Exhibit 10(b)
McDONALD'S CORPORATION
PROFIT SHARING PROGRAM
As amended and restated
effective
January 1, 1997
McDONALD'S CORPORATION PROFIT SHARING PROGRAM
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Summary of Contents
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ARTICLE I - DEFINITIONS
1.1 "Account"........................................................... 3
1.2 "Active Participant"................................................ 6
1.3 "Affiliated Service Group".......................................... 7
1.4 "Authorized Leave of Absence"....................................... 8
1.5 "Auxiliary ESOP".................................................... 8
1.6 "Beneficiary"....................................................... 8
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"..................................................... 9
1.14 "Considered Compensation"........................................... 9
1.15 "Credited Service".................................................. 12
1.16 "Disability"........................................................ 12
1.17 "Disqualified Person"............................................... 12
1.18 "Domestic Affiliate"................................................ 12
1.19 "Effective Date".................................................... 13
1.20 "Eligibility Computation Period".................................... 13
1.21 "Eligibility Service"............................................... 13
1.22 "Employee".......................................................... 13
1.23 "Employer".......................................................... 13
1.24 "Employer Contributions"............................................ 14
1.25 "Entry Date"........................................................ 14
1.26 "ERISA"............................................................. 14
1.27 "Five Percent Owner"................................................ 14
1.28 "Foreign Affiliate"................................................. 15
1.29 "Forfeiture"........................................................ 15
1.30 "Highly Compensated Employee"....................................... 15
1.31 "Hour of Service"................................................... 16
1.32 "Internal Revenue Code"............................................. 19
1.33 "Investment Fund"................................................... 19
1.34 "Leased Employee"................................................... 20
1.35 "LESOP"............................................................. 20
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1.36 "LESOP Suspense Account"............................................. 20
1.37 "Licensee"........................................................... 20
1.38 "McDESOP"............................................................ 20
1.39 "Non-highly Compensated Employee".................................... 20
1.40 "Parental Leave"..................................................... 20
1.41 "Participant"........................................................ 21
1.42 "Participant Contributions".......................................... 21
1.43 "Participant Elected Contributions".................................. 21
1.44 "Party in Interest".................................................. 21
1.45 "Program"............................................................ 22
1.46 "Plan Administrator"................................................. 22
1.47 "Plan Year".......................................................... 22
1.48 "Profit Sharing Plan"................................................ 22
1.49 "Qualified Preretirement Survivor Annuity"........................... 22
1.50 "Related Plan"....................................................... 22
1.51 "Required Beginning Date"............................................ 22
1.52 "Rollover"........................................................... 22
1.53 "STIF Fund".......................................................... 23
1.54 "Stock Sharing"...................................................... 23
1.55 "Subsidiary"......................................................... 23
1.56 "Termination of Employment".......................................... 23
1.57 [Reserved]........................................................... 23
1.58 "Trust".............................................................. 23
1.59 "Trust Agreement".................................................... 23
1.60 "Trustee"............................................................ 24
1.61 "Trust Fund"......................................................... 24
1.62 "Valuation Date"..................................................... 24
1.63 "Vesting Retirement Date"............................................ 24
1.64 "Year of Credited Service"........................................... 24
1.65 "Year of Eligibility Service"........................................ 24
ARTICLE II - PARTICIPATION
2.1 Participation........................................................ 25
2.2 Certification of Participation and Compensation to Committee......... 25
2.3 Termination of Employment, Break in Service, Reemployment and
Change in Employment Status.......................................... 25
2.4 Employees of Foreign or Domestic Affiliates.......................... 26
2.5 Leased Employee...................................................... 26
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ARTICLE III - PROFIT SHARING PLAN EMPLOYER CONTRIBUTIONS
3.1 Profit Sharing Contributions....................................... 27
3.2 Payment of Contributions Made Pursuant to Article III.............. 28
ARTICLE IV - McDESOP and LESOP EMPLOYER CONTRIBUTIONS
4.1 Amount of Employer Matching Contributions.......................... 29
4.2 LESOP 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
4.7 Reemployed Members of the Uniformed Services....................... 37
ARTICLE V - PARTICIPANT ELECTED CONTRIBUTIONS
5.1 Participant Elected Contributions.................................. 40
5.2 Restrictions on Participant Elected Contributions.................. 41
5.3 Allocation of Income to Certain Distributed Amounts................ 46
5.4 Multiple Use of Alternative Limitations............................ 47
5.5 Excess Compensation Reduction Elections............................ 50
5.6 Deadline for Participant Elected Contributions..................... 51
5.7 Application of the Limitations of Sections 5.2(c),
5.2(e), 5.4 and 9.1................................................ 51
ARTICLE VI - LESOP LOAN PROVISIONS
6.1 Power to Borrow.................................................... 52
6.2 Accounting for Loan Proceeds and LESOP Contributions............... 53
6.3 Release from LESOP Suspense Account................................ 53
6.4 Installment Payments on Exempt Loan................................ 55
6.5 Non-Terminable Rights and Protections.............................. 56
6.6 Independent Appraisals Required.................................... 58
ARTICLE VII - ALLOCATIONS OF CONTRIBUTIONS
7.1 Profit Sharing Contribution Allocation Formula..................... 59
7.2 Employer Matching Contributions, LESOP Employer
Matching Contributions Additional Employer
Contributions and Special Section 401(k) Employer
Contributions...................................................... 60
7.3 LESOP Contributions................................................ 61
7.4 Participant Elected Contributions.................................. 63
7.5 Timing of Allocations.............................................. 63
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ARTICLE VIII - ROLLOVERS AND TRUSTEE TRANSFERS
8.1 Participant Rollovers.............................. 64
8.2 Limited Participation.............................. 64
8.3 Withdrawal of Rollovers............................ 64
8.4 Rollover Not Forfeitable........................... 64
ARTICLE IX - LIMITATIONS ON CONTRIBUTIONS BECAUSE OF FEDERAL
LEGISLATION
9.1 Limitations on Contributions....................... 65
9.2 Employer Contribution Reductions................... 69
ARTICLE X - TRUSTEE AND TRUST FUNDS
10.1 Trust Agreements................................... 70
10.2 Trustee's Duties................................... 70
10.3 Trust Expenses..................................... 70
10.4 Trust Entity....................................... 70
10.5 Right of the Employers to Trust Assets............. 70
10.6 Trust Investment Funds............................. 71
10.7 Investment of Participant's Employer Profit
Sharing Contributions.............................. 74
10.8 Investment Election with Regard to a Participant's
Profit Sharing, Diversification, Investment Savings
and Rollover Accounts.............................. 74
10.9 Failure to Make an Investment Election............. 76
10.10 Diversification of McDESOP and LESOP Contributions. 76
10.11 Effective Date of Participant's Investment and
Diversification Elections.......................... 81
10.12 Trust Income....................................... 81
10.13 Adjustment of Participant's Account Balances and
the LESOP Suspense Accounts........................ 82
10.14 Allocation of Income to Holding Funds.............. 83
10.15 Separate Accounting in the Trust Fund.............. 83
10.16 Trust Investment................................... 83
10.17 Separate Accounting for LESOP Suspense Account..... 83
10.18 Correction of Error................................ 84
10.19 Statement of Accounts.............................. 85
10.20 Purchase or Sale of Company Stock.................. 85
10.21 Shareholder Rights in Company Stock................ 85
10.22 Cash Distributions with Respect to Company Stock... 87
10.23 Holding Funds...................................... 87
10.24 Restrictions Applicable to Participants Subject to
Section 16......................................... 88
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ARTICLE XI - DISTRIBUTION OF BENEFITS
11.1 Distributions, General.............................................. 90
11.2 Payment of Net Balance Account on Disability, or on Retirement or
Other Termination of Employment..................................... 90
11.3 Payment of Net Balance Account on Death of Participant.............. 98
11.4 Vesting and Forfeitures............................................. 102
11.5 Payment of Employer Profit Sharing Contribution for Year of
Termination of Employment........................................... 104
11.6 Designation of Beneficiary and Form of Beneficiary Benefit.......... 104
11.7 Incompetency, Distribution of Benefits.............................. 105
11.8 Deduction of Taxes from Accounts Payable............................ 106
11.9 Deadline for Payment of Benefits.................................... 106
11.10 Spousal Consent to a Beneficiary or a Waiver........................ 106
11.11 Single Sum Payment without Election................................. 107
11.12 Installment Payments................................................ 107
11.13 Required Minimum Distributions to Employed Participants............. 109
11.14 Transitional Rules.................................................. 110
11.15 Sale of Restaurant - Special Vesting Rules.......................... 110
11.16 In-Service Withdrawals.............................................. 111
11.17 Direct Rollovers.................................................... 112
ARTICLE XII - SUBSIDIARY PARTICIPATION
12.1 Adoption of Program and Trust....................................... 115
12.2 Withdrawal from Program by Participating Employer................... 115
ARTICLE XIII - ADMINISTRATION OF THE PROGRAM
13.1 Appointment and Removal of, and Resignation by, Trustee............. 117
13.2 Appointment of Committee; Tenure in Office.......................... 117
13.3 Named Fiduciaries................................................... 117
13.4 Delegation of Responsibilities...................................... 118
13.5 Committee Duties.................................................... 118
13.6 Committee Action by Majority -- Authorization of Members to Execute
Documents........................................................... 119
13.7 Secretary........................................................... 120
13.8 Member as Participant............................................... 120
13.9 Rules and Decisions................................................. 120
13.10 Electronic Elections................................................ 120
13.11 Agents and Counsel.................................................. 120
13.12 Authorization of Benefit Distribution............................... 120
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13.13 Claims Procedure.................................................. 121
13.14 Information to be Furnished to Committee.......................... 122
13.15 Plan Administrator................................................ 122
13.16 Fiduciary as Participant.......................................... 122
13.17 Fiduciary Responsibility.......................................... 122
ARTICLE XIV - AMENDMENT, TERMINATION, MERGER AND CONSOLIDATION OF PLAN
14.1 Amendment......................................................... 123
14.2 Termination of Program By the Company............................. 123
14.3 Merger, Consolidation, or Transfer of Assets...................... 124
14.4 Transfer of Assets from Plans of Subsidiaries..................... 124
ARTICLE XV - TOP HEAVY PROVISIONS
15.1 Application....................................................... 126
15.2 Special Top Heavy Definitions..................................... 126
15.3 Special Top Heavy Provisions...................................... 133
ARTICLE XVI - MISCELLANEOUS PROVISIONS
16.1 Headings.......................................................... 136
16.2 Indemnification................................................... 136
16.3 Employees' Trust.................................................. 136
16.4 Nonalienation of Benefits......................................... 136
16.5 Qualified Domestic Relations Order................................ 137
16.6 Unclaimed Amounts................................................. 138
16.7 Maximum Age Condition............................................. 140
16.8 Invalidity of Certain Provisions.................................. 140
16.9 Gender and Number................................................. 140
16.10 Law Governing..................................................... 141
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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 Plan") 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 effective after the
close of business on December 28, 1995. 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 January 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 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 was amended and restated in one document effective January 1,
1996, except as otherwise specifically provided in the Program document as
amended and restated effective January 1, 1996 and subsequently amended from
time to time.
The Program is hereby amended and restated January 1, 1997, 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, a cash or deferred arrangement and a leveraged employee stock ownership
plan under Sections 401(a), 401(k), 401(m) and 4975(e)(7) of the Internal
Revenue Code, (3) the LESOP portion which is intended to meet the requirements
of a stock bonus plan and a leveraged employee stock ownership plan under
Sections 401(a), 4975(e)(7) and 401(m) of the Internal Revenue Code and which
provides LESOP Employer Matching Contributions effective November 1, 1998, and
(4) the Stock Sharing portion which is intended to meet the requirements of a
stock bonus plan and a tax credit employee stock ownership plan 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
McDESOP, LESOP and the Stock Sharing portions of the Program shall be invested
primarily in qualifying employer securities as defined in Section 409(l) of the
Internal Revenue Code and Section 407(d)(6) of ERISA.
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,
1997. Eligibility, benefits, payment of benefits and the amount of benefits, if
any, of a person whose employment with an Employer terminated before January 1,
1997, and who is not rehired by an Employer on or after January 1, 1997, shall,
except as otherwise specifically provided herein, be determined in accordance
with the provisions of the Program, the Stock Sharing Plan, the McDESOP Plan,
and the Profit Sharing Plan as in effect on the date the person ceased to be an
Employee of an Employer.
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ARTICLE I
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 McDESOP Trust except to the extent transferred to the Profit Sharing
Trust in
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accordance with Participant's diversification elections made in accordance
with Section 10.10:
(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), LESOP Employer Matching Contributions,
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 may have one or more of the following accounts
in the LESOP portion of the Program ("LESOP Accounts") which shall be held
in the McDESOP Trust except to the extent transferred to the Profit Sharing
Trust in accordance with a Participant's diversification elections pursuant
to Section 10.10.
(1) A "Per Capita LESOP Account," to which were credited Company
Stock and associated dividends attributable to Employer Contributions
made on a Per Capita Basis under the terms of the Program before
January 1996.
(2) A "Compensation Based LESOP Account," to which shall be
credited Company Stock released from the LESOP Suspense Account in
accordance with Section 6.3(a), 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).
(3) An "Additional LESOP Account," to which shall be credited,
in accordance with Section 7.3(b) a Participant's Per Capita
Additional LESOP Contributions and Forfeitures therefrom and his
Compensation Based Additional LESOP Contributions and Forfeitures
therefrom, if any.
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(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 McDESOP Trust:
(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.
(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.
(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.
(4) An "Employer Matching Stock Sharing Contribution Account,"
to which shall be credited Employer Matching Contributions made by an
Employer to the Stock Sharing Plan for Plan Years ending on or before
December 31, 1982.
(5) An "Additional Employer Stock Sharing 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.
(e) Each Participant shall have the following accounts
("Diversification Accounts"), to which shall be credited the respective
portions of a Participant's LESOP Accounts, and McDESOP Accounts,
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 LESOP portion of
the Program, but is held in the Profit Sharing 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) "LESOP Diversification Account," to which shall be credited
the portions of a Participant's LESOP Account transferred to his LESOP
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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 suffered 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 a LESOP Suspense Account for a Plan Year, in
accordance with
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Section 6.3(a), and of Additional LESOP 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 (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
(c) for purposes of the McDESOP portion of the Program and, effective
with respect to periods on or after November 1, 1998, for the purpose of
being eligible to share in releases from the LESOP Suspense Accounts
pursuant to Section 6.3(c), 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 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
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(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
performing on a regular and continuing basis management functions for
one organization identified in Section 1.3(b)(2); and
(2) the organization for which such management functions are
performed and organizations aggregated with such organization in
accordance with Code Sections 414(b), 414(c), 414(m) or 414(o) with
the organization identified in Section 1.3(b)(1); 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 LESOP portion of the Program and the
provisions applicable thereto.
1.6 "Beneficiary" means one or more persons or entities 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.
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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(l)(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, under common control as
defined in Section 414(c) of the Internal Revenue Code or required to be
aggregated with one or more Employers pursuant to Section 414(m); 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 McDESOP and LESOP), (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 of Form
W-2, for 1997, 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
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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
Income 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; (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, any payments for referrals of new employees,
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 Section 415 of the
Internal Revenue Code 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 (i) with respect to
Plan Years commencing before January 1, 1998, any salary reduction
contributions to a plan sponsored by an Employer meeting the requirements
of Section 125 or Section 401(k) of the Internal Revenue Code, (ii) any
salary reduction amounts credited to the Participant's accounts under 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"), the McDonald's
Corporation Deferred Income Plan, or any other non-qualified deferred
compensation plans from time to time maintained by an Employer, (iii)
income from stock options, and (iv) any other amounts which receive special
tax benefits and for Plan Years beginning on and after January 1, 1998,
Considered
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Compensation under this Section 1.14(b) shall not exclude salary reduction
contributions to a plan sponsored by an Employer which meets the
requirements of Section 125 or Section 401(k) of the Internal Revenue Code;
(c) effective before January 1, 1988, for the purpose of determining
whether a Participant is (1) a Highly Compensated Employee or (2) 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; and effective January 1, 1998 and thereafter, for the purpose
of determining whether a Participant is (1) a Highly Compensated Employee
or (2) 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).
(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 of Form W-2, 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
Related Defined Contribution 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 purposes of determining the amount of Participant Elected
Contributions pursuant to Section 5.1, Considered Compensation means a
Participant's Considered Compensation while an Active Participant 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 officers discretionary bonuses to the extent included in
Considered Compensation as defined in Section 1.14(a).
For purposes of this Section 1.14 except for purposes of determining the
limitations under Section 415 of the Internal Revenue Code in Article IX,
Considered Compensation taken into account under the Program shall not exceed
$160,000 (for 1997) and as adjusted in subsequent years as provided by the
Secretary of the Treasury (the "dollar limit").
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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 LESOP Account (called "Leveraged ESOP
Account" before January 1, 1997) accrued before (1) a Break in Service
which occurred before January 1, 1985 or (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.
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1.19 "Effective Date" means January 1, 1997.
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, the
McDESOP portion or the LESOP 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. A consultant, an independent contractor or a Leased Employee shall
not become an Employee because of being reclassified as an employee of
McDonald's or another Employer by the Internal Revenue Service, except
prospectively from the date on which such reclassification occurs.
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(a), 4.3 and Article V, concerning Employer
Matching Contributions and Forfeitures 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
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(b) for purposes of the LESOP portion of the Program and for LESOP
Employer Matching Contributions, the Company and any Commonly Controlled
Corporation which, pursuant to Section 12.1, elects to adopt the LESOP
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(a);
(c) "Special Section 401(k) Employer Contributions" made pursuant to
Section 4.3(b);
(d) "LESOP Contributions" made pursuant to Section 4.2;
(e) "LESOP Employer Matching Contributions made pursuant to Section
4.1(b);
(f) "Additional Employer Contributions" made pursuant to Section 4.4;
(g) "Special Dividend Replacement Contributions" made pursuant to
Section 4.2(d);
(h) "Unmatched Employer Stock Sharing Contributions," "Employer
Contributions", "Employer Matching Stock Sharing Contributions,"
"Additional Employer Stock Sharing Contributions," and "PAYSOP Stock
Sharing 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
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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 LESOP 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:
(a) and who
(1) at any time during the Plan Year or the preceding Plan
Year ("Preceding Plan Year"), was a Five Percent Owner; or
(2) received Considered Compensation in excess of $80,000
(for 1996, adjusted in subsequent years as provided by the
Secretary of the Treasury) during the Preceding Plan Year.
(b) For purposes of this Section 1.30, 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.
(c) 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(c)) for
either the Plan Year in which he had a Termination of Employment or
any Plan Year ending on or after his 55th birthday.
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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) 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.
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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
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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.
(5) Each restaurant management and staff employee who became an
employee of Restaurant Acquisition Corp., McDonald's Corporation or
another Employer on or after February 14, 1997 as a result of an
acquisition of a Roy Rogers' or Hardee's restaurant ("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 Systems") 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 or, if later, the
next Entry Date following date he became an Employee of an Employer.
An Employee shall not receive Hours of Service credit for service with
Hardee's System's if such Employee did not become an Employee of an
Employer as a result of an acquisition of a Roy Rogers or Hardee's
restaurant on or after February 14, 1997.
(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
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(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) through 1.31(b)(5) and
1.31(c) each Employee who is paid on a salaried basis shall be credited
with (1) 95 Hours of Service if paid on a semimonthly payroll period or (2)
90 Hours of Service if paid on a bi-weekly 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 Stable
Value Fund, and (5) the Blended Stock Bond 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
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LESOP 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 a
Commonly Controlled Entity or a member of an Affiliated Service Group and who
provides services to a Commonly Controlled Entity or a member of an Affiliated
Service Group ("Recipient") if:
(a) such services are performed 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 individual's services are performed under the primary
direction or control of the Recipient.
1.35 "LESOP" means the portion of the Program consisting of Participants'
LESOP Accounts.
1.36 "LESOP Suspense Account" means the separate accounts maintained by
the Committee pursuant to Section 6.2. All Employer Per Capita LESOP
Contributions, Compensation Based LESOP Contributions and LESOP Employer
Matching 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 LESOP Accounts by Dividend Replacement Contributions
shall be held and accounted for within the separate LESOP 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
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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 pursuant to Section 4.3(a) makes Employer Matching
Contributions or LESOP 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
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Company may not, in accordance with Section 7.2, make Employer Matching
Contributions or LESOP 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) Profit Sharing, (ii) McDESOP, (iii) LESOP and (iv) Stock
Sharing.
1.46 "Plan Administrator" means the Plan Administrator appointed under or
by the provisions of Section 13.15.
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 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
the later of:
(a) the calendar year in which a Participant attains age 70-1/2;
or
(b) if the Participant is not a Five Percent Owner of the
Employer or a Commonly Controlled Entity at any time during the Plan
Year ending with or within the calendar year in which he attains age
70-1/2, the calendar year in which he has a Termination of Employment.
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Notwithstanding the foregoing, the Required Beginning Date shall not be any date
earlier than any date to which the 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 [Reserved]
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 LESOP Contributions the LESOP 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.
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1.59 "Trust Agreement" means any agreement between the Company and a
Trustee, establishing the McDonald's Corporation Savings and Profit Sharing
Master Trust (the "Profit Sharing Trust") and the McDonald's Matching and
Deferred Stock Ownership Trust ("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 Partipipant's 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.
The Committee may designate additional Valuation Dates prospectively or
retroactively.
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.
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ARTICLE II
PARTICIPATION
2.1 Participation. Each person who was a Participant under the provisions
of the McDonald's Corporation Profit Sharing Program 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 become a Participant solely for purposes of the Profit Sharing
and the McDESOP portions of the Program and for the purpose of receiving
allocations with respect to LESOP Employer Matching Contributions and Employer
Matching Allocations under Section 7.2(a)(2) of the LESOP portion of the Plan.
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
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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 or allocations with respect to LESOP
Employer Matching Contributions for periods on or after November 1, 1998, 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; provided that such Employee's entry into the Plan on account of service
as a Leased Employee shall not occur before the next Entry Date following the
date the Employee first reports his service as a Leased Employee to the Plan
Administrator.
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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.
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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.
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ARTICLE IV
McDESOP and LESOP EMPLOYER CONTRIBUTIONS
4.1 Amount of Employer Matching Contributions and LESOP Employer Matching
Contributions. Employer Matching Contributions and LESOP Employer Matching
Contributions shall be made by Employers as specified in (a) or (b), subject to
the limitations specified in (c) below:
(a) Employer Matching Contributions. For periods before November 1,
1998, each Employer shall contribute to the McDESOP Trust as Employer
Matching Contributions for each Plan Year an amount as defined below:
(1) The amount of Employer Matching Contributions plus the
Forfeiture 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 or portion of a Plan Year made for
Active Participants who are employed by that Employer.
(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) LESOP Employer Matching Contributions. For periods beginning on
or after November 1, 1998, each Employer shall make LESOP Employer Matching
Contributions and Forfeitures in an amount which when added to the value of
the shares released from a leveraged ESOP Suspense Account pursuant to
Section 6.3(c) with equal fifty percent (or such greater percentage as the
Board of Directors from time to time determines) of the Participant Elected
Matched Contributions made to the Plan for the Plan Year for Active
Participants who are Employees of such Employer.
(c) 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), LESOP
Employer
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Matching Allocations, LESOP Employer Matching Contributions and such amount
of Special Section 401(k) Employer Contributions and Participant Elected
Contributions as the Committee determines to include in the calculation of
the Average ACP 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.
Notwithstanding the foregoing provisions of Section 4.1, 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
Participants') Employer Matching Contributions (and Forfeitures), LESOP
Employer Matching Contributions, 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) All contributions to the Program other than Participant
Elected Contributions, Employer Matching Contributions, LESOP Employer
Matching Contributions and Special Section 401(k) Employer
Contributions satisfy the requirements of Code Section 401(a)(4); and
(3) The Participant Elected Contributions, including those
treated as matching contributions for purposes of the Required ACP
Test satisfy the requirements of the ADP test.
(4) 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, LESOP 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.
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(d) Required Actual Contribution Percentage Test and Adjustment. The
Average ACP for the group of Highly Compensated Employees for a Plan Year
beginning on or after January 1, 1997 shall bear a relationship to the
Average ACP for all Non-highly Compensated Employees for the preceding Plan
Year which meets either of the following tests ("Required ACP Test"):
(1) The Average ACP for the preceding Plan Year 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 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 of all
Non-highly Compensated Employees who are Active Participants
multiplied by 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 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) or the LESOP Employer Matching Contributions 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 or LESOP Employer Matching Contributions 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 or LESOP Employer
Matching Contributions 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 on account of any reductions made under Section
5.2, 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
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Step 1, no longer would exceed the amounts permitted in both Sections
4.1(c)(1) and (c)(2). Then, 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 or LESOP Employer Matching
Contributions 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 and
LESOP Employer Matching Contributions calculated under Step 1 ("Total
Excess Contributions").
Step 3. Finally, the Committee shall reduce the Employer Matching
Contributions and Forfeitures and LESOP Employer Matching Contributions of
the Highly Compensated Employees with the highest total dollar amount of
Employer Matching Contributions and Forfeitures and LESOP Employer Matching
Contributions by the lesser of the amount which either: (i) causes such
Highly Compensated Employees' Employer Matching Contributions and
Forfeitures and LESOP Employer Matching Contributions to equal the total
dollar amount of the Employer Matching Contributions and Forfeitures and
LESOP Employer Matching Contributions of the Highly Compensated Employees
with the next highest dollar amount of Employer Matching Contributions and
Forfeitures and LESOP Employer Matching Contributions or (ii) reduces the
total of the Highly Compensated Employee's Employer Matching Contributions
and Forfeitures and LESOP Employer Matching Contributions by the Total
Excess Contributions. Then, unless the total amount of reductions made to
Highly Compensated Employees' Employer Matching Contributions and
Forfeitures and LESOP Employer Matching Contributions 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 and LESOP Employer Matching Contributions of the group of
Highly Compensated Employees with the highest dollar amount of Employer
Matching Contributions and Forfeitures and LESOP Employer Matching
Contributions, 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
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and LESOP Employer Matching Contributions made in this Step 3 to equal the
dollar amount of the Employer Matching Contributions and Forfeitures and
LESOP Employer Matching Contributions of other Highly Compensated Employees
with the next highest dollar amount of Employer Matching Contributions and
Forfeitures and LESOP Employer Matching 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 Employer
Matching Contributions and Forfeitures and LESOP Employer Matching
Contributions 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 and LESOP Employer Matching Contributions
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 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 and LESOP Employer Matching
Contributions were made.
4.2 LESOP Contributions. LESOP Contributions shall be made by Employers,
as follows:
(a) Company LESOP 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 LESOP Contributions, such amounts (if any) as
shall be determined by the Board of Directors, provided, however, the
Company's LESOP Contribution in cash for any Plan Year shall not be less
than the product of:
(1) the installments (if any) payable on such loan reduced by
the sum of the (A) 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) and on LESOP Contributions made to repay
such loan, (B) dividends on allocated shares of Company Stock
(including Company Stock into which such shares have been converted)
held in Participants' LESOP Accounts acquired with the proceeds of
such loan (or any Loan refinanced with such loan) and earnings
attributable to such dividends, and (C) LESOP Employer Matching
Contributions made for the Plan Year by the Company; 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.
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If no installment (as drawn or renegotiated) is payable on a loan for the
Plan Year, no LESOP 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' LESOP Accounts which were 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)(B)
for a Plan Year 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.
LESOP Employer Matching Contributions shall be included in Section
4.2(a)(1)(C) for a Plan Year only to the extent of the value of Company
Stock allocated to Participants' LESOP Employer Matching Contribution
Account pursuant to Section 7.2(a)(2) as of the Valuation Date as of which
such allocation occurs.
(b) LESOP Contributions by Other Employers. Each Employer that has
adopted the LESOP 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 LESOP 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 LESOP Contributions. The Board of Directors may, in
its discretion, determine that Additional LESOP Contributions shall be made
for a Plan Year in Company Stock and designate such contributions as Per
Capita Additional LESOP Contributions or Compensation Based Additional
LESOP Contributions (collectively called "Additional LESOP Contributions").
The Company shall make such Additional LESOP Contributions in an amount
equal to the total Additional LESOP 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 LESOP (other than the Company)
shall contribute to the Trust as Additional LESOP Contributions an amount
equal to the product of the total Considered Compensation for the Plan Year
paid by such
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Employer to Employees while they were Active Participants multiplied by a
fraction the numerator of which is the Company's Additional LESOP
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 Employers shall
make Special Dividend Replacement Contributions as of any Valuation Date in
an amount not to exceed the dividends with respect to Company Stock which
has been allocated to Participant's LESOP Accounts and are placed in the
LESOP Suspense Account to be used pursuant to Section 6.3(b) to repay an
Exempt Loan (or other loan authorized under Section 6.1). 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 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.
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(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 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 Holding Fund until credited to Participant's
Accounts as provided in Section 7.4.
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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.
4.7 Reemployed Members of the Uniformed Services. The provisions of this
Section 4.7 shall apply to each person reemployed by an Employer after a period
of uniformed service with reemployment rights under Chapter 43 of Title 38,
United States Code ("Qualified Uniformed Service"); provided that any Employee
seeking benefits under this Section 4.7 shall notify the Benefits Accounting
Department of his eligibility and provide such information and proof, including
but not limited to his certificate of service, as shall reasonably be required
to confirm the Employee's eligibility.
(a) Contributions. The Accounts of each such reemployed veteran
("Reemployed Veteran") shall be credited with contributions (but not
earnings or Forfeitures except as he becomes entitled to them under
the Plan after the date of reemployment) as follows:
(i) Employer Profit Sharing Contributions. As of the
Valuation Date next following such reemployment, each Reemployed
Veteran's Employer Profit Sharing Account shall be credited with
the Employer Profit Sharing Contributions which he would have
been allocated under Section 7.1 if he had been an Employee of an
Employer during the period of Qualified Uniformed Service with
Considered Compensation determined as described in Section
4.7(d). Such amounts shall be credited from Forfeitures under
the Profit Sharing portion of the Program or, if the Employer so
elects, from special contributions made for the purpose by the
Employer.
(ii) LESOP Allocations. As of the Valuation Date next
following the date of such reemployment, each Reemployed
Veteran's LESOP Accounts shall be credited with the allocations
of Company Stock from the LESOP Suspense Account in the amount he
would have received under Section 7.3 if he had been an Employee
of an Employer with Considered Compensation determined as
described in Section 4.7(d) during the period of Qualified
Uniformed Service. Such allocations shall be made from amounts
released from the LESOP Suspense Account under Section 6.3 in the
Plan Year in which the allocation is made before the allocations
in Section 7.3(a) are made and if there are no such releases or
they are insufficient from Forfeitures under the LESOP or special
contributions made for the purpose by the Employer.
(iii) Participant Elected Contributions. At any time
during the period beginning on the date of reemployment and
ending on the earlier
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of the end of a period which is (A) three times the length of the
period of the person's Qualified Uniformed Service or (B) five
years, the Reemployed Veteran may make elective deferrals from
his Considered Compensation with respect to his period of
Qualified Uniformed Service provided that the amount of such
contributions shall not exceed the amount the person would have
been permitted to elect to contribute had the person remained
continuously employed and been an Employee throughout the period
of Qualified Uniformed Service ("Additional Elective Deferrals").
(iv) Employer Matching Contributions. Each Employer shall
make Employer Matching Contributions to the Program to be
credited to such Reemployed Veteran's Employer Matching
Contribution Account with respect to any Additional Elective
Deferrals in the amount which such Employer would have
contributed under the Program had the Additional Elective
Deferrals been make during the period of Qualified Uniformed
Service. Such amounts shall be credited from Forfeitures under
the Profit Sharing Portion of the Program unless the Employer
determines to make a special contribution for the purpose.
Notwithstanding the foregoing, effective for LESOP Employer
Matching Allocations made with respect to Participant Elected
Contributions for periods on or after November 1, 1998, LESOP
Employer Matching Contributions shall be made from the LESOP
Suspense Account under Section 6.3 in the Plan Year in which the
allocation is made and before allocations in Section 7.3(a) are
made and if there are no such releases or if they are
insufficient from Forfeitures under the LESOP or special
contributions made for the purpose by the Employer.
(b) Service and Position with the Employer. In determining the
contributions to which each such Reemployed Veteran is entitled under
Section 4.7(a), he shall be credited with Hours of Service hereunder
during his period of Qualified Uniformed Service both with respect to
Eligibility Service and Vesting Service. In determining the amount of
such Hours of Service to be credited, the Plan Administrator shall
make good faith estimates of the Hours of Service the person would
have received had he been continuously employed by the Employer during
the period of Qualified Uniformed Service.
In addition, each Reemployed Veteran shall be deemed to have been
employed in the same position he would have been in had he not had the
period of Qualified Uniformed Service.
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(c) Break in Service. After reemployment, such a person shall
not be treated as having incurred a Break in Service by reason of such
person's period(s) of Qualified Uniformed Service.
(d) Considered Compensation. For purposes of determining the
amount of a Reemployed Veteran's contributions under Section 4.7(a),
each person shall be treated as receiving Considered Compensation
during the period of Qualified Uniformed Service equal to (i) the
Considered Compensation he would have received during such period if
he were not in Qualified Uniformed Service, determined based on the
rate of pay the Reemployed Veteran would have received from the
Employer but for the absence during the period of Qualified Uniformed
Service, or (ii) if the Considered Compensation the Veteran would have
received during such period was not reasonably certain, the Reemployed
Veteran's average compensation from the Employer during the 12-month
period immediately preceding the Qualified Uniformed Service (or, if
shorter, the period of employment immediately preceding the Qualified
Uniformed Service).
(e) Limits. The contributions made pursuant to Section 4.7(a)
above shall be taken into account with respect to the limits contained
in Section 5.2(c)(1) or Article IX, as applicable in the Plan Year for
which such contributions are made but shall not be taken into account
in applying such limits with respect to the Plan Year in which the
contributions are made. Assuming that the Reemployed Veteran had
compensation as described in 4.7(d) during the period of Qualified
Uniformed Service. The ADP test and non-discrimination tests for a
prior Plan Year shall not be recalculated to take into account
contributions made under this Section 4.7.
(f) References. All references to Sections of the Program in
this Section 4.7 shall refer to the analogous sections of the Program
as in existence during the period of Qualified Uniform Service with
respect to which contributions are being made.
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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 that 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
-40-
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 1997 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
-41-
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 and LESOP Employer
Matching Contributions and Forfeitures allocated therewith shall not
be contributed or allocated 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 and LESOP Employer Matching
Contributions and 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.
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(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, LESOP Employer Matching Contributions
and Special Section 401(k) Employer Contributions, as provided in Section
4.3(b), paid to the Trust for or allocated to 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.
Effective January 1, 1987, 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, LESOP 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
to be counted for purposes of calculating Actual Deferral Percentage
shall satisfy the requirements of Section 401(a)(4);
(2) All contributions to the Program other than Participant
Elected Contributions, Employer Matching Contributions, LESOP Employer
Matching Contributions and Special Section 401(k) Employer
Contributions satisfy the requirements of Code Section 401(a)(4); and
(3) The Employer Matching Contributions, LESOP Employer Matching
Contributions and 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. 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"):
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(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
or LESOP 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 and LESOP Employer Matching
Contributions and Forfeitures counted in the Required ADP Test) and any
Employer Matching Contributions and Forfeitures or LESOP Employer Matching
Contributions and Forfeitures allocated with respect to reduced Participant
Elected Contributions 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 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
-44-
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 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 Employees' 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 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.
-45-
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 or LESOP
Employer Matching Contributions and 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 or LESOP
Employer Matching Contributions and 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 or LESOP Employer Matching
Contributions and 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 or LESOP Employer Matching
Contributions and Forfeitures Accounts in proportion to the Employer
Matching Contributions and any Forfeitures or LESOP Employer Matching
Contributions and Forfeitures, respectively, allocated therewith to such
accounts pursuant to Sections 7.2(a) and (b).
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
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Contribution Account or LESOP 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 assuming that the
reductions in the amount and manner provided for in Section 5.2(b) and in Step 1
of Sections 4.1(c) and 5.2(e) were made the ACP of highly Compensated Employees
would exceed the amount in Section 4.1(c)(1) but would 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 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).
If the sum of the Average ADP and the Average ACP of Highly Compensated
Employees for a Plan Year, after any reductions provided for in Section 5.2(b)
or in Step 1 of Sections 4.1(c) and 5.2(e) if applicable, exceeds the amounts
determined under both Sections 5.4(a) and 5.4(b) and if the Company does not
elect to make Special Section 401(k) Employer Contributions so that the sum of
such Average ADP and Average ACP does not exceed both Sections 5.4(a) and
5.4(b), the Committee shall determine, in accordance with Step 1, the smallest
aggregate dollar amount of reductions to Participant Elected Contributions and
any Employer Matching Contributions and Forfeitures and LESOP Employer Matching
Contributions and Forfeitures of Highly Compensated Employees
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allocated therewith which would make the sum of such Average ADP and Average ACP
not exceed both Sections 5.4(a) and 5.4(b). In determining whether any Employer
Matching Contributions and Forfeitures and LESOP Employer Matching Contributions
and Forfeitures are allocated with respect to Participant Elected Contributions,
reductions shall be made first to a Participant's Unmatched Participant Elected
Contributions and then to his Matched Participant Elected Contributions.
Step 1. The Committee shall determine the dollar amount of the
reductions which have to be made under this Section 5.4 so that the
Multiple Use Test is met. Such amount shall be calculated by first
determining the dollar amount by which the total of the Participant Elected
Contributions (and the Employer Matching Contributions and Forfeitures and
LESOP Employer Matching Contributions and Forfeitures allocated with
respect to such Participant Elected Contributions) after any reductions
made under Section 5.2(b) or Step 1 of Sections 4.2(c) or 5.2(e) of the
Highly Compensated Employees the sum of whose Actual Contribution
Percentage and Actual Deferral Percentage is the greatest of all Highly
Compensated Employees would have to be reduced until the total of his
Actual Contribution Percentage and Actual Deferral Percentage equals
either: (i) the sum of the Actual Contribution Percentage and Actual
Deferral Percentage of other Highly Compensated Employees or (ii) or the
sum of the Average ACP and the Average ADP of the Highly Compensated
Employees, as calculated after such reduction, no longer exceeds the
amounts determined under both Section 5.4(a) and (b). Then, unless the sum
of the Average ACP and Average ADP of the Highly Compensated Employees, as
recalculated after the reductions made under Section 5.2(b) and Step 1 of
Sections 4.2(c), 5.2(e) and 5.4, no longer exceeds the amounts determined
under both Sections 5.4(a) and (b), 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, whose
Actual Contribution Percentage and Actual Deferral Percentage after all
prior reductions under Step 1 would sum to the highest amount until the
first to occur of: (iii) the sum of the Actual Contribution Percentage and
the Actual Deferral Percentage, after the prior reductions, of each person
in such group becomes tied with that of one or more other Highly
Compensated Employees or (iv) that the sum of the Average ADP and the
Average ACP of all Highly Compensated Employees, after all prior reductions
made under Sections 5.2(b) and Step 1 of Sections 4.1(c), 5.2(e) and 5.4,
would no longer exceed the amounts determined under both Sections 5.4(a)
and (b). This process is repeated until the sum of the Average ACP and the
Average ADP of all of the Highly Compensated Employees, after all
reductions, would no longer exceed the amount permitted in both Sections
5.4(a) and (b).
Step 2. Next the Committee shall determine the total dollar amount
of reductions to the Participant Elected Contributions, Employer Matching
Contributions and Forfeitures and LESOP Employer Matching Contributions and
Forfeitures as calculated under Step 1 ("Total Reduction Amount").
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Step 3. Once the Total Reduction Amount has been determined, the
Participant Elected Contributions, Employer Matching Contributions and
Forfeitures and LESOP Employer Matching Contributions and Forfeitures of
the Highly Compensated Employee for whom the sum of his Participant Elected
Contributions, Employer Matching Contributions and Forfeitures and LESOP
Employer Matching Contributions and Forfeitures, after any reductions made
in Section 5.2(b) or in Step 3 of Sections 4.2(b) or 5.2(e), is the highest
dollar amount of all Highly Compensated Employees shall be reduced by the
lesser of the amount which either: (i) causes the sum of such Highly
Compensated Employee's Participant Elected Contributions, Employer Matching
Contributions and Forfeitures and LESOP Employer Matching Contributions and
Forfeitures to equal the sum of the Highly Compensated Employee with the
next highest sum of his Participant Elected Contributions, Employer
Matching Contributions and Forfeitures and LESOP Employer Matching
Contributions and Forfeitures or (ii) reduces the Highly Compensated
Employee's Sum of Participant Elected Contributions, Employer Matching
Contributions and Forfeitures and LESOP Employer Matching Contributions and
Forfeitures by the Total Reduction Amount. Then, unless the total amount
of reductions made equals the Total Reduction Amount, the reduction process
shall be repeated by reducing the Participant Elected Contributions,
Employer Matching Contributions and Forfeitures and LESOP Employer Matching
Contributions and Forfeitures allocated with respect thereto by the lesser
of such amount which either: (iii) causes the sum of such highly
Compensated Employees' Participant Elected Contributions, Employer Matching
Contributions and Forfeitures and LESOP Employer Matching Contributions and
Forfeitures allocated with respect to such Participant Elected
Contributions to equal the dollar amount of such contributions of other
Highly Compensated Employees or (iv) causes total reductions to equal the
Total Reduction Amount. This process is repeated with each successive
group of Highly Compensated Employees with the highest sum of Participant
Elected Contributions, Employer Matching Contributions and Forfeitures and
LESOP Employer Matching Contributions and Forfeitures allocated with
respect thereto, after the prior reductions, until the total reductions
made under this Step 3 is equal to the Total Reduction Amount.
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 Forfeitures and LESOP Employer Matching
Contributions and 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 and LESOP Employer Matching
Contributions and Forfeitures allocated therewith pursuant to Section 5.3 for
such Highly Compensated Employees, including elections for Participant Elected
Contributions or such contributions, Employer Matching Contributions and any
Forfeitures and LESOP Employer Matching Contributions and Forfeitures allocated
therewith for the Plan Year, as provided in Section 4.1(c) or 5.2(e).
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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 or LESOP Employer Matching Contributions and
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 or LESOP Employer Matching
Contributions and 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 elections
with respect to Participant Elected Contributions 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.
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(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
applicable 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), 5.4 and
9.1. Section 9.1 shall be first applied to contributions under the Program;
secondly, Section 5.2(c) shall be applied to contributions under the Program;
thirdly, Section 5.2(e) shall be applied to contributions under the Program; and
fourthly, Section 4.1(c) shall be applied to contributions under the Program;
and lastly, 5.4 shall be applied to contributions under the Program. Amounts
contributed to the Plan in excess of the amounts permitted under Section 9.1
which are reduced under Sections 5.2(c), 5.2(e), 4.1(c) or 5.4 shall be
disregarded for the calculation of the tests in Sections 5.2(e), 5.2(e), 4.1(c)
or 5.4. Other than with respect to the reductions required under Section 9.1,
amounts reduced in an earlier step in the above sequence shall reduce the
reductions of contributions of the same type required to be made in subsequent
steps.
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ARTICLE VI
LESOP LOAN 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, LESOP 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 LESOP Suspense Account) and dividends paid on
Company Stock (or Company Stock into which such shares have been converted)
acquired with the loan proceeds and held in Participants' LESOP 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
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(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 LESOP Contributions. The Committee
shall establish with respect to each loan a separate LESOP 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) LESOP Contributions with respect to such loan, (c) any income,
gains or losses allocated to the LESOP 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 LESOP 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 LESOP 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 LESOP 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 LESOP
Suspense Account under Section 6.2 shall be released as of the last
Valuation Date of a Plan Year immediately following the release under
Sections 6.3(b) and 6.3(c) for such Valuation Date for allocation to LESOP
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,
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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 LESOP 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 LESOP Suspense
Account immediately before the release increased by the number of
shares, if any, previously released from the LESOP Suspense Account in
accordance with Sections 6.3(b) and 6.3(c) 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 LESOP
Suspense Account in accordance with Sections 6.3(b) and 6.3(c) 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 LESOP Suspense Account shall equal the
difference between (A) the product of the number of shares of Company
Stock held and accounted for under the LESOP Suspense Account
immediately before the release increased by the number of shares, if
any, previously released from the LESOP Suspense Account in accordance
with Sections 6.3(b) and 6.3(c) 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 LESOP Suspense Account in accordance with Sections 6.3(b) and
6.3(c) 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 LESOP
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
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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 LESOP
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 LESOP 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) As of each Valuation Date occurring on or after November 1, 1998,
there shall be released from the LESOP Suspense Account maintained with
respect to each Exempt Loan (or other loan authorized under Section 6.1)
the number of shares of Company Stock which have a fair market value equal
to fifty percent (or such higher percentage as the Board shall from time to
time determine) of the amount of Participant Elected Matched Contributions
contributed to the Plan since the immediately preceding Valuation Date and
which shall be allocated to Participant's Matching Contribution Account as
provided in Section 7.2(a)(2). For purposes of this Section 6.3(c), a
Participant's Participant Elected Matched Contributions to the Program
since the immediately preceding Valuation Date shall be the difference
between the amount of his Participant Elected Contributions as of the
Valuation Date and the amount of his Participant Elected Contributions as
of the immediately preceding Valuation Date up to an amount not to exceed
the maximum percentage of his Considered Compensation specified for such
Participant in Section 4.3(a).
(d) Any release from the LESOP Suspense Account provided for in
Sections 6.3(b) and 6.3(c) 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 LESOP 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
LESOP Suspense Account, from amounts of
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LESOP 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 LESOP Suspense Account and allocated to Participants'
Accounts and from dividends or other earnings with respect to the LESOP
Suspense Account maintained with respect to such loan.
(b) Sale of Company Stock Held in LESOP 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 LESOP Suspense Account
are sold prior to release from such LESOP 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
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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.
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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.
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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, 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 Profit Sharing 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
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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, LESOP Employer Matching Contributions
Additional Employer Contributions and Special Section 401(k) Employer
Contributions.
(a) Allocation of Employer Matching Contributions and LESOP Employer
Matching Contributions.
(1) For periods before November 1, 1998, as of each Valuation
Date, the Employer Matching Contributions and Forfeitures held in the
McDESOP 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. For
purposes of Section 7.2(a)(1), a Participant's Participant Elected
Matched Contributions made for the period since the immediately
preceding Valuation Date shall be the difference between the amount of
his Participant Elected Contributions for the Plan Year as of the
Valuation Date and the amount of his Participant Elected Contributions
for the Plan Year as of the immediately preceding Valuation Date up to
an amount not to exceed the percentage of his Considered Compensation
specified for such Participant in Section 4.3(a). Notwithstanding the
foregoing, any amount in the McDESOP 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.
(2) For periods beginning on or after November 1, 1998, any
shares of Company Stock released from the LESOP Suspense Account as of
a Valuation Date as LESOP Employer Matching Allocations and
Forfeitures pursuant to Section 6.3(c) shall be allocated to the
Employer Matching Contribution Account of each Active Participant in
an equal percentage (not to exceed fifty percent or such higher
percentage as the Board shall provide pursuant to Section 4.1(b)) of
each such Participant's Participant Elected Matched Contributions
(excluding Special Participant Elected Matched Contributions)
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made for the period since the immediately preceding Valuation Date.
For purposes of this Section 7.2(a)(2), a Participant's Participant
Elected Matched Contributions to the Program since the immediately
preceding Valuation Date shall be the difference between the amount of
his Participant Elected Contributions for the Plan Year as of the
Valuation Date and the amount of his Participant Elected Contributions
for the Plan Year as of the immediately preceding Valuation Date up to
an amount not to exceed the percentage of his Considered Compensation
specified for such Participant in Section 4.3(a).
(b) Allocation of Special Section 401(k) Employer Contributions.
Special Section 401(k) Employer Contributions to the Trust for a Plan Year,
if any, 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 LESOP Contributions.
(a) LESOP 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 LESOP Contributions (or a loan refinanced by such loan)
and released from the LESOP Suspense Accounts maintained with respect to
such loan, any income from such LESOP Suspense Accounts released pursuant
to Sections 6.2 and 6.3, and any Forfeitures from LESOP Accounts for the
Plan Year shall be allocated to each Active Participant's LESOP 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
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dividends, since the immediately preceding Valuation Date, were
credited to Participants' Accounts and immediately transferred to the
LESOP 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 LESOP 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 LESOP Contributions. Additional LESOP Contributions
for a Plan Year which were designated in accordance with Section 4.2(c) as
Per Capita Additional LESOP Contributions (and any Forfeitures therefrom)
shall be allocated as of the last Valuation Date of the Plan Year to the
Additional LESOP Account of each Active Participant in an amount equal to
the total amount of Per Capita Additional LESOP Contributions (and any
Forfeitures therefrom) for the Plan Year divided by the number of Active
Participants. Additional LESOP Contributions for a Plan Year which were
designated in accordance with Section 4.2(c) as Compensation Based
Additional LESOP Contributions (and any Forfeitures therefrom) shall be
allocated as of the last Valuation Date of such Plan Year to the Additional
LESOP Account of each Active Participant in an amount equal to the total
amount of Additional LESOP 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 LESOP Contributions and Compensation Based
Additional Employer LESOP Contributions shall be separately accounted for
in Participants' Additional LESOP 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 LESOP 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.
(d) LESOP Employer Matching Contributions. Any LESOP Employer
Matching Contributions and Forfeitures made to the Program, on or after
November 1, 1998, pursuant to Section 4.1(b) shall be credited to a LESOP
Suspense Account in an amount not to exceed the value of the Company Stock
expected to be released from the LESOP Suspense Account pursuant to Section
6.3(c). Any amount of LESOP Employer Matching Contributions and
Forfeitures for a Plan Year which exceeds the fair market value of the
Company Stock released from the LESOP Suspense Accounts pursuant to Section
6.3(c) shall be allocated to Participant's
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Employer Matching Contribution Accounts pursuant to Section 7.2(a)(2) with
amounts released from the LESOP Suspense Accounts pursuant to Section
6.3(c).
7.4 Participant Elected Contributions. As of each Valuation Date, the
Participant Elected Contributions in the McDESOP Holding Fund made since the
preceding Valuation Date 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 Holding Fund, and Rollover Holding
Account as provided in Section 10.23 and the LESOP Suspense Account as provided
in Section 6.2.
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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.
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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 and LESOP Employer Matching
Contributions and Forfeitures allocated therewith for the Plan Year
allocated to the Participant;
(3) any amount of LESOP 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 LESOP 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
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(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) "LESOP Annual Additions" means:
(1) If the Participant is an Active Participant under the LESOP
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 total amount of Company and Other Employer LESOP Contributions for
a Plan Year as provided in Sections 4.2(a) and 4.2(b) 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 LESOP 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 LESOP Account for the Plan Year after
applying the Annual Excess reduction provisions hereunder and the
denominator of which is such allocation to his LESOP 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 (and earnings
thereon) allocated to the Participant's LESOP Account under the LESOP
portion of the Program, and (B) the total amount of Company and Other
Employer LESOP Contributions for a Plan Year as provided in Sections
4.2(a) and 4.2(b) 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 LESOP 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 LESOP 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
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numerator of which is the Participant's allocation to his LESOP
Account for the Plan Year, after applying the Annual Excess reduction
provisions hereunder and the denominator of which is such allocation
to his LESOP Account for the Plan Year before applying the Annual
Excess reduction provisions hereunder.
(3) The amount of LESOP 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 LESOP 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 exists, 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 LESOP Annual Additions (other
than 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 and Forfeitures and LESOP Employer Matching
Contributions and Forfeitures 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: (A) Participant
Elected Unmatched Contributions and (B) Participant Elected Matched
Contributions and associated Employer Matching Contributions and
Forfeitures or LESOP Employee Matching and Forfeitures Contributions
to the extent such reductions reduce the amount of the Annual Excess.
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(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
LESOP 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 LESOP 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, if before November 1, 1998, or LESOP
Employer Matching Contributions, if on or after November 1, 1998, 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 9.1, and any such amounts which cannot be reallocated to
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
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"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.
This Section 9.1(e) shall not apply in Plan Years beginning after December
31, 1999.
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, Employer Matching Contributions
and LESOP 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,
Employer Matching Contributions or LESOP 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 or LESOP 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.
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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 Agreements, 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 Agreements 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
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Employer within one year of the payment of the contribution and any
Participant Elected Contributions shall be distributed to the Participants
with respect to which such contributions were made.
Notwithstanding any other provision of this Section 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 Stable Value 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 Stable Value 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)
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the book value of a pool or segregated group of fixed income
obligations held in the Stable Value 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 Blended Stock Bond 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, 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 Blended Stock Bond 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 Stable Value Fund, the Money Market Fund, and the Blended Stock
Bond 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).
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(b) LESOP. The assets of the LESOP 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 LESOP 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 either because of the small amount
involved or the short time duration for which the investment is to be made,
the Trustee is authorized to hold portions of the LESOP Accounts and LESOP
Suspense Accounts 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 McDESOP
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 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
later of 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 Considered Compensation (from which such Participant
Elected Contributions were taken) was paid or as of such earlier date
as the Committee shall provide. For periods before January 1, 1998,
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 contributions made on or after January 1, 1998
which are 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.
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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. The following two
paragraphs are effective before January 1, 1998. 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 Stable
Value Fund, the Blended Stock Bond 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.
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If a Participant makes a LESOP 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 from time to
time thereafter 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.
Effective January 1, 1998 the preceding two paragraphs shall be replaced
with the following:
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 Stable
Value Fund, the Blended Stock Bond 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 LESOP 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.
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10.9 Failure to Make an Investment Election.
(a) Profit Sharing Accounts. If 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 LESOP Contributions and Accounts.
(a) Age Diversification of LESOP 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, each
Qualified Participant shall be permitted to make a diversification
election with respect to his Qualified Account ("LESOP 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.
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(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
LESOP Accounts.
(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 LESOP
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 LESOP Diversification
Election and has not made a subsequent LESOP Diversification
Election with a lower percentage election than his prior
LESOP 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 LESOP
Diversification Election shall be transferred to the
Participant's LESOP Diversification Account. If a
Participant who has made a LESOP Diversification Election
makes a new LESOP Diversification Election at a percentage
(including to zero) lower than the percentage of the earlier
LESOP Diversification Election, no portion of allocations to
the Participant's Qualified Account shall
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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 LESOP
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 LESOP Account.
(3) Investment of Amounts Subject to LESOP Diversification
Election. The amount subject to a Participant's LESOP Diversification
Election shall be transferred to the Participant's LESOP
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 LESOP Diversification Election or at such
earlier dates as the Committee, pursuant to Section 10.11 shall
permit.
(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 affect 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 Contribution 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
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Contributions and the earnings credited thereon in the Participant's
McDESOP 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 such Participant's 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.
(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,
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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 Account.
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 Account 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
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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, Employer Matching Contribution Accounts or LESOP
Accounts, respectively, except that the balance in a Participant's McDESOP
Diversification Account and LESOP Diversification Account and LESOP
Diversification Account shall be invested in the 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. 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 and LESOP Diversification Account in McDonald's common stock.
10.11 Effective Date of Participant's Investment and Diversification
Elections. Participant's investment elections, pursuant to Section 10.8, or
Diversification Elections, pursuant to Section 10.10, submitted by the date
designated by the Committee shall be made effective as of the first day of the
next calendar month (or as soon thereafter as is administratively convenient) or
at such more frequent times as the Committee shall determine. 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) or at such more frequent times as the Committee
shall determine. 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
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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's Account Balances and the LESOP 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 LESOP 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 immediately preceding Valuation Date reduced
by any distributions therefrom on or since such 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 such Valuation Date.
(b) Valuation of the Portion of the LESOP Suspense Account and of
Participants' LESOP Accounts and Stock Sharing Accounts invested in Company
Stock. Each Valuation Date, Participants' LESOP Accounts and Stock Sharing
Accounts and the LESOP 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'
LESOP Accounts which are to be used to repay an Exempt Loan, pursuant to
Section 6.3(b), shall immediately after being so credited to Participants'
Accounts be transferred to the LESOP Suspense Account and held there in a
separate account until used to repay an Exempt Loan and further provided
that the amount of such dividends transferred to the LESOP 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'
LESOP Accounts pursuant to Section 6.3(b) for the Plan Year. Earnings on
Forfeitures from the LESOP portion of the Program shall be allocated to
Participants' LESOP 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 Participant's Stock Sharing Account balance is to the
total of all Participant's 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 of Company
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Stock credited to a Participant's Accounts in the LESOP Accounts and the
Stock Sharing Plan and to the LESOP 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 Holding Fund. Any net income and gains (after reduction
by losses and by expenses not paid by an Employer) of the McDESOP Holding
Fund for a Plan Year shall be credited to Participants' Elected
Contribution Accounts as earnings pursuant to the fraction in Section
10.13(a)(2).
(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 the fraction in Section 10.13(a)(2).
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 LESOP Suspense Account. The Committee shall
create and maintain a separate account, called a LESOP 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 LESOP Contributions to the Program to
repay each such loan or extension of credit, (c) all dividends transferred to
the LESOP Suspense Account to repay an Exempt Loan pursuant to Section 6.3(b),
(d) net income, gains or losses charged to such LESOP Contributions and LESOP
Suspense Account under Sections 10.13 and 10.6(b), and (e) 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.
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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.
Effective July 1, 1998, notwithstanding the foregoing, an Employee who
fails, upon request, to provide the Committee information, as requested by the
Committee, concerning his service as a Leased Employee and who, as a consequence
does not enter the Program as early as he could have if such service had been
taken into account shall not be deemed to have suffered an error in Program
administration and shall not receive corrected Participant Elected
Contributions, Employer Matching Contributions or LESOP Employer Matching
Contributions for periods before the earlier of such Employee's Entry Date
determined without regard to such Leased Employee service or such Employee's
Entry Date including such Leased Employee service from the date the Employee
provides the Committee with such information concerning such service as the
Committee requests. Profit Sharing Contributions and allocations from the
leveraged ESOP Suspense Account pursuant to Section 6.3(a) which such a
Participant would have received if his Leased Employee service had been
considered from his date of hire shall be credited to the former Leased
Employees' Accounts as of the first Valuation Date next following the Leased
Employee's actual Entry Date.
Except as provided in this Section, the Accounts of other Participants
shall not be readjusted on account of such error.
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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
believed that such Participants as a group are uniquely able to determine the
best interests of future Participants 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
Program 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.
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(a) Allocated Shares. With respect to shares (and fractional shares)
of Company Stock which have been allocated to Participants' 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 for which
directions are given pursuant to this Section 10.21(b) and 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 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
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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
LESOP 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 is a bank or a Trust
Company, the Trustee's or custodian'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 Holding Fund. Participant Elected Contributions and
Matching Contributions made to the Program shall be held in the McDESOP
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
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cash from the McDESOP and LESOP portions of the Program shall, at the
direction of the Committee, be transferred to the McDESOP Holding Fund
during the calendar month next following the calendar month within which
such amount became distributable. The McDESOP 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 and amounts which
are distributable to a Participant or Beneficiary in cash from
Participants' Rollover Contribution Accounts or Investment Savings
Accounts.
(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.
10.24 Restrictions Applicable to Participants Subject to Section 16.
Effective November 1, 1996, anything herein to the contrary notwithstanding, a
Participant who is subject to Section 16 of the Securities Exchange Act of 1934
("1934 Act") may not engage in any one or more of the following transactions
involving Company Stock if he has engaged in an opposite way transaction, as
defined below, involving Company Stock within the preceding seven months:
(a) Investment elections into or out of Company Stock;
(b) Age diversification elections of amounts invested in Company
Stock under the McDESOP or LESOP portions of the Program; and
(c) Cash withdrawals during employment of amounts invested in Company
Stock under the Investment Savings, Rollover, Stock Sharing or any other
portions of the Program.
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For purposes of this Section 10.24, the transactions described in (i) are
opposite way transactions to the transactions described in (ii):
(i) a Participant's making an investment election which results in a
transfer of assets credited to his Account into a McDonald's Common Stock
Fund, on the one hand, and
(ii) his election (x) to take a cash withdrawal from one or more
Accounts invested in Company Stock, (y) to have assets in his Accounts
transferred from Company Stock to another investment option available under
the Program and (z) to make an age diversification election with respect to
his Accounts in the McDESOP or LESOP portions of the Program, on the other
hand.
In addition to the foregoing, the Committee may establish such rules and
procedures, applicable to Participants who are subject to Section 16 of the 1934
Act, as are necessary or desirable to prevent the occurrence of opposite way
transactions or of other circumstances which might create liabilities under
Section 16(b) of the 1934 Act, provided that such rules and procedures are not
inconsistent with the provisions of the Internal Revenue Code applicable to the
Program.
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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) ($5,000 on or after January 1, 1998) 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) ($5,000 on or after January 1, 1998) 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.
11.2 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
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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) Termination for Reasons 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.
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(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 and LESOP Accounts. The Participant's
McDESOP Accounts and LESOP 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 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
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pursuant to Section 11.16, until he again has a subsequent 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, LESOP, 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 Applicable
Percentage of the benefit paid to the Participant as shown in Appendix A.
(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
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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 to the Participant and if the
Participant's beneficiary is not his spouse or his former spouse
receiving benefits pursuant to a Qualified Domestic Relations Order as
defined in Section 16.5, 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 from Appendix B.
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 in Exhibit B.
(e) Qualified Joint and Survivor Annuities.
(1) Notwithstanding the foregoing provisions of this Section
11.2 to the contrary, 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
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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;
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(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. 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
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(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) LESOP Accounts. A Participant's vested balances in his LESOP
Accounts and his LESOP 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 LESOP 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.
(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
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, LESOP 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, LESOP Diversification Account or
Stock Sharing Account is not readily tradeable on an established market
when distributed, the distributee shall have the put option rights with
respect to such shares which are described in Section 6.5(b).
(l) Distributions After Rehire. If a Participant who has had a
Termination of Employment subsequently becomes an Employee, such
Participant shall not be
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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
his 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
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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 as provided under Sections 11.2(f) through 11.2(i).
(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) through 11.3(i), 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
one or both of 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
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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, in either event, 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.
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(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 or will become so by its terms
upon 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 from the trust instrument as provided in Section
401(a)(9) of the Internal Revenue Code and the regulations
adopted or proposed hereunder; and
(D) a copy of the trust instrument has been 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).
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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, LESOP Account and LESOP
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, LESOP Account and LESOP 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, LESOP
Account and LESOP 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, LESOP Account and LESOP
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
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' LESOP Accounts and LESOP Diversification Account shall be
allocated for the Plan Year among all Active Participants as provided in
Section 7.3 for Forfeitures from Participants' LESOP 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, LESOP
Account and LESOP Diversification Account as of the
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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, LESOP Account and
LESOP 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 LESOP 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 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, LESOP Account or LESOP 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, LESOP Account or LESOP 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, LESOP Account or LESOP
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, LESOP Account or LESOP Diversification Account at the time
of Forfeiture which was not distributed shall be held in a "Pre-Break
Profit Sharing Account," "Pre-Break LESOP Account" or "Pre-Break LESOP
Diversification Account," respectively, which shall be 100% vested; and (2)
the Participant's Profit Sharing Contributions and the net earnings thereon
and LESOP 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 LESOP Account," respectively, which shall be
vested in accordance with Section 11.4(b). Any amounts transferred to the
Participant's LESOP Diversification Account from the Participant's Pre-
Break LESOP Account shall be held in the Participant's Pre-Break LESOP
Diversification Account
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and amounts transferred from the Participant's Post-Break LESOP Account
shall be held in the Participant's Post-Break LESOP 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 LESOP 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 LESOP 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 LESOP 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 LESOP 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, LESOP 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
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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 LESOP 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
McDonald's basic group term life insurance benefits 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
basis group term life insurance benefits;
(d) His lawful descendants including adopted children per stirpes;
(e) His parents in equal shares, or (if only one parent survives him)
his surviving parent;
(f) The lawful descendants of his parents, per stirpes;
(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
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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
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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 ($5,000 on or after January 1, 1998), 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 ($5,000 on or after January 1, 1998), 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.
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(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
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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. (S) 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 in the Minimum Distribution Amount 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) A Participant who attains the age of 70-1/2 may elect to receive
his entire vested Net Balance Account on or after the Attainment of that
age. 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.
(e) Elective Distributions. Notwithstanding the foregoing provisions
of Section 11.13, a Participant, who is not a Five Percent Owner and has
attained the age of 70 1/2 but has not had a Termination of Employment, may
elect to receive or not to receive distributions as provided in Sections
11.13(a) and 11.13(b). If the Participant fails to make such an election,
the distributions provided in Sections 11.13(a) and 11.13(b) shall be made
to such a Participant. If such distributions have commenced to such a
Participant, he or she may make an election to discontinue such
distributions. If such distributions are not being made to a Participant,
he or she may make one election, which shall be irrevocable subject to the
Participant's right under Section 11.16(c) to elect a distribution of his
entire Net Balance Account, to
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commence receiving distributions as provided in Sections 11.13(a) and
11.13(b). Elections made hereunder shall be made at such time and in
accordance with such procedures as the Committee shall from time to time
permit.
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 LESOP 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
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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, his LESOP Account and LESOP
Diversification Account, if any, 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, provided that such withdrawals shall consist of
whole shares. 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.
(c) Distributions after Age 70 1/2. A Participant who has attained
the age of 70 1/2 but has not had a Termination of Employment may elect, at
such time and on such form as the Committee shall permit, to begin
receiving installment payments beginning after he becomes 70 1/2 or to
receive a distribution of his entire Net Balance
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Account. An affirmative election to receive installment payments shall be
irrevocable, provided that at any time a Participant who has attained the
age of 70 1/2 may elect a distribution of his entire Net Balance Account.
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 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 or
a direct rollover), and
(2) the Participant or Beneficiary after receiving the notice
affirmatively waives his right to consider his decision for a 30 day
period.
(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.
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(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
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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.
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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 LESOP 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 which is part of a group of corporations in which 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
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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.
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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.
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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
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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;
(k) To review the performance of any person to whom duties and
responsibilities have been delegated under Section 13.4;
(l) To annually review and approve the proposed budget for the
Program's administrative expenses and to approve and direct the Trustee as
to the payment of such expenses including those which arise which were not
anticipated in the budget; and
(m) To direct the Trustee as to the payment of distributions from the
Trust or otherwise arrange for distributions to be made from the Trust Fund
through a commercial banking account as provided in Section 3.2 of the
Trust.
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
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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 Electronic Elections. Anything in the Plan to the contrary not
withstanding, the Committee may determine to permit Participants or their
Beneficiaries to make electronic elections (except for elections to receive
amounts from a Participant's accounts whether by distribution, in-service
withdrawal or otherwise) in lieu of written elections provided in the Plan. In
making such a determination, the Committee shall consider the availability of
electronic elections to Participants, the protection of the rights of
Participants and their Beneficiaries, the appropriateness of the standards for
authentication of identity and other security considerations involved in the
electronic election system and any guidance issued by the Internal Revenue
Service and the Department of Labor.
13.11 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.
13.12 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.
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13.13 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 evaluated 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.
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13.14 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.
13.15 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.
13.16 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.
13.17 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.
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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
contributions previously 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.
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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, Employer Matching Contributions and
Special Section 401(k) Employer 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)), (c) the Employer disposes
of substantially all of its assets used in a trade or business to an unrelated
corporation and the Employee continues employment with the acquiring corporation
or (d) the Employer disposes of its interest in a subsidiary to an unrelated
party 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
(b), (c) or (d), 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.
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(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.
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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
multiple employer plan as described in Internal Revenue Code Section 413(c), the
provisions of this Article XV shall 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, LESOP 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.
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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
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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 such Plan Year, the largest
percentage interests in the Employer, Commonly Controlled 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
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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
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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 Defined Benefit Plans or, if
no single accrual method 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
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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:
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(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
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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 Program (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)
contributions.
(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 LESOP
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:
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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
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not greater than 1.00. This Section 15.3(d) shall not apply in Plan Years
beginning after December 31, 1999.
(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.
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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 shall not preclude the
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(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,
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(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 any
specified 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.
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(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 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 LESOP Account to
Participants' LESOP 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.
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(3) To the extent that such Reclaimed Amount originated as an
unclaimed amount in respect to a LESOP 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' LESOP Accounts and, to the
extent such Forfeitures are not sufficient, shall be treated as an
expense of the LESOP 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.
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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 _____ day of ____________, 1998.
McDonald's Corporation
By: /S/ STANLEY N. STEN
--------------------------
Its: Executive Vice President
-------------------------
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APPENDIX A
Maximum Percentage of Annuity Benefit Paid to Participant Which Can Be Paid
to a Non-spouse Beneficiary.
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
APPENDIX B
The Applicable Divisor for purposes of Section 11.2(d)(3) shall be:
Attained Age of Participant
on Birthday in Calendar Year Applicable 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