrued benefit for any person who
is employed by an employer maintaining a plan on the
Determination Date is determined as of the most recent
valuation date which is within a 12-month period ending on
the Determination Date, provided however that:
(C) for the first plan year of the plan, the
present value for an employee is determined as if the
employee had a Termination of Employment (i) on the
Determination Date or (ii) on such valuation date but
taking into account the estimated accrued benefit as of
the Determination Date; and
(D) for the second and subsequent plan years of
the plan, the accrued benefit taken into account for an
employee is not less than the accrued benefit taken
into account for the first plan year unless the
difference is attributable to using an estimate of the
accrued benefit as of the Determination Date for the
first plan year and using the actual accrued benefit as
of the Determination Date for the second plan year.
For purposes of this paragraph (2), the valuation date is
the valuation date used by the plan for computing plan costs
for minimum funding, regardless of whether a valuation is
performed that year.
If the plan provides for a nonproportional subsidy as
described in Treasury Regulations Section 1.416-1 (T-27),
the present value of accrued benefits shall be determined
taking into account the value of nonproportional subsidized
early retirement benefits and nonproportional subsidized
benefit options.
(3) Subject to (4) below, the aggregate value of
amounts distributed during the plan year that includes the
Determination Date or any of the four preceding plan years
including amounts distributed under a terminated plan which,
if it had not been terminated, would have been in the
Aggregation Group.
(4) The following rules shall apply in determining the
Present Value of Accrued Benefits:
(A) Amounts attributable to qualified voluntary
employee contributions, as defined in Section 219(e) of
the Internal Revenue Code, shall be excluded.
(B) In computing the Present Value of Accrued
Benefits with respect to rollovers or plan-to-plan
transfers, the following rules shall be applied to
determine whether amounts which have been distributed
during the five (5) year period ending on the
Determination Date from or accepted into this Program
or any plan in the Aggregation Group shall be included
in determining the Present Value of Accrued Benefits:
(i) Unrelated Transfers made from the
Program or any plan in the Aggregation Group shall
be included.
(ii) Related Transfers made from the Program
or any plan in the Aggregation Group shall not be
included by the transferor plan (but shall be
counted by the accepting plan).
The accrued benefit of any individual who has not performed
services for an Employer maintaining the Program at any time
during the five (5) year period ending on the Determination Date
shall be excluded in computing the Present Value of Accrued
Benefits.
(g) "Related Transfer" means a rollover or a plan-to-plan
transfer which is either not initiated by the Employee or is made
between plans each of which is maintained by a Commonly
Controlled Entity or member of an Affiliated Service Group.
(h) A "Top Heavy Aggregation Group" means an Aggregation
Group in any Plan Year for which, as of the Determination Date,
the sum of the Present Value of Accrued Benefits for Key
Employees under all plans in the Aggregation Group exceeds sixty
percent (60%) of the sum of the Present Value of Accrued Benefits
for all employees under all plans in the Aggregation Group;
provided that, for purposes of determining the sum of Present
Value of Accrued Benefits for all employees, former Key Employees
who have not performed any services for an Employer, a Commonly
Controlled Entity or a member of an Affiliated Service Group in
the Plan Year containing the Determination Date or the preceding
four Plan Years shall be excluded entirely from the calculation
of the Present Value of Accrued Benefits for the Plan Year that
contains the Determination Date. For purposes of applying the
special rules herein with respect to a Super Top Heavy Plan, a
Top Heavy Aggregation Group will also constitute a "Super Top
Heavy Aggregation Group" if in any Plan Year as of the
Determination Date, the sum of the Present Value of Accrued
Benefits for Key Employees under all plans in the Aggregation
Group exceeds ninety percent (90%) of the sum of the Present
Value of Accrued Benefits for all employees under all plans in
the Aggregation Group.
(i) "Top Heavy Plan" means the Program in any Plan Year in
which it is a member of a Top Heavy Aggregation Group, including
a Top Heavy Aggregation Group consisting solely of the Program.
For purposes of applying the rules herein with respect to a Super
Top Heavy Plan, a Top Heavy Plan will also constitute a "Super
Top Heavy Plan" if the Program in any Plan Year is a member of a
Super Top Heavy Aggregation Group, including a Super Top Heavy
Aggregation Group consisting solely of the Program.
(j) "Unrelated Transfer" means a rollover or a plan-to-plan
transfer which is both initiated by the Employee and (1) made
from a plan maintained by a Commonly Controlled Entity or member
of an Affiliated Service Group to a plan maintained by an
employer which is not a Commonly Controlled Entity or member of
an Affiliated Service Group or (2) made to a plan maintained by a
Commonly Controlled Entity or member of an Affiliated Service
Group from a plan maintained by an employer which is not a
Commonly Controlled Entity or member of an Affiliated Service
Group.
15.3 Special Top Heavy Provisions. For each Plan Year in which
the Program is a Top Heavy Plan, the following rules shall apply,
except that the special provisions of this Section 15.3 shall not
apply with respect to any employee included in a unit of employees
covered by an agreement which the Secretary of Labor finds to be a
collective-bargaining agreement between employee representatives and
one or more employers if there is evidence that retirement benefits
were the subject of good faith bargaining between such employee
representative and the Employer or Employers:
(a) Minimum Employer Contributions. In any Plan Year in
which the Program is a Top Heavy Plan, the Employers shall make
additional Employer Contributions to the Program as necessary for
each Participant who is employed on the last day of the Plan Year
and who is a Non-Key Employee to bring the amount of his
Aggregate Employer Contributions for the Plan Year up to at least
three percent (3%) of his Considered Compensation, or such lesser
amount as is equal to the largest percentage of a Key Employee's
Considered Compensation allocated to the Key Employee as
Aggregate Employer Contributions.
For purposes of determining whether a NOn-Key Employee is a
Participant entitled to have minimum Employer Contributions made
on his behalf, a Non-Key Employee will be treated as a
Participant even if he is not otherwise a Participant (or accrues
no benefit) under the Program because:
(1) he has failed to complete the requisite number
of hours of service (if any) after becoming a Participant in
the Program,
(2) he is excluded from participation in the Prgram
(or accrues no benefit) merely because his compensation is
less than a stated amount, or
(3) he is excluded from participation in the Program
(or accrues no benefit) merely because of a failure to make
mandatory employee contributions or because of a failure to
make elective 401(k) contribution.
(b) Vesting. For each Plan Year in which the Program is a
Top Heavy Plan and for each Plan Year thereafter, the vested right
of each Participant who has an Hour of Service after the Program
becomes a Top Heavy Plan to a percentage of his Profit Sharing
Account and Employer Leveraged ESOP Account (to the extent such
Accounts had not been forfeited prior to the Program's becoming
a Top Heavy Plan) shall be determined under the following table:
Year of Credited Service Vested Percentage
------------------------ -----------------
Less than 2 0%
2 but less than 3 20
3 but less than 4 40
4 but less than 5 60
5 but less than 6 80
6 or more 100
(c) Limitations. In computing the limitations under
Article IX hereof for years in which the Program is a Top Heavy
Plan, the special rules of Section 416(h) of the Code shall be
applied in accordance with applicable regulations and rulings so
that, in determining the denominator of the defined contribution
plan fraction, as defined in Section 415(e)(3) of the Internal
Revenue Code ("Defined Contribution Plan Fraction") and the
defined benefit plan fraction as defined in Section 415(e)(2) of
the Internal Revenue Code ("Defined Benefit Plan Fraction") at
each place at which "1.25" would have been used, "1.00" shall be
substituted and by substituting $41,500 for $51,875 in the
numerator of the transition fraction described in Section
415(e)(6)(B) of the Internal Revenue Code, unless the Program is
not a Super Top Heavy Plan and the special requirements of
Section 416(h)(2) of the Internal Revenue Code have been
satisfied.
(d) Transition Rule for a Top Heavy Plan. Notwithstanding
the provisions of Section 15.3(c), for each Plan Year in which
the Program is a Top Heavy Plan and in which the Program does not
meet the special requirements of Section 416(h)(2) of the
Internal Revenue Code in order to use 1.25 in the denominator of
the Defined Contribution Plan Fraction and the Defined Benefit
Plan Fraction, if an Employee was a participant in one or more
defined benefit plans and in one or more defined contribution
plans maintained by the Employer before the plans became Top
Heavy Plans and if such Participant's Combined Fraction exceeds
1.00 because of accruals and additions that were made before the
plans became Top Heavy Plans, a factor equal to the lesser of
1.25 or such lesser amount (but not less than 1.00) as shall be
needed to make the Employee's Combined Fraction equal to 1.00
shall be used in the denominator of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction if there are
no further accruals or annual additions under any Top Heavy
Plans until the Participant's Combined Fraction is not greater
than 1.00 when a factor of 1.00 is used in the denominators of
the Defined Benefit Plan Fraction and the Defined Contribution
Plan Fraction. Any provisions herein to the contrary
notwithstanding, if the Program is a Top Heavy Plan and the
Program does not meet the special requirements of Section
416(h)(2) of the Internal Revenue Code in order to use 1.25 in
the denominator of the Defined Benefit Plan Fraction and the
Defined Contribution Plan Fraction, there shall be no further
Annual Additions for a Participant whose Combined Fraction is
greater than 1.00 when a factor of 1.00 is used in the
denominator of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction, until such time as the Participant's
Combined Fraction is not greater than 1.00.
(e) Transition Rule for a Super Top Heavy Plan.
Notwithstanding the provisions of Sections 15.3(c) and 15.3(d),
for each Plan Year in which the Program is a Super Top Heavy Plan,
(1) if an Employee was a participant in one or more defined
benefit plans and in one or more defined contribution plans
maintained by the employer before the plans became Super Top Heavy
Plans, and (2) if such Participant's Combined Fraction exceeds
1.00 because of accruals and additions that were made before the
plans became Super Top Heavy Plans and if immediately before the
plans became Super Top Heavy Plans the Combined Fraction as then
computed did not exceed 1.00, then a factor equal to the lesser of
1.25 or such lesser amount (but not less than 1.00) as shall be
needed to make the Employee's Combined Fraction equal to 1.00 shall
be used in the denominator of the Defined Benefit Plan Fraction
and the Defined Contribution Plan Fraction if there are no
further accruals or annual additions under any Super Top Heavy
Plans until the Participant's Combined Fraction is not greater
than 1.00 when a factor of 1.00 is used in the denominators of
the Defined Benefit Plan Fraction and the Defined Contribution
Plan Fraction. Any provisions herein to the contrary
notwithstanding, if the Program is a Super Top Heavy Plan, there
shall be no further Annual Additions for a Participant whose
Combined Fraction is greater than 1.00 when a factor of 1.00 is
used in the denominator of the Defined Benefit Plan Fraction and
the Defined Contribution Plan Fraction until the Participant's
Combined Fraction is not greater than 1.00
(f) Terminated Plan. If the Program becomes a Top Heavy
Plan after it has formally been terminated, has ceased crediting
for benefit accruals and vesting and has been or is distributing
all plan assets to participants and their beneficiaries as soon
as administratively feasible or if a terminated plan has
distributed all benefits of participants and their beneficiaries,
the provisions of Section 15.3 shall not apply to the Program.
(g) Frozen Plans. If the Program becomes a Top Heavy Plan
after contributions have ceased under the Program but all assets
have not been distributed to participants or their beneficiaries,
the provisions of Section 15.3 shall apply to the Program.
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 Headings. Headings of sections and subsections of the
Program are inserted for convenience of reference and are neither part
of the Program nor to be considered in the construction thereof.
16.2 Indemnification. Each member of the Committee, each member
of the Board of Directors, each individual serving as Trustee without
compensation, and each and every Employee to whom are delegated
duties, responsibilities and authority with respect to the Program and
the Trust shall be indemnified, held harmless and promptly reimbursed
by the Company against all claims, liabilities, fines and penalties
and all expenses (including, but not limited to, attorney fees)
reasonably incurred by or imposed upon such member, individual or
Employee which arise as a result of his actions or failure to act in
connection with the operation and administration of the Program and
the Trust, to the extent lawfully allowable; provided that to the
extent that such claim, liability, fine, penalty or expense is paid
for by liability insurance purchased by or paid for by the Company,
reimbursement shall be limited to amounts which would not cause the
loss of coverage under such insurance and further provided that to the
extent that the Company has reimbursed the Employee, the Company shall
be subrogated to the Trustee's rights to reimbursement under such
insurance. Notwithstanding the foregoing, the Company shall not
indemnify any person for any such amount incurred through any
settlement or compromise of any action unless the Company consents in
writing to such settlement or compromise. Expenses incurred in
defending a civil or criminal action, suit or proceeding shall be paid
by the Company in advance of the final disposition of such action,
suit or proceeding as authorized by the Company in the specific case
upon receipt of an undertaking by or on behalf of the member of the
Committee, member of the Board of Directors, individual Trustee or
Employee to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the Company as authorized in
this Section 16.2.
16.3 Employees' Trust. This Program is created for the exclusive
purpose of providing benefits to the Participants in the Program and
their Beneficiaries, and shall be interpreted in a manner consistent
with its being a Plan described in Section 401(a) of the Internal
Revenue Code and with the Trust's being a Trust exempt under Section
501(a) of the Internal Revenue Code.
16.4 Nonalienation of Benefits. Benefits payable under this
Program shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution or levy of any kind, either voluntary or
involuntary, prior to actually being received by the person entitled
to the benefit under the terms of the Program; and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber,
charge, garnish, execute on, levy or otherwise dispose of any right to
benefits payable hereunder, shall be void. The Trust Fund shall not
in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements or torts of any person entitled to benefits
hereunder. The foregoing provisions of this Section 16.4(a) shall not
preclude the (1) enforcement of a Federal tax levy made pursuant to
Section 6331 of the Internal Revenue Code or (2) collection by the
United States on a judgment resulting from an unpaid tax assessment.
16.5 Qualified Domestic Relations Order.
(a) Qualified Domestic Relations Order means any judgment,
decree, or order (including approval of a property settlement
agreement):
(1) which is made pursuant to a state domestic
relations law (including a community property law),
(2) which relates to the provision of child support,
alimony payments, or marital property rights to a spouse,
former spouse, child, or other dependent of a Participant,
(3) which creates or recognizes the existence of an
alternate payee's right to receive all or a portion of the
Participant's Net Balance Account under the Program, and
(4) with respect to which the requirements of
paragraphs (b) and (c) are met.
(b) A domestic relations order can be a Qualified Domestic
Relations Order only if such order clearly specifies:
(1) the name and the last known mailing address, if
any, of the Participant and the name and mailing address of
each alternate payee covered by the order,
(2) the amount or percentage of the Participant's
Accrued Benefit to be paid by the Program to each such
alternate payee, or the manner in which such amount or
percentage is to be determined,
(3) the number of payments or period to which such
order applies, and
(4) each Plan to which such order applies.
(c) A domestic relations order can be a Qualified Domestic
Relations Order only if such order does not:
(1) require the plan to provide any type or form of
benefit, or any option not otherwise provided under the
Program,
(2) require the Program to provide increased benefits
(determined on the basis of actuarial value), or
(3) require the payment of benefits to an alternate
payee which are required to be paid to another alternate
payee under another order previously determined to be a
Qualified Domestic Relations Order.
(d) In the case of any payment before a Participant has had
a Termination of Employment, a domestic relations order shall not
be treated as failing to meet the requirements of Section
16.5(c)(1) solely because such order requires that payment of
benefits be made to an alternate payee:
(1) without regard to the Participant's attainment of
ansppeecified age;
(2) as if the Participant had retired on the date on
which such payment is to begin under such order; and
(3) in any form in which such benefits may be paid
under the Program to the Participant (other than in the form
of a Qualified Joint and Survivor Annuity with respect to
the alternate payee and his or her subsequent spouse).
(e) To the extent provided in any Qualified Domestic
Relations Order the former spouse of a Participant if married to
the Participant for at least one year, shall be treated as the
surviving spouse of such Participant for purposes of consenting
to the waiver of a Qualified Joint and Survivor Annuity as
provided in Sections 11.2(f) and 11.10 and the naming of another
Beneficiary to the extent provided in Sections 11.3 and 11.10.
(f) Notwithstanding anything to the contrary in Article X,
if, pursuant to a Qualified Domestic Relations Order, a
segregated account is established containing the interest of an
alternate payee, the alternate payee shall direct the manner in
which such segregated account shall be invested in accordance
with the procedures under Article X; provided that such
segregated account shall remain invested in the same manner as
the assets were invested before the account was segregated until
the alternate payee's election in accordance with this
Section 16.5(f) becomes effective.
16.6 Unclaimed Amounts. Unclaimed amounts shall consist of the
amounts of the Accounts of a retired, deceased or terminated
Participant (including amounts held in the Holding Fund with respect
to checks which are distributed but which are not cashed) which cannot
be distributed because of the Committee's inability, after a
reasonable search, to locate a Participant or his Beneficiary within a
period of two (2) years after the payment of benefits becomes due.
(a) Unclaimed amounts with respect to Accounts held in the
Profit Sharing Plan portion of the Program for a Plan Year shall
become a Forfeiture and shall be allocated for such Plan Year as
determined in accordance with Section 7.1 hereof, within a
reasonable time after the close of the Plan Year in which such
two-year period shall end.
(b) The Committee shall allocate Forfeitures with respect
to Accounts held in the McDESOP portion of the Program to
Participants' Participant Elected Contribution Accounts and
Employer Matching Contribution Accounts by crediting such
Forfeitures to the McDESOP and Leveraged ESOP Holding Fund as of
the Valuation Date following the date the amount of such
Forfeitures is determined for the immediately preceding Plan year
but not later than March 31 of the year following the Plan year
with respect to which such Forfeitures occurred.
(c) Forfeitures arising in respect to a Leveraged ESOP
Account to Participants' Leveraged ESOP Accounts shall be
allocated in the same manner as Forfeitures under Section 7.3 are
allocated to such Accounts.
(d) As of the last day of the Plan Year, Forfeitures
arising in respect to the Stock Sharing Accounts of Participants
shall be charged with the expenses of the Stock Sharing portion
of the Program without regard to the limitations on reimbursement
for expenses prescribed by Section 409(l) of the Internal Revenue
Code. Any net Forfeitures after such charges and charges
pursuant to Section 16.6(e) shall be allocated as income of the
Stock Sharing portion of the Program as provided in Section
10.13(b).
(e) If an unclaimed amount is subsequently properly claimed
by the Participant or the Participant's Beneficiary ("Reclaimed
Amount") and unless an Employer in its discretion makes a
contribution to the Program for such year in an amount sufficient
to pay such Reclaimed Amount, it shall be charged as follows:
(1) To the extent such Reclaimed Amount originated as
an unclaimed amount with respect to the Accounts held in the
Profit Sharing Plan portion of the Program, it shall be
charged against Forfeitures from the Profit Sharing portion
of the Program and, if such Forfeitures are not sufficient,
the remainder shall be treated as an expense of the Profit
Sharing Plan portion of the Program during the Plan Year in
which the Participant or Beneficiary makes such claim.
(2) To the extent that the Reclaimed Amount originated
as an unclaimed amount with respect to the amounts held in
the McDESOP portion of the Program it shall be charged
against Forfeitures for the Plan Year with respect to
Participants' Participant Elected Contribution Accounts and
Employer Matching Contribution Accounts and, to the extent
such Forfeitures are not sufficient, shall be treated as an
expense of the McDESOP portion of the Program.
(3) To the extent that such Reclaimed Amount
originated as an unclaimed amount in respect to an Leveraged
ESOP Account, it shall be treated as a charge against
Forfeitures arising under Sections 11.4 and 16.6 for the
Plan Year with respect to Participants' Leveraged ESOP
Accounts and, to the extent such Forfeitures are not
sufficient, shall be treated as an expense of the Leveraged
ESOP portion of the Program.
(4) To the extent that such Reclaimed Amount
originated as an unclaimed amount with respect to a Stock
Sharing Account, it shall be treated as a charge against
Forfeitures arising under Section 16.6 for the Plan Year
with respect to Participants' Stock Sharing Accounts and, to
the extent that such Forfeitures are not sufficient, shall
be treated as an expense of the Stock Sharing portion of the
Program.
16.7 Maximum Age Condition. Anything to the contrary herein
notwithstanding, eligibility to participate in the Program and to
elect or receive allocations of contributions to the Trust shall not
be subject to any restrictions on account of a maximum age condition.
16.8 Invalidity of Certain Provisions. If any provision of this
Program shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and
this Program shall be construed and enforced as if such provisions, to
the extent invalid or unenforceable, had not been included.
16.9 Gender and Number. Except when otherwise indicated by the
context, any masculine terminology herein shall also include the
feminine and the singular shall also include the plural.
16.10 Law Governing. This Program and Trust shall be construed
and enforced according to the laws of the State of Illinois other than
its laws respecting choice of law, to the extent not preempted by
ERISA.
Executed in multiple originals this 18th day of December, 1995.
McDonald's Corporation
By: /s/ Stanley R. Stein
-------------------------
Stanley R. Stein
Its: Senior Vice President