Exhibit 10(b)
FOURTH AMENDMENT TO THE
MCDONALD'S CORPORATION
PROFIT SHARING PROGRAM
The McDonald's Corporation Profit Sharing Program (the "Program"), as
amended and restated effective January 1, 1996, is hereby amended, effective
January 1, 1997, except as otherwise specifically provided herein, as follows:
I
The following shall be added to Section 1.30 at the end thereof:
(d) In lieu of determining which individuals are Highly Compensated
Employees as provided in Section 1.30(a) for the Plan Year beginning in 1997,
the Committee may elect to consider as Highly Compensated each Participant who
performs services as an employee for an Employer, Commonly Controlled Entity or
member of an Affiliated Service Group during the Plan Year and who, during the
Plan Year;
(1) was at any time a Five Percent Owner; and
(2) received Considered Compensation in excess of $80,000 for 1997.
II
Effective July 1, 1997, the following paragraph (5) shall be added to
Section 1.31(b):
(5) Each restaurant management and staff employee who became an
employee of Restaurant Acquisition Corp., McDonald's Corporation or an
other Employer on February 14, 1997 as a result of the Roy Roger's
acquisition ("Acquisition Employees") shall be credited with Hours of
Service for each calendar year during which he was employed by Hardee's
Food Systems, Inc. ("Hardee's") or a member of a controlled group with
Hardee's. In determining the Hours of Service to be credited to Acquisition
Employees, the Plan Administrator shall rely on available information and,
as necessary, shall make good faith estimates based upon available
information and records. Such service shall be credited to each Acquisition
Employee effective July 1, 1997.
III
Section 4.1(c) shall be deleted and replaced by the following:
(c) Required Actual Contribution Percentage Test and Adjustment. The
Average ACP for the group of Highly Compensated Employees for a Plan Year
shall bear a relationship to the Average ACP for all Non-highly Compensated
Employees for the
preceding Plan Year for Plan Years beginning in 1997 and thereafter, which
meets either of the following tests ("Required ACP Test"):
(1) The Average ACP for the preceding Plan Year for Plan Years
beginning in 1997 and thereafter for the group of Participants who are
Non-highly Compensated Employees multiplied by 1.25 is greater than or
equal to the Average ACP for the Plan Year for the Highly Compensated
Employees; or
(2) The excess of the Average ACP for the Plan Year for the
group of Highly Compensated Employees who are Active Participants over
the Average ACP for the preceding Plan Year for Plan Years beginning
in 1997 and thereafter of all Non-highly Compensated Employees who are
Active Participants is not more than 2 percentage points, and the
Average ACP for the Plan Year for the group of Highly Compensated
Employees who are Active Participants is not more than the Average ACP
for the preceding Plan Year for Plan Years beginning in 1997 and
thereafter of all Non-highly Compensated Employees who are Active
Participants multiplied by 2.
For Plan Years beginning in 1998 and thereafter, the above Required
ACP Test may be applied by using the Average ACP for Non-highly Compensated
Employees for the current Plan Year if the Committee so elects: provided
that once made such an election may not be changed except as provided by
the Secretary of the Treasury.
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 or to count Participant Elected Contributions for purposes of
the Required ACP test with respect to the Plan Year sufficient to result in
the Required ACP test being passed, then the Committee shall reduce
Employer Matching Contributions and Forfeitures (which for this purpose
shall include any Participant Elected Contributions counted in the Required
ACP Test) that Active Participants who are Highly Compensated Employees for
the Plan Year (or a portion of such Active Participants) may defer in the
following steps:
Step 1: The Committee shall first determine the dollar amount of the
reductions which would have to be made to the Employer Matching
Contributions and Forfeitures of Highly Compensated Employees who are
Active Participants for the Plan Year in order that the Average ACP of the
Highly Compensated Employees would not exceed both the amounts permitted in
Sections 4.1(c)(1) and (c)(2). Such amount shall be calculated by first
determining the dollar amount by which the Employer Matching Contributions
and Forfeitures of the Highly Compensated Employees who have the highest
Actual Contribution Percentage would have to be reduced until the first to
occur of: (i) such Employees' Actual Contribution Percentage, after the
reductions made under Section 5.2(b), would become tied with the Actual
Contribution Percentage of one or more other Highly Compensated Employees
or (ii) the Average ACP of all of the Highly Compensated Employees, as
recalculated after the reductions made under this Step 1, no longer would
exceed the amounts permitted in both Sections 4.1(c)(1) and (c)(2). Then,
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unless the Average ACP of the Highly Compensated Employees, as recalculated
after the reductions made under this Step 1, no longer exceeds the amounts
permitted in both Sections 4.1(c)(1) and (c)(2), the reduction process
shall be repeated by determining the dollar amount of reductions which
would have to be made to the Employer Matching Contributions and
Forfeitures of the group of Highly Compensated Employees who after all
prior reductions made in this Step 1 would have the highest Actual
Contribution Percentage until the first to occur of: (iii) the Actual
Contribution Percentage, after the prior reductions made in this Step 1, of
each person in such group becomes tied with that of one or more other
Highly Compensated Employees or (iv) the Average ACP of all of the Highly
Compensated Employees, after the prior reductions, no longer would exceed
the amounts permitted in both Sections 4.1(c)(1) and (c)(2). This process
is repeated until the Average ACP of all of the Highly Compensated
Employees, after all reductions, would no longer exceed the amounts
permitted in both Sections 4.1(c)(1) and (c)(2).
Step 2. Next, the Committee shall determine the total dollar amount of
reductions to the Employer Matching Contributions and Forfeitures
calculated under Step 1 ("Total Excess Contributions").
Step 3. Finally, the Committee shall reduce the Employer Matching
Contributions and Forfeitures of the Highly Compensated Employees with the
highest dollar amount of Employer Matching Contributions and Forfeitures by
the lesser of the amount which either: (i) causes such Highly Compensated
Employees' Employer Matching Contributions and Forfeitures to equal the
dollar amount of the Employer Matching Contributions and Forfeitures of the
Highly Compensated Employees with the next highest dollar amount of
Employer Matching Contributions and Forfeitures or (ii) reduces the Highly
Compensated Employee's Employer Matching Contributions and Forfeitures by
the Total Excess Contributions. Then, unless the total amount of reductions
made to Highly Compensated Employees' Employer Matching Contributions and
Forfeitures under this Step 3 equals the amount of Total Excess
Contributions, the reduction process shall be repeated by reducing the
Employer Matching Contributions and Forfeitures of the group of Highly
Compensated Employees with the highest dollar amount of Employer Matching
Contributions and Forfeitures, after the prior reductions made in this Step
3, by the lesser of the amount which either: (iii) causes such Highly
Compensated Employees' Employer Matching Contributions and Forfeitures made
in this Step 3 to equal the dollar amount of the Employer Matching
Contributions and Forfeitures of other Highly Compensated Employees with
the next highest dollar amount of Employer Matching Contributions and
Forfeitures or (iv) causes total reductions to equal the Total Excess
Contributions. This process is repeated with each successive group of
Highly Compensated Employees with the highest dollar amount, after the
prior reductions of the Employer Matching Contributions and Forfeitures
made under this Step 3 until the total reductions equal the Total Excess
Contributions.
The Committee shall reduce and distribute Employer Matching
Contributions and Forfeitures equal to the Total Excess Contributions for
the Plan Year and any income, gains or losses attributable thereto, as
determined in accordance with Section 5.3, to
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Highly Compensated Employees as determined in Step 3 after the end of the
Plan Year with respect to which such reduced Employer Matching
Contributions and Forfeitures were made.
If any Employer Matching Contributions are reduced hereunder, such
reduced amounts shall become a Forfeiture and shall be allocated to other
Participants' Employer Matching Contribution Accounts in proportion to the
Employer Matching Contributions and any Forfeitures allocated to such
accounts pursuant to Sections 7.2(a) and (b).
IV
Section 5.2(e) is hereby deleted and replaced by the following:
(e) Required ADP Test. The Average ADP for eligible Highly
Compensated Employees for the Plan Year bears a relationship to the Average
ADP for all Non-highly Compensated Employees for the preceding Plan Year
for Plan Years beginning in 1997 and thereafter, which meets either of the
following tests ("Required ADP Test"):
(1) The Average ADP for the preceding Plan Year for the group of
Active Participants who are Non-highly Compensated Employees
multiplied by 1.25 is greater than or equal to the Average ADP for the
Plan Year for the Highly Compensated Employees; or
(2) The excess of the Average ADP for the Plan Year for the
group of Highly Compensated Employees who are Active Participants over
the Average ADP for the preceding Plan Year of all Non-highly
Compensated Employees who are Active Participants is not more than 2
percentage points, and the Average ADP for the Plan Year for the group
of Highly Compensated Employees who are Active Participants is not
more than the Average ADP for the preceding Plan Year of all Non-
highly Compensated Employees who are Active Participants multiplied by
2.
For Plan Years beginning in 1998 and thereafter, the above Required
ADP Test may be applied by using the Average ADP for Non-highly Compensated
Employees for the current Plan Year if the Committee so elects; provided
that once made such an election may not be changed except as provided by
the Secretary of the Treasury.
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) Employer
Contributions or to count Employer Matching Contributions and Forfeitures
for purposes of the ADP test with respect to the Plan Year sufficient to
result in the Required ADP Test being passed, then the Committee shall
reduce Participant Elected Contributions (which for this purpose shall
include any Employer Matching Contributions and Forfeitures counted in the
Required ADP Test) and any Employer Matching Contributions and Forfeitures
allocated with respect to reduced Participant Elected Contributions that
Active Participants who are Highly Compensated
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Employees for the Plan Year (or a portion of such Active Participants) may
defer in the following steps:
Step 1: The Committee shall first determine the dollar amount of the
reductions which would have to be made to the Participant Elected
Contributions of Highly Compensated Employees who are Active Participants
for the Plan Year in order that the Average ADP of the Highly Compensated
Employees would not exceed the amounts permitted in both Sections 5.1(e)(1)
and (e)(2). Such amount shall be calculated by first determining the dollar
amount by which the Participant Elected Contributions of Highly Compensated
Employees who have the highest Actual Deferral Percentage would have to be
reduced until the first to occur of: (i) such Employees' Actual Deferral
Percentage, after the reductions under Section 5.2(b), would become tied
with the Actual Deferral Percentage of one or more other Highly Compensated
Employees or (ii) the Average ADP of all of the Highly Compensated
Employees, as recalculated after the prior reductions under Section 5.2(b),
no longer would exceed the amounts permitted in both Sections 5.1(e)(1) and
(e)(2). Then, unless the recalculated Average ADP of the Highly Compensated
Employees no longer exceeds the amounts permitted in both Sections
5.1(e)(1) and (e)(2), the reduction process shall be repeated by
determining the amount of reductions which would have to be made to the
Participant Elected Contributions of Highly Compensated Employees who after
all prior reductions would have the highest Actual Deferral Percentage
until the first to occur of: (iii) the Actual Deferral Percentage, after
the prior reductions under Sections 5.2(b), 4.2(c) and this Step 1, of each
person in such group becomes tied with that of one or more other Highly
Compensated Employees or (iv) the Average ADP of all of the Highly
Compensated Employees, after the prior reductions, no longer would exceed
the amounts permitted in both Sections 5.1(e)(1) and (e)(2). This process
is repeated until the Average ADP of all of the Highly Compensated
Employees, after all reductions, would no longer exceed the amounts
permitted in both Sections 5.1(e)(1) and (e)(2).
Step 2. Determine the total dollar amount of reductions to the
Participant Elected Contributions calculated under Step 1 ("Total Excess
Deferrals").
Step 3. The Participant Elected Contributions (which for this purpose
shall include any other contributions counted for purposes of calculating
the Required ADP Test) of the Highly Compensated Employees with the highest
dollar amount of Participant Elected Contributions shall be reduced by the
lesser of the dollar amount which either (i) causes such Highly Compensated
Employees' Participant Elected Contributions to equal the dollar amount of
the Participant Elected Contributions of the Highly Compensated Employees
with the next highest dollar amount of Participant Elected Contributions or
(ii) reduces the Highly Compensated Employee's Participant Elected
Contributions by the Total Excess Contributions. Then, unless the total
amount of reductions made to Highly Compensated Employees' Participant
Elected Contributions under this Step 3 equals the amount of the Total
Excess Deferrals, the reduction process shall be repeated by reducing the
Participant Elected Contributions of the group of Highly Compensated
Employees with the highest dollar amount of Participant Elected
Contributions, after the prior
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reductions made in this Step 3, by the lesser of the amount which either:
(iii) causes such Highly Compensated Employees' Participant Elected
Contributions after reductions made in Section 5.2(b) and made in this Step
3 to equal the dollar amount of the Participant Elected Contributions of
the Highly Compensated Employees with the next highest dollar amount of
Participant Elected Contributions or (iv) causes total reductions to equal
the Total Excess Contributions. This process is repeated with each
successive group of Highly Compensated Employees with the highest dollar
amount, after the prior reductions, of the Participant Elected
Contributions until the total reductions made under this Step 3 equal the
Total Excess Contributions.
The Committee shall reduce and distribute the Total Excess Deferrals
for the Plan Year and any income, gains or losses attributable thereto, as
determined in accordance with Section 5.3, to Highly Compensated Employees
as determined under Step 3 after the end of the Plan Year with respect to
which such reduced Participant Elected Contributions were made.
If Employer Matching Contributions and any Forfeitures allocated with
respect to Participants' Participant Elected Contributions are included in
calculating the Average 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 with respect to Participants' Participant Elected Contributions
are not included in calculating the Average ADP for the Plan Year, any
amount of Employer Matching Contributions and any Forfeitures allocated
therewith which are reduced hereunder because such contributions were
originally allocated with respect to Participant Elected Matched
Contributions which are reduced to meet the above tests shall become a
Forfeiture and shall be allocated to other Participants' 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 (b).
V
Effective January 1, 1998, Section 10.8 shall be amended to read as
follows:
10.8 Investment Election with Regard to a Participant's Profit Sharing,
Diversification, Investment Savings and Rollover Accounts. Once each month
effective the first day of the next calendar month (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 provide, 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
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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,
Participant Elected Contribution Account 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.
VI
Section 10.10(b) is hereby amended to read as follows:
(b) Diversification of McDESOP Contributions.
(1) Future Participant Elected Contributions. Effective before
January 1, 1998, 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 a Participant has made such
a McDESOP Future Contribution Diversification Election, he may, with
respect to periods before January 1, 1998, 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. Effective January 1, 1998,
no further McDESOP Future Contribution Diversification Elections may
be made. However, any such elections which are in effect on January 1,
1998 shall remain in effect until the Participant makes a Participant
Elected Contribution Account Diversification Election as provided in
Section 10.10(b)(2).
(2) Participant Elected Contributions Accounts. Effective on or
after January 1, 1998, a Participant may make an election
("Participant Elected Contribution Account Diversification Election")
with respect to the amount in his Participant Elected Contribution
Account (including his Participant Elected Contributions and the
earnings credited thereon in the Participant's McDESOP
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Diversification Account) to have up to 100 percent of such total
amount on the Valuation Date on which the diversification occurs, in
increments of 5 percent, credited to his McDESOP Diversification
Account. A Participant may make a Participant Elected Contribution
Account Diversification Election with respect to his Participant
Elected Contribution Account (including his Participant Elected
Contributions and the earnings credited thereon to the Participant's
McDESOP Diversification Account) in accordance with such rules and
procedures as the Committee shall from time to time establish.
Once a Participant has made a Participant Elected Contribution
Account Diversification Election which selects a percentage of
diversification which is higher than the percentage of the
Participant's Participant Elected Contribution Account which has been
transferred to the Participant's McDESOP Diversification Account, a
transfer shall be made, as of the Valuation Date with respect to which
such election is effective, to his McDESOP Diversification Account to
achieve the percentage of diversification elected with respect to his
Participant Elected Contribution Account (including his Participant
Elected Contributions and the earnings thereon credited to the
Participant's McDESOP Diversification Account) and, thereafter, the
elected percentage of his future Participant Elected Contributions
shall be transferred to his McDESOP Diversification Account, subject
to Section 10.11.
However, if a Participant makes a Participant Elected
Contribution Account Diversification Election which selects a
percentage of diversification which is equal to or less than the
percentage of the Participant's Participant Elected Contribution
Account which is credited to the Participant's McDESOP Diversification
Account, no transfer shall be made from the McDESOP Diversification
Account to the portion of the Participant's Participant Elected
Contribution Account held in the McDESOP Trust. In addition, future
Participant Elected Contributions shall be credited to the
Participant's McDESOP Diversification Account in the percentage of
diversification elected only after the percentage of the Participant's
Participant Elected Contributions (including his Participant Elected
Contributions and the earnings thereon credited to his McDESOP
Diversification Account) which is credited to his McDESOP
Diversification Account is reduced to the diversification percentage
elected by the Participant.
If a Participant makes a McDESOP Diversification Election, such
election, as from time to time in effect, shall thereafter control the
amount of diversification in the Participant's McDESOP Accounts and
any election made under this Section 10.10(b) shall have no effect
after the date of his first McDESOP Diversification Election.
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VII
Effective September 1, 1997, Sections 11.2(g), (h) and (i) are hereby
amended to read as follows:
(g) McDESOP Accounts. A Participant's vested balances in his
Participant Elected Contribution Account, Employer Matching Contribution
Account and McDESOP Diversification Account shall be distributed in cash
unless the Participant (or his Beneficiary) elects, at such time and in
accordance with such procedures as the Committee shall from time to time
permit, with respect to the portions of such accounts invested in
McDonald's common stock, whether held in the Profit Sharing McDonald's
Common Stock Fund or the McDESOP McDonald's Common Stock Fund, to receive a
distribution in shares of McDonald's common stock.
(h) Leveraged ESOP Accounts. A Participant's vested balances in his
Leveraged ESOP Accounts and his Leveraged ESOP Diversification Account
shall be distributed in cash unless the Participant (or his Beneficiary)
elects, at such time and in accordance with such procedures as the
Committee shall from time to time permit, with respect to the portions of
such accounts invested in Company Stock, whether held in the Profit Sharing
McDonald's Common Stock Fund or the Leveraged ESOP portion of the Trust to
receive a distribution in shares of McDonald's common stock.
(i) Stock Sharing Accounts. A Participant's vested balances in his
Stock Sharing Accounts shall be distributed in cash unless the Participant
(or his Beneficiary) elects, at such time and in accordance with such
procedures as the Committee shall from time to time permit, with respect to
the portions of such accounts invested in McDonald's common stock to
receive a distribution in shares of McDonald's common stock.
VIII
Effective January 1, 1998, Sections 11.1, 11.11 and 11.13 shall be amended
to substitute $5,000 for $3,500 or $3,500 each place it appears therein.
IX
Except as amended herein the Program as previously amended shall remain in
full force and effect.
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Executed in multiple originals this 19th day of December, 1997.
McDONALD'S CORPORATION
By: Stanley R. Stein
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Its: Executive Vice President
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By: Carleton D. Pearl
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Its: Senior Vice President and Treasurer
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