Severance Agreement

Amendment to Severance Agreement

Second Amendment to Severance Agreement

Change in Control

 

EXHIBIT (10)(m)(i)

 

McDonald’s Corporation

Severance Plan

Effective January 1, 2008


TABLE OF CONTENTS

 

  

 

 

  

Page

ARTICLE I. - Statement of Purpose

  

1

ARTICLE II. - Definitions

  

1

ARTICLE III. - Eligibility

  

5

ARTICLE IV. - Benefits

  

6

    Section 4.1.

 

Computation of Severance Pay

  

6

    Section 4.2.

 

Medical, Dental and Vision Coverage

  

6

    Section 4.3.

 

Outplacement

  

7

    Section 4.4.

 

Stock Options and Restricted Stock Units

  

7

    Section 4.5.

 

Sabbatical

  

7

    Section 4.6.

 

Prorated TIP Bonuses

  

7

    Section 4.7.

 

Company Vehicle

  

7

    Section 4.8.

 

Prorated CPUP Payment

  

8

ARTICLE V. - Payment of Severance Pay and Sabbatical Pay

  

8

    Section 5.1.

 

Form and Timing of Payments

  

8

    Section 5.2.

 

Delayed Payment Date for Key Employees

  

8

    Section 5.3.

 

Death of Qualifying Employee

  

8

ARTICLE VI. - Requirement of Effective Release; Integration with Other Benefits

  

9

    Section 6.1.

 

Releases Generally

  

9

    Section 6.2.

 

Benefit Programs Generally

  

9

    Section 6.3.

 

Severance Not Compensation; Severance Period Not Service

  

10

    Section 6.4.

 

Increases in Compensation, Stock Option Grants and Restricted Stock Units

  

10

    Section 6.5.

 

Limitations on Severance

  

10

ARTICLE VII. - Discontinuance or Repayment of Benefits Upon Re-Employment or For Cause

  

11

    Section 7.1.

 

Discontinuance or Repayment upon Re-Employment

  

11

    Section 7.2.

 

Discontinuance or Repayment for Cause

  

11

ARTICLE VIII. - Plan Administration

  

11

ARTICLE IX. - Claims Procedure

  

12

    Section 9.1.

 

Filing a Claim

  

12

    Section 9.2.

 

Review of Claim Denial

  

12

ARTICLE X. - Amendment and Termination

  

13

ARTICLE XI. - Miscellaneous

  

13

    Section 11.1.

 

Qualifying Employee Information

  

13

 

i


    Section 11.2.

 

Successors and Assigns

  

13

    Section 11.3.

 

Employment Rights

  

14

    Section 11.4.

 

Controlling Law

  

14

    Section 11.5.

 

Notices

  

14

    Section 11.6.

 

Interests Not Transferable

  

14

    Section 11.7.

 

Mistake of Fact or Law

  

14

    Section 11.8.

 

Representations Contrary to the Plan

  

14

    Section 11.9.

 

Plan Funding

  

14

    Section 11.10.

 

Headings

  

14

    Section 11.11.

 

Severability

  

15

    Section 11.12.

 

Withholding

  

15

    Section 11.13.

 

Indemnification

  

15

Appendix I - Schedule of Severance Benefits

 

ii


McDONALD’S CORPORATION

SEVERANCE PLAN

ARTICLE I.

Statement of Purpose

McDonald’s Corporation has established the McDonald’s Corporation Severance Plan to provide financial assistance through severance payments and other benefits to employees on the United States payroll who are subject to United States taxation and whose employment with an Employer hereunder is terminated in a Covered Termination.

The Plan is intended to be an unfunded welfare benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended, and a severance pay plan within the meaning of the United States Department of Labor regulation section 2510.3-2(b). All prior existing severance pay plans, programs and practices for employees (other than the McDonald’s Corporation Change of Control Severance Plan), whether formal or informal, are hereby revoked and terminated for Covered Employees. This document applies to Covered Employees whose Covered Termination occurs on and after January 1, 2008. Except as provided in Section 4.1 of the Plan, the payment of severance benefits to any Employee who had a Covered Termination prior to January 1, 2008 shall be determined in accordance with the terms of the Plan in effect at the time of such Employee’s Covered Termination.

ARTICLE II.

Definitions

Cash Performance Unit Plan or CPUP. “Cash Performance Unit Plan” or “CPUP” means the McDonald’s Cash Performance Unit Plan, the long-term incentive plan for eligible Officers or, if applicable, such other long-term cash incentive plan of an Employer as may be in effect as of a Qualifying Employee’s Termination Date.

Cause. “Cause” means any one or more of the following:

(a) an Employee’s commission of any act or acts involving dishonesty, fraud, illegality or moral turpitude;

(b) an Employee’s willful or reckless material misconduct in the performance of his or her duties;

(c) an Employee’s willful habitual neglect of material duties; or

(d) an Employee’s serious and reckless or intentional violation of McDonald’s Standards of Business Conduct.

Change of Control Severance Plan. “Change of Control Severance Plan” means (i) the McDonald’s Change of Control Severance Plan or (ii) a McDonald’s Corporation Tier I or Tier II Change of Control Employment Agreement, established as of January 1, 2008, as each is amended from time to time.


Claim. “Claim” means a written application for Severance Benefits under Section 9.1 of the Plan.

Claimant. “Claimant” means any individual who believes that he or she is eligible for Severance Benefits under this Plan and files a claim pursuant to Section 9.1 of the Plan.

COBRA. “COBRA” means the provisions regarding healthcare continuation coverage set forth in Section 601 et seq. of ERISA and Section 4980B of the Code.

COBRA Premium. “COBRA Premium” means the monthly cost of providing healthcare continuation coverage for a qualified beneficiary under COBRA, as adjusted from time to time.

Code. “Code” means the Internal Revenue Code of 1986, as amended.

Company Service Date. “Company Service Date” means an Employee’s first day of full-time employment or benefits eligible part-time employment with an Employer as determined by McDonald’s Human Resources Department.

Compensation. “Compensation” means the defined term under McDonald’s Corporation Profit Sharing and Savings Plan, McDonald’s Corporation Excess Benefit and Deferred Bonus Plan and any other long-term incentive plan, welfare benefits plan, deferred compensation arrangement, fringe benefit, practice or policy maintained by an Employer as described in Section 6.3 of the Plan.

Covered Employee. “Covered Employee” means an Employee who has been notified by McDonald’s Corporation that he or she has a Covered Termination making them eligible for Severance Benefits under the Plan as described in Article III.

Covered Termination. “Covered Termination” means an Employee’s Separation from Service due to:

(a) Reduction in the work force;

(b) Elimination of a position or job restructuring;

(c) Elimination of a position due to outsourcing; or

(d) Termination of employment by an Employer without Cause.

A Covered Termination does not include the Separation from Service of (i) any Employee who is being terminated for performance reasons, (ii) an Officer who is entitled to receive benefits under the Executive Retention Replacement Plan or (iii) an Employee who is eligible to receive benefits under the Change of Control Severance Plan with respect to such Separation from Service. In addition,

 

2


an Employee’s Separation from Service will not be treated as a Covered Termination hereunder if the Employee fails to return all property of the Employers (including, without limitation, automobiles (unless previously purchased in accordance with the applicable Schedule), keys, credit cards, documents and records, identification cards, equipment, phones, computers, etc.) within fifteen (15) days after the Employee’s Separation from Service.

Employee. “Employee” means an employee (including an Officer) of an Employer who is on the Employer’s United States payroll and is subject to taxation in the United States.

Employer. “Employer” means for purposes of this Plan, McDonald’s Corporation and the following Related Entities: McDonald’s USA, LLC; McDonald’s Latin America, LLC; McDonald’s APMEA, LLC; McDonald’s International, LLC and McDonald’s Europe, Inc.

ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

Executive Retention Replacement Plan. “Executive Retention Replacement Plan” means the McDonald’s Corporation Executive Retention Replacement Plan and its predecessor, the McDonald’s Corporation Executive Retention Plan.

Key Employee. “Key Employee” means a “specified employee” as determined in accordance with the McDonald’s Corporation Section 409A Specified Key Employee Policy adopted as in effect on January 1, 2008 and as amended from time to time in accordance with Treasury Regulation Section 1.409A-1(i).

McDonald’s Corporation. “McDonald’s Corporation” means McDonald’s Corporation and its successors and assigns.

Officer. “Officer” means an Employee in the leadership band and above.

Plan. “Plan” means the McDonald’s Corporation Severance Plan as set forth in this document.

Plan Administrator. “Plan Administrator” means the person responsible for administration of the Plan as set forth in Article VIII of the Plan.

Plan Year. The “Plan Year” shall be the calendar year for record keeping purposes.

Prorated CPUP. “Prorated CPUP” means the cash lump sum payment described in Section 4.8 for certain Qualifying Employees who are eligible for a pro rata long-term cash incentive bonus under CPUP for the performance period during which the Qualifying Employee’s Termination Date occurs.

Prorated TIP. “Prorated TIP” means the cash lump sum payment for certain Qualifying Employees described in Section 4.6 of the Plan who are eligible for a pro rata bonus under McDonald’s TIP.

Qualifying Employee. “Qualifying Employee” means each Covered Employee who meets the requirements set forth in the Plan, including, without limitation, the requirement to sign a Release Agreement within the time frame described in Section 6.1 and not revoke or rescind the Release Agreement.

 

3


Related Entity. “Related Entity” means a corporation, trade, or business if it and McDonald’s Corporation are members of a controlled group of corporations as defined in Section 414(b) of the Code or under common control as defined in Section 414(c) of the Code.

Release Date. “Release Date” means the date upon which a Qualifying Employee’s signed Release Agreement required under Section 6.1 of the Plan becomes irrevocable and non-rescindable.

Schedule. “Schedule” means the schedules attached as Appendix I to the Plan which describe the duration and which Severance Benefits under the Plan are available for different categories of Qualifying Employees.

Separation from Service. “Separation from Service” means an Employee’s cessation of the performance of services for McDonald’s Corporation and all of its Related Entities; provided that a “Separation from Service” shall not be deemed to have occurred for purposes of this Plan unless the relevant circumstances constitute the Employee’s “Separation from Service” with McDonald’s Corporation and all of its Related Entities within the meaning of Section 409A of the Code. In general, neither a transfer of employment from an Employer to another Related Entity nor a change in status from Employee to independent contractor or similar non-employee service provider to an Employer or any Related Entity will be treated as a Separation from Service.

Severance Benefits. “Severance Benefits” means the Severance Pay and any other benefit payable pursuant to this Plan.

Severance Pay. “Severance Pay” means the lump sum cash payment made to a Qualifying Employee pursuant to Section 4.1 of the Plan.

Severance Period. “Severance Period” means the period of time equal to the Qualifying Employee’s Weeks of Severance commencing on his or her Termination Date.

Termination Date. A Covered Employee’s “Termination Date” is the date on which a Covered Termination becomes effective.

Termination Notice Date. A “Termination Notice Date” is the date on which a Covered Employee receives notice that he or she has a Covered Termination under the Plan.

TIP. “TIP” means McDonald’s Target Incentive Plan or any annual bonus plan that replaces the Target Incentive Plan.

TIP-Eligible. A Qualifying Employee is “TIP-Eligible” if his or her Termination Date is on or after March 1 of a calendar year and the Qualifying Employee is eligible to participate in TIP for the calendar year in which his or her Covered Termination occurs.

Weekly Base Pay. “Weekly Base Pay” means the base salary or base wages that a Qualifying Employee earns during a week, based upon rate of pay in effect for the Qualifying Employee immediately before the Qualifying Employee’s Termination Date, excluding overtime or any special payments, and is used to compute the amount of Severance Pay under Section 4.1 of the Plan.

 

4


Weeks of Severance. “Weeks of Severance” means two weeks for each Year of Service of a Qualifying Employee subject to the minimum and maximum Weeks of Severance as set forth in the Schedule applicable to such Qualifying Employee.

Year of Service. A “Year of Service” for purposes of computing the amount of Severance Pay under Section 4.1 of the Plan means each complete twelve-month period beginning on the Qualifying Employee’s Company Service Date and ending on the Qualifying Employee’s Termination Date, with any period of less than 6 months being rounded down to the nearest complete twelve-month period and any period of 6 months or more being rounded up to the nearest complete twelve-month period. For example, a period of 10 years, 8 months and 3 days shall equal eleven Years of Service and a period of 10 years, 5 months and 3 days shall equal ten Years of Service.

ARTICLE III.

Eligibility

To be eligible for Severance Benefits under the Plan, an Employee must be subject to United States taxation and must be on the United States active payroll of an Employer (or must be an Employee who would be on the United States payroll but for the fact that, immediately prior to his or her Termination Date, the Employee is on a leave of absence or receiving short-term disability benefits) immediately before his or her Termination Date. Such an Employee must be designated for a Covered Termination by McDonald’s Corporation and be notified that he or she has been so designated under the Plan as a Covered Employee after April 1, 2006. The fact that an Employee receives notice of termination of employment, or an Employee’s employment actually terminates, shall not automatically entitle such Employee to be considered a Covered Employee nor automatically cause such termination to be considered a Covered Termination.

McDonald’s Corporation shall establish procedures and processes for implementing Covered Terminations. These procedures and processes may differ depending on the business needs and priorities of the affected work unit. In the case of any Officer who is an officer of McDonald’s Corporation within the meaning of Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended (as determined by the Board of Directors of McDonald’s Corporation), the Compensation Committee of the Board of Directors of McDonald’s Corporation shall determine whether such Officer shall be treated as a Covered Employee and to what extent such Officer will be entitled to receive Severance Benefits under this Plan and the determinations of the Compensation Committee shall be final and binding. Officers who are entitled to receive benefits under the Executive Retention Replacement Plan are not eligible for benefits under this Plan. In addition, any Employee who is entitled to receive benefits under the Change of Control Severance Plan with respect to his or her Separation from Service shall not be eligible for benefits under this Plan.

 

5


ARTICLE IV.

Benefits

In General. Each Qualifying Employee shall be entitled to Severance Pay and other Severance Benefits in accordance with this Article IV and Article V below, together with the Schedules included in Appendix I to this Plan applicable to the different categories of Qualifying Employees. Except as provided in Section 5.2, to the extent there is any conflict between the provisions of the Plan and an applicable Schedule, the provisions of the Schedule shall control. If a Qualifying Employee would be covered by both (i) Schedule A, B, C or D and (ii) the Schedules dealing with special circumstances (Schedule E, F or G), then Schedule E, F or G, as applicable, shall be the only Schedule that applies to that Qualifying Employee, except to the extent that provisions of another Schedule are incorporated by reference in the special circumstance Schedules. If a Qualifying Employee is a part-time Employee who is not benefits eligible as described in Schedule H, the only benefit payable under the Plan shall be Severance Pay for the duration specified in Schedule H.

Section 4.1. Computation of Severance Pay. A Qualifying Employee shall receive Severance Pay in a lump sum amount equal to his or her Weekly Base Pay multiplied by the Qualifying Employee’s Weeks of Severance. Notwithstanding any provision herein or in any prior severance plan maintained by McDonald’s Corporation or any other Employer to the contrary, if any former employee of an Employer is receiving severance continuation pay from an Employer as of December 31, 2007 under the terms of this Plan as in effect prior to January 1, 2008 and such payments are scheduled to continue into 2008, the Employer shall pay the former employee’s remaining severance continuation payments in a single lump sum on, or as soon as reasonably practicable after, January 2, 2008.

Section 4.2. Medical, Dental and Vision Coverage. Unless otherwise provided in the applicable Schedule, if a Qualifying Employee is entitled to file, and does timely file, an election to continue any health benefits under a medical, dental and/or vision benefit program sponsored by McDonald’s Corporation in accordance with the provisions of COBRA, the Employer shall pay a portion of such COBRA Premiums, as specified in the next sentence, during the Severance Period, out of the total period of eighteen months normally provided for by COBRA. During the Severance Period, the Qualifying Employee shall be required to pay a portion of the COBRA Premiums equal to what he or she would pay for such health benefits under the applicable program of McDonald’s Corporation, if he or she had remained employed, and the Employer shall pay the balance of such COBRA Premiums. The Employer’s payments, as applicable, shall be made to the entity funding the applicable plan coverage, and not to the Qualifying Employee. The Qualifying Employee must pay his or her share of such COBRA Premiums and may not have such cost withheld from the Severance Pay nor contributed to any cafeteria or flexible spending account. After the Severance Period ends, any further COBRA to which the Qualifying Employee may be entitled shall continue only if the Qualifying Employee pays the full cost thereof at the rate of 102% of both the employee and the employer premium costs under the applicable plans. The Employers shall not pay any portion of the

 

6


COBRA Premiums for more than twelve months, regardless of whether the Qualifying Employee or his or her eligible dependents have an additional qualifying event under COBRA. Notwithstanding the foregoing, if COBRA is no longer required to be provided to a Qualifying Employee under the federal laws governing COBRA during the Severance Period, all payments of COBRA Premiums for that Qualifying Employee under this Plan will also end.

Section 4.3. Outplacement. The Employers shall provide each Qualifying Employee with outplacement assistance only if and only to the extent set forth in the applicable Schedule. The Qualifying Employee must start the outplacement process within 60 days of the Termination Date. In no event shall any Qualifying Employee be entitled to receive cash or other benefits in lieu of such outplacement assistance.

Section 4.4. Stock Options and Restricted Stock Units. Any equity compensation (including, without limitation, stock options and restricted stock units) granted to a Covered Employee under any equity incentive plan maintained by McDonald’s Corporation that is outstanding immediately before the Termination Date shall be treated in accordance with the terms of the equity incentive plan, prospectus and grant applicable to such equity compensation.

Section 4.5. Sabbatical. A Qualifying Employee shall receive a lump sum sabbatical payment equal to eight weeks of Weekly Base Pay if: (a) the Qualifying Employee was entitled to take a sabbatical leave immediately before his or her Termination Date; or (b) the Qualifying Employee was eligible for McDonald’s Corporation’s sabbatical program and the Termination Date occurs on or after the ninth, nineteenth, twenty-ninth or thirty-ninth anniversary of the Qualifying Employee’s Company Service Date but before the beginning of the year in which the tenth, twentieth, thirtieth or fortieth anniversary thereof occurs. In no event shall a Qualifying Employee receive more than one sabbatical payment or more than a total of eight weeks of Weekly Base Pay under this Section 4.5.

Section 4.6. Prorated TIP Bonuses. A Qualifying Employee who is TIP-Eligible shall also be entitled to receive a Prorated TIP payment. The Prorated TIP payment shall be prorated based on a fraction, the numerator of which is the number of days from January 1 through the Termination Date in the calendar year and the denominator of which is 365 (or 366 in a leap year). The Prorated TIP payment shall be based on the actual performance of McDonald’s Corporation and its subsidiaries and business units during the annual performance period and shall be subject to supervisory discretion for the individual performance factor. The Prorated TIP payment will be made at the same time TIP payments are made to active employees.

Section 4.7. Company Vehicle. A Qualifying Employee who has a company-provided vehicle may purchase it and, in certain cases, may receive a prorated cash reimbursement for recent upgrades related to such vehicle, as determined by McDonald’s Fleet Management Department and the terms of the McDonald’s Corporation Vehicle Program applicable to the Qualifying Employee. In no event will the initial salary reduction of $1,200 paid by Home Office employees ($1,500 in the case of Officers) be refunded or repaid to the Employee.

In order to exercise the right to purchase his or her company-provided vehicle, a Qualifying Employee must provide notice of such exercise and complete the purchase in accordance with the procedures determined by McDonald’s Fleet Management Department,

 

7


but in no event may the purchase take place before his or her Release Date. If the Covered Employee’s Termination Date occurs before his or her Release Date, the Covered Employee must return his or her company-provided vehicle on his or her Termination Date, and the vehicle shall be returned to him or her when such purchase can be completed.

Section 4.8. Prorated CPUP Payment. A Qualifying Employee who is eligible to participate in CPUP shall also be entitled to receive a Prorated CPUP payment. The Prorated CPUP payment shall be prorated based on a fraction, the numerator of which is the number of days from the beginning of the performance period through the Termination Date and the denominator of which is the total number of days from the first day of the performance period through the date on which the performance period would have ended if the Qualifying Employee had remained in active employment through the end of the scheduled performance period. The Prorated CPUP payment, if any, shall be based on the actual performance of McDonald’s Corporation during the applicable performance period. The Prorated CPUP payment will be paid to the Qualifying Employee at the same time CPUP payments are made to other eligible active employees.

ARTICLE V.

Payment of Severance Pay and Sabbatical Pay

Section 5.1. Form and Timing of Payments. Except as provided in Section 5.2, a Qualifying Employee’s Severance Pay and sabbatical pay, if any, shall be paid to the Qualifying Employee in a single lump sum as soon as reasonably practicable following the later of the Termination Date or the Release Date, but in no event later than 90 days after the Termination Date; provided, however that the Plan Administrator may, in his or her sole discretion, cause the Employer to make such payments at any time during the 90 day period following the Termination Date even if prior to the Release Date. Notwithstanding the foregoing, payment of the Severance Pay and the sabbatical pay is expressly conditioned on timely execution of a Release Agreement in accordance with Section 6.1. If a Qualifying Employee fails to execute the Release Agreement during the time frame specified in Section 6.1, the Covered Employee shall forfeit his or her right to receive the Severance Pay and sabbatical pay and shall repay any Severance Pay and sabbatical pay the Covered Employee previously received. The Employers shall have the right to seek enforcement of this repayment right in any court of competent jurisdiction.

If a Qualifying Employee is entitled to receive severance compensation as a statutory or government-funded benefit under the laws of a foreign country, the Severance Benefits that would otherwise be payable under this Plan may be offset by such severance compensation as the Plan Administrator determines in his or her discretion.

Section 5.2. Delayed Payment Date for Key Employees. Notwithstanding any provision in this Plan or any applicable Schedule to the contrary, if a Qualifying Employee is a Key Employee as of his or her Termination Date, the payment of such Qualifying Employee’s Severance Pay and sabbatical pay, if any, shall be delayed until and shall be paid on the date that is six months after his or her Termination Date or in accordance with Section 5.3 if the Qualifying Employee dies before the end of such six month period.

 

8


Section 5.3. Death of Qualifying Employee. In the event a Qualifying Employee (including a Qualifying Employee who is a Key Employee) dies before receiving his or her Severance Pay and sabbatical pay under the Plan, the Qualifying Employee’s Severance Pay and sabbatical pay shall be paid in a lump sum as soon as practicable following the Qualifying Employee’s death, but not later than 90 days following the Qualifying Employee’s death, to the beneficiary designated by the Qualifying Employee under the McDonald’s Corporation Profit Sharing and Savings Plan. If a deceased Qualifying Employee has failed to designate a specific beneficiary under the McDonald’s Corporation Profit Sharing and Savings Plan, or if the designated beneficiary dies before the Qualifying Employee has received his or her Severance Pay and sabbatical pay, payment of the Qualifying Employee’s Severance Pay and sabbatical pay shall be made to the Qualifying Employee’s spouse if the Qualifying Employee is married as of the date of his or her death or otherwise to the Qualifying Employee’s estate.

ARTICLE VI.

Requirement of Effective Release; Integration with Other Benefits

Section 6.1. Releases Generally. In addition to the requirements of Article III of the Plan, it shall be a condition of eligibility for Severance Benefits under the Plan that the Covered Employee shall have timely signed a release agreement (the “Release Agreement”) within the period of time specified below and shall not have timely revoked or rescinded such Release Agreement. Such Release Agreement shall be in a form acceptable to the Plan Administrator that complies with applicable law and which is appropriate for the Covered Employee’s classification. The Release Agreement may include a covenant not to compete with McDonald’s Corporation or its subsidiaries. A Release Agreement must be signed no later than the date specified in the form of Release Agreement provided to the Covered Employee by the Plan Administrator; provided, however, that such date shall not be more than 60 days after the Covered Employee’s Termination Date. McDonald’s Corporation shall provide a Covered Employee with an executable form of Release Agreement no later than five (5) business days following the Covered Employee’s Termination Date.

Except as provided in Section 5.1, no Severance Pay or sabbatical pay will be paid to a Covered Employee unless and until the Covered Employee timely signs the Release Agreement and the period of time for revoking or rescinding such agreement under applicable law has expired without the Covered Employee having revoked or rescinded such agreement. Severance Benefits other than Severance Pay and sabbatical payments shall be provided to a Covered Employee in accordance with Article III until such time as the Covered Employee either (a) fails to sign a Release Agreement within the time specified above or (b) timely revokes or rescinds an executed Release Agreement, at which time the Covered Employee shall cease to receive any further Severance Benefits under this Plan and shall repay McDonald’s Corporation the cost of any Severance Benefits previously received by the Covered Employee. The Employers shall have the right to seek enforcement of this repayment right in any court of competent jurisdiction.

If a Covered Employee dies prior to the expiration of the time frame for signing the Release Agreement, the requirement for executing the Release Agreement shall be waived and the Severance Pay and sabbatical pay shall be paid in accordance with Section 5.3.

 

9


Section 6.2. Benefit Programs Generally. Except as provided in Section 6.5 below, Severance Benefits under this Plan are in addition to all pay and other benefits normally payable to a Qualifying Employee as of his or her Termination Date according to the established applicable policies, plans, and procedures of McDonald’s Corporation and its Related Entities (other than severance pay plans, programs and practices, which have been revoked and terminated for Covered Employees pursuant to Article I above). Without limiting the generality of the foregoing, each Qualifying Employee shall be paid for any accrued but unused vacation as of his or her Termination Date. If a Qualifying Employee’s Termination Date occurs in a year when he or she is eligible for an extra week of vacation under the “Splash Program,” the Qualifying Employee will be paid for any unused Splash vacation. In addition, any benefit continuation or conversion rights to which a Qualifying Employee is entitled as of his or her Termination Date shall be made available to him or her. On a Qualifying Employee’s Termination Date, all benefit plans, policies, fringe benefits and pay practices in which the Qualifying Employee was participating shall cease to apply to the Qualifying Employee in accordance with the terms of such benefits plans, policies, procedures and practices that apply to any other employee terminating employment with McDonald’s Corporation or its Related Entities, as applicable and in accordance with the requirements of any applicable law, unless such benefits are specifically continued as a Severance Benefit under this Plan. In addition, the Employers will waive repayment by a Qualifying Employee of sabbatical, relocation and/or short-term disability benefits that otherwise would be required if the Qualifying Employee did not return to active employment under the terms of the applicable sabbatical, relocation or short-term disability program of the Employer. Finally, the Employers will continue to provide educational assistance for any class that the Qualifying Employee has begun to attend before his or her Termination Notice Date, provided that the Qualifying Employee complies with all requirements for such assistance and notifies the educational assistance service center of his or her Covered Termination within two weeks after his or her Termination Notice Date.

Section 6.3. Severance Not Compensation; Severance Period Not Service. Payments for sabbatical pursuant to Section 4.5 and for vacation pursuant to Section 6.2 shall be Compensation for purposes of determining any benefits provided under McDonald’s Corporation Profit Sharing and Savings Plan and the McDonald’s Corporation Excess Benefit and Deferred Bonus Plan to the extent so provided in the applicable plan documents. Except as provided in the preceding sentence, Severance Benefits under this Plan shall not be construed as Compensation for purposes of determining any benefits provided under McDonald’s Corporation Profit Sharing and Savings Plan, the McDonald’s Corporation Excess Benefit and Deferred Bonus Plan, any long-term incentive plan, or any other welfare benefit plan, deferred compensation arrangement, fringe benefit, practice or policy maintained by an Employer for its employees. The period of time during which Severance Benefits are being paid out or provided shall not count as credited service for any benefit program, payroll practice (such as entitlement to vacation or sabbatical) or for any other welfare benefit, profit sharing, savings, retirement or deferred compensation benefit or fringe benefit plan, practice or policy of any Employer.

Section 6.4. Increases in Compensation, Stock Option Grants and Restricted Stock Units. After a Covered Employee’s Termination Notice Date, he or she shall not be entitled to any increases in compensation, including, without limitation, regularly scheduled merit increases in Weekly Base Pay or grants of stock options or restricted stock units.

 

10


Section 6.5. Limitations on Severance. To the extent that any federal, state or local law, including, without limitation, the Worker Adjustment and Retraining Notification Act and so-called “plant closing” laws, requires an Employer or any Related Entity to give advance notice or make a payment of any kind to a Covered Employee because of that Covered Employee’s involuntary termination due to layoff, reduction in force, plant or facility closing, sale of business, change of control, or any other similar event or reason, the Severance Pay provided under this Plan shall be reduced or eliminated, as the case may be, by the amount of wages, benefits, or voluntary and unconditional payments paid in lieu of notice. The Severance Benefits provided under this Plan (together with the wages, benefits, or other payments described in this Section that reduce or eliminate the Severance Pay) are intended to satisfy any and all statutory obligations that may arise out of a Covered Employee’s Covered Termination.

ARTICLE VII.

Discontinuance or Repayment of Benefits Upon Re-Employment or For Cause

Section 7.1. Discontinuance or Repayment upon Re-Employment. If a Qualifying Employee is subsequently re-employed by an Employer or any Related Entity before or after all of the Qualifying Employee’s Severance Benefits under this Plan have been paid or provided, Schedule G shall set forth the Qualifying Employee’s rights to receive or retain Severance Benefits under this Plan, unless the Plan Administrator, on behalf of the Employers, agrees otherwise in writing.

Section 7.2. Discontinuance or Repayment for Cause. Notwithstanding any other provision of the Plan, if the Plan Administrator determines at any time that a Qualifying Employee committed any act or omission that would constitute Cause while he or she was employed by an Employer or any Related Entity, the Employers may (i) cease payment of any benefit otherwise payable to a Qualifying Employee under the Plan and (ii) require the Qualifying Employee to repay any and all Severance Pay, sabbatical pay and Prorated TIP previously paid to such Qualifying Employee under the terms of this Plan. The Employers shall have the right to seek enforcement of their rights under clause (ii) above in any court of competent jurisdiction.

ARTICLE VIII.

Plan Administration

McDonald’s Corporation may appoint one or more individuals to serve as Plan Administrator for the Plan. In the absence of such an appointment, the Plan Administrator shall be the Corporate Executive Vice President—Human Resources for McDonald’s Corporation. The Plan Administrator shall have the discretionary authority to determine eligibility for Severance Benefits under the Plan and to construe the terms of the Plan, including the making of factual determinations. Benefits under the Plan shall be paid only if the Plan Administrator decides in his or her discretion that the Claimant is entitled to such benefits. The decisions of the Plan Administrator shall be final and conclusive with respect to all questions concerning administration of the Plan. The Plan Administrator may delegate to other persons responsibilities for performing certain of the duties of the Plan Administrator under the terms of the Plan and may seek such expert advice as the Plan Administrator deems reasonably necessary with respect to the Plan.

 

11


The Plan Administrator shall be entitled to rely upon the information and advice furnished by such delegates and experts, unless the Plan Administrator has actual knowledge that such information and advice is inaccurate or unlawful. Notwithstanding the foregoing, the Compensation Committee of the Board of Directors of McDonald’s Corporation shall have the final authority with respect to all Severance Benefits under the Plan for executive Officers subject to Section 16 of the Securities Exchange Act of 1934.

McDonald’s Corporation intends for the Plan to comply with the requirements of Section 409A of the Code and regulations, rulings and other guidance issued thereunder, and the Plan shall be interpreted and administered accordingly.

ARTICLE IX.

Claims Procedure

Section 9.1. Filing a Claim. Any individual who believes he or she is eligible for Severance Benefits under this Plan that have not been provided may submit his or her application for Severance Benefits to the Plan Administrator (or to such other person who may be designated by the Plan Administrator) in writing in such form as is provided or approved by the Plan Administrator. A Claimant shall have no right to seek review of a denial of Severance Benefits, or to bring any action in any court to enforce a Claim, prior to filing a Claim and exhausting rights under this Article IX.

When a Claim has been filed properly, it shall be evaluated and the Claimant shall be notified of the approval or the denial of the Claim 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, which 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 the Claimant 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 notice shall contain (a) the specific reasons for the denial, (b) references to pertinent Plan provisions upon which the denial is based, (c) 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 (d) the Claimant’s right to seek review of the denial.

Section 9.2. Review of Claim Denial. If a Claim is denied, in whole or in part, the Claimant shall have the right to (a) request that the Plan Administrator review the denial, (b) review pertinent documents, and (c) submit issues and comments in writing, provided that the Claimant files a written request for review with the Plan Administrator within sixty (60) days after the date on which the Claimant received written notification of the denial. 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 be given a written notification within such initial sixty (60) day period

 

12


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 by the Plan Administrator shall be forwarded to the Claimant in writing and shall include specific reasons for the decision and reference to Plan provisions upon which the decision is based. A decision on review shall be final and binding on all persons for all purposes.

ARTICLE X.

Amendment and Termination

McDonald’s Corporation reserves the right to amend the Plan from time to time or to terminate the Plan; provided, however, that no such amendment or termination shall reduce the amount of Severance Benefits payable to any Qualifying Employee whose Termination Date has already occurred, who has signed and not revoked or rescinded a Release Agreement required by Section 6.1, and who has completed all other applicable paperwork on or before the effective date of such amendment or termination. Notwithstanding the foregoing, the Corporate Executive Vice President - Human Resources and the Corporate Executive Vice President, General Counsel and Secretary of McDonald’s Corporation may amend or modify the terms of the Plan hereunder (i) to the extent necessary or advisable to comply with or obtain the benefits or advantages under the provisions of applicable law, regulations or rulings or requirements of the Internal Revenue Service or other governmental agency or of changes in such law, regulations, ruling or requirements (including, without limitation, any amendment necessary to comply with or secure an exemption from Section 409A of the Code) or (ii) to adopt any other procedural or cosmetic amendment that does not materially change the benefits to Qualifying Employees or materially increase the cost of the benefits provided hereunder. No person may amend this Plan in a manner that would subject any Covered Employee to taxation of his or her Severance Pay or any other Severance Benefits under Section 409A(a)(1) of the Code.

ARTICLE XI.

Miscellaneous

Section 11.1 Qualifying Employee Information. Each Qualifying Employee shall notify the Plan Administrator of his or her mailing address and each change of mailing address. In addition, each Qualifying Employee shall be required to furnish the Plan Administrator with any other information and data that McDonald’s Corporation or the Plan Administrator considers necessary for the proper administration of the Plan. The information provided by the Qualifying Employee under this provision shall be binding upon the Qualifying Employee, his or her dependents and any beneficiary for all purposes of the Plan, and McDonald’s Corporation and the Plan Administrator shall be entitled to rely on any representations regarding personal facts made by a Qualifying Employee, his or her dependents or beneficiary, unless such representations are known to be false. The receipt of Severance Benefits under the Plan by each Qualifying Employee is conditioned upon the Qualifying Employee furnishing full, true and complete data, evidence or other information and the Qualifying Employee’s timely signature of any document related to the Plan, requested by McDonald’s Corporation or the Plan Administrator.

 

13


Section 11.2. Successors and Assigns. The obligations of McDonald’s Corporation under the Plan shall be assumed by its successors and assigns.

Section 11.3. Employment Rights. The existence of the Plan shall not confer any legal or other rights upon any employee to continuation of employment. McDonald’s Corporation and its Related Entities reserve the right to terminate any employee with or without cause at any time, notwithstanding the provisions of this Plan.

Section 11.4. Controlling Law. The provisions of this Plan shall be governed, construed and administered in accordance with ERISA. To the extent that ERISA does not apply, the laws of the State of Illinois shall be controlling, other than Illinois law concerning conflicts of law.

Section 11.5. Notices. Any notice, request, election or other communication under this Plan shall be in writing and shall be considered given when delivered personally or mailed by first class mail properly addressed (which, in the case of a Qualifying Employee, shall include mailing to the last address provided to the Plan Administrator by such Qualifying Employee). Notice to McDonald’s Corporation or the Plan Administrator by fax shall be acceptable notice if faxed to the number designated by McDonald’s Corporation or the Plan Administrator, as applicable, for receipt of notices under this Plan.

Section 11.6. Interests Not Transferable. The interest of persons entitled to Severance Benefits under the Plan are not subject to their debts or other obligations and, except as provided in Sections 5.3 and 11.2 above and Section 11.12 below, as required by federal or state garnishment orders issued to the Plan or McDonald’s Corporation or any Employer, or as may be required by ERISA, may not be voluntarily or involuntarily sold, transferred, alienated, assigned or encumbered.

Section 11.7. Mistake of Fact or Law. Any mistake of fact or misstatement of fact shall be corrected when it becomes known and proper adjustment made by reason thereof. A Qualifying Employee shall be required to return any payment, or portion thereof, made by mistake of fact or law to the applicable Employer that made such payment.

Section 11.8. Representations Contrary to the Plan. No employee, Officer, or director of McDonald’s Corporation has the authority to alter, vary or modify the terms of the Plan or the Severance Benefits available to any Qualifying Employee except by means of a written amendment duly authorized by the Board of Directors of McDonald’s Corporation or its delegate, in accordance with the provisions of the Plan. No verbal or written representations contrary to the terms of the Plan and any duly authorized written amendment in effect as of the date such representation was made shall be binding upon the Plan, the Plan Administrator, McDonald’s Corporation or any Related Entity.

Section 11.9. Plan Funding. No Qualifying Employee or beneficiary thereof shall acquire by reason of the Plan any right in or title to any assets, funds, or property of McDonald’s Corporation or any Employer. Any Severance Benefits that become payable under the Plan are unfunded obligations of the Qualifying Employee’s Employer, and shall be paid from the general assets of such Employer. No employee, Officer, director or agent of McDonald’s Corporation or any Related Entity guarantees in any manner the payment of Severance Benefits.

 

14


Section 11.10. Headings. The headings in this Plan are for convenience of reference and shall not be given substantive effect.

Section 11.11. Severability. If any provision of this Plan is held illegal or invalid for any reason, the other provisions of this Plan shall not be affected.

Section 11.12. Withholding. Notwithstanding any other provision of this Plan, the Employers may withhold from any and all Severance Benefits such United States federal, state or local or foreign taxes as may be required to be withheld pursuant to any applicable law or regulation.

Section 11.13. Indemnification. Any individual serving as Plan Administrator without compensation, and each and every individual who is an employee of an Employer or any Related Entity to whom are delegated duties, responsibilities and authority with respect to the Plan, shall be indemnified to the fullest extent permitted by applicable law and the McDonald’s Corporation Bylaws.

Executed this 29th day of November, 2007.

 

McDONALD’S CORPORATION

/s/ Richard Floersch

Richard Floersch

Corporate Executive Vice President and

Chief Human Resources Officer

 

15


Appendix I

McDonald’s Corporation Severance Plan

Schedule A:

Severance Benefits for

Qualifying Employees who are Officers

This Schedule sets forth the Severance Benefits under the Plan for those Qualifying Employees who are employed as Officers and who are full-time Employees or benefits-eligible part-time Employees immediately before their Termination Dates. A Qualifying Employee under this Schedule who is a Key Employee as of his or her Termination Date, as determined under Section 5.2, shall be subject to the six month delay in payment of Severance Pay and sabbatical pay described in Section 5.2 in order to comply with Internal Revenue Code Section 409A.

Weeks of Severance: Each Qualifying Employee covered by this Schedule shall be credited with two (2) Weeks of Severance for each Year of Service with a minimum of twenty six (26) Weeks of Severance and a maximum of fifty-two (52) Weeks of Severance.

Severance Pay: Each Qualifying Employee shall receive Severance Pay in a lump sum in an amount equal to his or her Weekly Base Pay multiplied by his or her Weeks of Severance.

Medical/Dental Coverage: The Employers shall make the payments for COBRA Premiums provided for in Section 4.2 of the Plan during the Qualifying Employee’s Severance Period.

Outplacement: Each Qualifying Employee covered by this Schedule shall receive outplacement assistance under a senior executive program, at the expense of the Employers, for a period of not more than 12 months, beginning not later than 60 days after the Qualifying Employee’s Termination Date.

Prorated TIP/CPUP: Each Qualifying Employee who is TIP-Eligible may receive a Prorated TIP, if any, computed in accordance with Section 4.6 of the Plan and each Qualifying Employee who is eligible for a long-term cash bonus under CPUP may receive a Prorated CPUP, if any, computed in accordance with Section 4.8 of the Plan.

Company Vehicle: Section 4.7 of the Plan shall apply to each Qualifying Employee who has a company-provided vehicle.

Other Severance Benefits: A Qualifying Employee shall also receive, if otherwise eligible, the Severance Benefits provided for in Section 4.4 (equity awards) and Section 4.5 (sabbatical).


McDonald’s Corporation Severance Plan

Schedule B:

Severance Benefits for

Qualifying Employees in the Direction and Senior Direction Compensation Bands

This Schedule sets forth the Severance Benefits under the Plan for those Qualifying Employees who are in the Direction or Senior Direction Compensation Band of the Employers and who are full-time Employees or benefits-eligible part-time Employees immediately before their Termination Dates.

Weeks of Severance: Each Qualifying Employee covered by this Schedule shall be credited with two (2) Weeks of Severance for each Year of Service with a minimum of sixteen (16) Weeks of Severance and a maximum of thirty-eight (38) Weeks of Severance.

Severance Pay: Each Qualifying Employee shall receive Severance Pay in a lump sum in an amount equal to his or her Weekly Base Pay multiplied by his or her Weeks of Severance.

Medical/Dental Coverage: The Employers shall make the payments for COBRA Premiums provided for in Section 4.2 of the Plan during the Qualifying Employee’s Severance Period.

Outplacement: Each Qualifying Employee covered by this Schedule shall receive outplacement assistance under an executive program, at the expense of the Employers, for a period of not more than six months, beginning not later than 60 days after the Qualifying Employee’s Termination Date.

Prorated TIP: Each Qualifying Employee who is TIP-Eligible may receive a Prorated TIP, if any, computed in accordance with Section 4.6 of the Plan.

Company Vehicle: Section 4.7 of the Plan shall apply to each Qualifying Employee who has a company-provided vehicle.

Other Severance Benefits: A Qualifying Employee shall also receive, if otherwise eligible, the Severance Benefits provided for in Section 4.4 (equity awards) and Section 4.5 (sabbatical).


McDonald’s Corporation Severance Plan

Schedule C:

Severance Benefits for Qualifying Employees

in the Specialist, Supervisory/Consulting or Management/Advisory Bands

This Schedule sets forth the Severance Benefits under the Plan for those Qualifying Employees who are in the Specialist, Supervisory/Consulting or Management/Advisory Band but who are not Officers or directors of McDonald’s Corporation or directors of any other Employer, and who are full-time Employees or benefits-eligible part-time Employees immediately before their Termination Dates.

Weeks of Severance: Each Qualifying Employee covered by this Schedule shall be credited with two (2) Weeks of Severance for each Year of Service with a minimum of twelve (12) Weeks of Severance and a maximum of twenty-six (26) Weeks of Severance.

Severance Pay: Each Qualifying Employee shall receive Severance Pay in a lump sum in an amount equal to his or her Weekly Base Pay multiplied by his or her Weeks of Severance.

Medical/Dental Coverage: The Employers shall make the payments for COBRA Premiums provided for in Section 4.2 of the Plan during the Qualifying Employee’s Severance Period.

Outplacement: Each Qualifying Employee covered by this Schedule C shall receive outplacement assistance, at the expense of the Employers, for a period of not more than six months, beginning not later than 60 days after the Qualifying Employee’s Termination Date.

Prorated TIP: Each Qualifying Employee who is TIP-Eligible may receive a Prorated TIP, if any, computed in accordance with Section 4.6 of the Plan.

Company Vehicle: Section 4.7 of the Plan shall apply to each Qualifying Employee who has a company-provided vehicle.

Other Severance Benefits: A Qualifying Employee shall also receive, if otherwise eligible, the Severance Benefits provided for in Section 4.4 (equity awards) and Section 4.5 (sabbatical).


McDonald’s Corporation Severance Plan

Schedule D:

Severance Benefits for

Qualifying Employees in the Associate or Coordination Compensation Bands

This Schedule sets forth the Severance Benefits under the Plan for those Qualifying Employees who are Employees in the Associate or Coordination Compensation Band, and who are full-time Employees or benefits-eligible part-time Employees immediately before their Termination Dates.

Weeks of Severance: Each Qualifying Employee covered by this Schedule shall be credited with two (2) Weeks of Severance for each Year of Service with a minimum of eight (8) Weeks of Severance and a maximum of twenty (20) Weeks of Severance.

Severance Pay: Each Qualifying Employee shall receive Severance Pay in a lump sum in an amount equal to his or her Weekly Base Pay multiplied by his or her Weeks of Severance.

Medical/Dental Coverage: The Employers shall make the payments for COBRA Premiums provided for in Section 4.2 of the Plan during the Qualifying Employee’s Severance Period.

Outplacement: Each Qualifying Employee covered by this schedule shall receive three months outplacement assistance, beginning not later than 60 days after the Qualifying Employee’s Termination Date.

Prorated TIP: Each Qualifying Employee who is TIP-Eligible may receive a Prorated TIP, if any, computed in accordance with Section 4.6 of the Plan.

Other Severance Benefits: A Qualifying Employee shall also receive, if otherwise eligible, the Severance Benefits provided for in Section 4.4 (equity awards) and Section 4.5 (sabbatical).


McDonald’s Corporation Severance Plan

Schedule E:

Severance Benefits for

Qualifying Employees becoming Restaurant Operators

This Schedule sets forth the Severance Benefits under the Plan for those Qualifying Employees who are full-time Employees or benefits-eligible part-time Employees immediately before their Termination Dates and who become restaurant operators (either as owner/operators or in a joint venture with an Employer).

Weeks of Severance: Each Qualifying Employee covered by this Schedule shall be credited with the lesser of sixteen (16) Weeks of Severance or the number of Weeks of Severance equal to the number of weeks from the Qualifying Employee’s Termination Date until the Qualifying Employee is projected to begin operation of a restaurant franchised by McDonald’s Corporation as determined by the Plan Administrator in his sole discretion.

Severance Pay: Each Qualifying Employee shall receive Severance Pay in a lump sum in an amount equal to his or her Weekly Base Pay multiplied by his or her Weeks of Severance.

Medical/Dental Coverage: The Employers shall make the payments for COBRA Premiums provided for in Section 4.2 of the Plan during the Qualifying Employee’s Severance Period.

Prorated TIP: A Qualifying Employee who is TIP-Eligible may receive a Prorated TIP, if any, computed in accordance with Section 4.6 of the Plan.

Company Vehicle: Section 4.7 of the Plan shall apply to each Qualifying Employee who has a company-provided vehicle.

Other Severance Benefits: A Qualifying Employee who is covered by this Schedule E shall also receive, if otherwise eligible, the Severance Benefits provided for in Sections 4.4 (equity awards) and 4.5 (sabbatical) of the Plan, but shall not receive the Severance Benefits provided for in Section 4.3 (outplacement) of the Plan.


McDonald’s Corporation Severance Plan

Schedule F:

Severance Benefits for

Qualifying Outsourced Employees

This Schedule sets forth the Severance Benefits under the Plan for each Qualifying Employee (1) who is a full-time Employee or a benefits-eligible part-time Employee before his or her Termination Date, (2) whose Covered Termination occurs as a result of the elimination of his or her job because the functional area is outsourced, and (3) who is offered employment with the entity that will be providing services on an outsourced basis to McDonald’s Corporation or a Related Entity in a position with a level of responsibility comparable to his or her job that was eliminated (as determined by the Plan Administrator in his or her sole discretion), at a rate of Weekly Base Pay not less than 80% of his or her rate of Weekly Base Pay immediately before the Termination Date, and located not more than 25 miles from the location of his or her eliminated job, regardless of whether the Qualifying Employee accepts or rejects such offer (referred to as a “Qualifying Outsourced Employee”).

Weeks of Severance: Each Qualifying Employee covered by this Schedule shall be credited with four (4) Weeks of Severance.

Severance Pay: Each Qualifying Employee shall receive Severance Pay in a lump sum in an amount equal to his or her Weekly Base Pay multiplied by his or her Weeks of Severance.

Medical/Dental Coverage: The Employers shall make the payments for COBRA Premiums provided for in Section 4.2 of the Plan during the Qualifying Employee’s Severance Period.

Prorated TIP: A Qualifying Outsourced Employee who is TIP-Eligible may receive a Prorated TIP, if any, computed in accordance with Section 4.6 of the Plan.

Company Vehicle: Section 4.7 of the Plan shall apply to each Qualifying Outsourced Employee who has a company-provided vehicle.

Other Severance Benefits: A Qualifying Outsourced Employee shall also receive, if otherwise eligible, the Severance Benefits provided for in Section 4.4 (equity awards) and Section 4.5 (sabbatical), but shall not receive the Severance Benefits provided for in Section 4.3 (outplacement) of the Plan.


McDonald’s Corporation Severance Plan

Schedule G:

Severance Benefits for

Certain Rehired Qualifying Employees

This Schedule sets forth the Severance Benefits under the Plan for each Qualifying Employee who was a full-time Employee or a benefits-eligible part-time Employee immediately before his or her Termination Date, and who commences work with McDonald’s Corporation or any Related Entity after his or her Termination Date.

Severance Pay, Sabbatical Pay and Prorated TIP: A rehired Qualifying Employee shall be entitled to receive or retain his or her (1) sabbatical pay (if any) under Section 4.5, and (2) Prorated TIP (if any) under Section 4.6. A rehired Qualifying Employee shall be entitled to receive or retain the portion of his or her Severance Pay that is attributable to the Weeks of Severance (including any fraction of a Week of Severance) from the Termination Date through the date the Qualifying Employee is rehired and he or she shall repay the portion, if any, of the Severance Pay previously received by the Qualifying Employee that is attributable to the Weeks of Severance (including any fraction of a Week of Severance) on or after the date the Qualifying Employee is rehired. The Employers shall have the right to seek enforcement of their right to repayment in any court of competent jurisdiction.

Medical/Dental Coverage: The Employer’s payments for COBRA Premiums provided for in Section 4.2 of the Plan shall end upon the Qualifying Employee’s reemployment.

Outplacement: Any outplacement assistance under Section 4.3 shall cease upon the Qualifying Employee’s reemployment.

Company Vehicle: A rehired Qualifying Employee may keep any company-provided vehicle that he or she purchased or was in the process of purchasing under Section 4.7 of the Plan.

Equity Awards: A rehired Qualifying Employee shall be treated as a new employee for stock option and restricted stock unit purposes.


McDonald’s Corporation Severance Plan

Schedule H:

Severance Benefits for Certain Part-Time Employees

This Schedule sets forth the Severance Benefits under the Plan for each Qualifying Employee who is a part-time Employee who is not benefits-eligible before his or her Termination Date.

A Qualifying Employee who is a part-time Employee and who is not benefits eligible shall receive Severance Pay in an amount equal to his or her Weekly Base Pay multiplied by his or her Weeks of Severance determined in accordance with his or her compensation band as set forth in the chart below, as applicable, but shall not receive any other Severance Benefits under the Plan.

 

Compensation Band

  

Weeks of Severance

 

  

Weeks/Years

of Service

  

Minimum

  

Maximum

Associate and Coordination

  

2 weeks

  

8 weeks

  

20 weeks

Specialist, Supv/Consulting & Mgmt/Advisory

  

2 weeks

  

12 weeks

  

26 weeks

Direction and Sr. Direction

  

2 weeks

  

16 weeks

  

38 weeks

Leadership and above

  

2 weeks

  

26 weeks

  

52 weeks

 

 

First Amendment of

McDonald’s Corporation Severance Plan

The McDonald’s Corporation Severance Plan (the “Plan”) is hereby amended effective as of October 1, 2008 by adding the attached Schedule I to the Plan.

Except for this addition of Schedule I, the Plan shall remain in full force and effect.

Executed in multiple originals this 21st day of October, 2008.

 

McDONALD’S CORPORATION

By

 

/s/ Richard Floersch

Its Corporate Executive Vice President and

Chief Human Resources Officer


Schedule I:

Severance Benefits for

Qualifying McOpCo Restaurant Managers & Shared Restaurant Support Employees

This Schedule sets forth the Severance Benefits under the Plan for each Qualifying Employee (1) who is salaried Restaurant Manager (including a salaried assistant manager) or a full time salaried or hourly Shared Restaurant Support Employee (as determined by the Plan Administrator) before his or her Termination Date, (2) whose Covered Termination occurs as a result of the elimination of his or her job because of the sale of one or more restaurants, and (3) who is either (i) not offered employment with the purchasing Operator of the restaurant or (ii) offered employment (x) with a level of responsibility not comparable to his or her job that was eliminated (as determined by the Plan Administrator in his or her sole discretion), (y) at a rate of monthly Base Pay less than 80% of his or her rate of monthly Base Pay immediately before the Termination Date, or (z) at a location more than 35 miles from the location of his or her eliminated job.

Weeks of Severance: Each Qualifying Employee covered by this Schedule shall be credited with four (4) Weeks of Severance.

Severance Pay: Each Qualifying Employee shall receive Severance Pay in a lump sum in an amount equal to his or her Weekly Base Pay multiplied by his or her Weeks of Severance.

Medical/Dental Coverage: The Employers shall make the payments for COBRA Premiums provided for in Section 4.2 of the Plan during the Qualifying Employee’s Severance Period (4 weeks).

Company Vehicle: Section 4.7 of the Plan shall apply to each Qualifying Employee who has a company-provided vehicle.

Other Severance Benefits: A Qualifying Employee shall also receive, if otherwise eligible, the Severance Benefits provided for in Section 4.4 (equity awards) and Section 4.5 (sabbatical), but shall not receive the Severance Benefits provided for in Section 4.3 (outplacement) of the Plan.

 

 

 

 

EX-10.(L)(II) 4 d260574dex10lii.htm SECOND AMENDMENT OF MCDONALD'S CORPORATION SEVERANCE PLAN

Exhibit (10)(l)(ii)

SECOND AMENDMENT

OF

McDONALD’S CORPORATION SEVERANCE PLAN

The McDonald’s Corporation Severance Plan (the “Plan”), as adopted effective January 1, 2008, and as subsequently amended, is hereby further amended, effective upon execution, as set for the below:

I.

By substituting the following for the first sentence of Article VIII of the Plan:

The Plan shall be administered by the Plan Administrator, which shall be a Committee consisting of three (3) or more officers of McDonald’s Corporation or McDonald’s USA, LLC appointed by the Chief Executive Officer of McDonald’s Corporation. The Chief Executive Office of McDonald’s Corporation shall also designate one member of the Committee to serve as the Chair of the Committee.

II.

By substituting the following for Article X of the Plan:

ARTICLE X.

Amendment and Termination

McDonald’s Corporation reserves the right to amend the Plan from time to time or to terminate the Plan; provided, however, that no such amendment or termination shall reduce the amount of Severance Benefits payable to any Qualifying Employee whose Termination Date has already occurred, who has signed and not revoked or rescinded a Release Agreement required by Section 6.1, and who has completed all other applicable paperwork on or before the effective date of such amendment or termination. Notwithstanding the foregoing, the Plan Administrator may amend or modify the terms of the Plan hereunder (i) to the extent necessary or advisable to comply with or obtain the benefits or advantages under the provisions of applicable law, regulations or rulings or requirements of the Internal Revenue Service or other governmental agency or of changes in such law, regulations, rulings or requirements (including, without limitation, any amendment necessary to comply with or secure an exemption from Section 409A of the Code) or (ii) to adopt any other procedural or cosmetic amendment that does not materially change the benefits to Qualifying Employees or materially increase the cost of the benefits provided hereunder. No person may amend this Plan in a manner that would subject any Covered Employee to taxation of his or her Severance Pay or any other Severance Benefits under Section 409A(a)(1) of the Code.

III.

Except as herein amended, the Plan shall remain in full force and effect.

Executed in multiple originals this 5th day of December, 2011.

 

McDONALD’S CORPORATION

By

 

/s/    Gloria Santona        

 

Gloria Santona

Its:

 

Corporate Executive Vice President,

 

General Counsel and Secretary

 

and

 

By

 

/s/    Richard Floersch        

 

Richard Floersch

Its:

 

Corporate Executive Vice President

 

and Chief Human Resources Officer

 

 

 

 

 

 

EXHIBIT (10)(i)

MCDONALD’S CORPORATION

TIER I

CHANGE OF CONTROL EMPLOYMENT AGREEMENT


MCDONALD’S CORPORATION

TIER I

CHANGE OF CONTROL EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”), dated as of                              , 2008 (the “Agreement Date”), is made by and between McDonald’s Corporation, a Delaware corporation (the “Company”), and                              (“Executive”). The Agreement supersedes in its entirety, any Change of Control Employment Agreement executed between the Company and the Executive prior to the date hereof (the “Original Agreement”).

RECITALS

The Company has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued service of Executive. The Company also believes it is imperative to reduce the distraction of Executive that would result from the personal uncertainties caused by a pending or threatened change of control of the Company, to encourage Executive’s full attention and dedication to the Company, and to provide Executive with compensation and benefits arrangements upon a change of control which ensure that the expectations of Executive will be satisfied and are competitive with those of similarly-situated corporations. This Agreement is intended to accomplish these objectives.

In addition, the Company has determined that it is in the best interests of the Company and its stockholders to ensure that the compensation and benefits provided pursuant to this Agreement comply with Section 409A of the Code (“Section 409A”). To accomplish this objective, this Agreement shall supersede in its entirety any Original Agreement, if applicable. This Agreement modifies the terms of the Original Agreement solely to the extent necessary to comply with Section 409A. The changes to any benefits provided for in the Original Agreement, if any, are not intended to enhance the benefits the Executive is entitled to receive.

ARTICLE I.

CERTAIN DEFINITIONS

As used in this Agreement, the terms specified below shall have the following meanings:

1.1.    “409A Change of Control” means a Change of Control that is also a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company within the meaning of U.S. Treasury Department Regulation Section 1.409A-3(i)(5).

1.2.    “Accrued Annual Bonus” means the amount of any Annual Bonus earned but not yet paid with respect to the latest Annual Performance Period ended prior to the Termination Date.

1.3.    “Accrued Base Salary” means the amount of Executive’s Base Salary that is earned but not yet paid as of the Termination Date.

1.4.    “Accrued Obligations” means, as of any date, the sum of Executive’s Accrued Base Salary, Accrued Annual Bonus, any accrued but unpaid vacation pay, and any other amounts and benefits which are then due to be paid or provided to Executive by the Company, but have not yet been paid or provided (as applicable).

1.5.    “Agreement Date” – see the introductory paragraph of this Agreement.

1.6.    “Agreement Term” means the period commencing on the Original Agreement Date and ending on the third anniversary of the Original Agreement Date or, if later, the date to which the Agreement Term is extended under the following sentence. Commencing on the first anniversary of the Original Agreement Date, the Agreement


Term shall automatically be extended on such date and on each day thereafter by one day until, at any time after the first anniversary of the Original Agreement Date, the Company delivers written notice (an “Expiration Notice”) to Executive that the Agreement shall expire on a date specified in the Expiration Notice (the “Expiration Date”); provided that such date is not prior to the last day of the Agreement Term (as extended); provided further, however, that if an Effective Date or an Imminent Change Date occurs before the Expiration Date specified in the Expiration Notice, then such Expiration Notice shall be void and of no further effect.

1.7.    “Annual Bonus” – see Section 2.2(b).

1.8.    “Annual Performance Period” – see Section 2.2(b).

1.9.    “Article” means an article of this Agreement.

1.10.    “Base Salary” – see Section 2.2(a).

1.11.    “Beneficial Ownership” has the meaning specified in Rule 13d-3 of the SEC under Exchange Act for a “Beneficial Owner.”

1.12.    “Beneficiary” – see Section 10.3.

1.13.    “Board” means the Company’s Board of Directors.

1.14.    “Bonus Plan” – see Section 2.2(b).

1.15.    “Business Combination” means a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company and/or any entity controlled by the Company, or a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any entity controlled by the Company.

1.16.    “Cause” means any one or more of the following:

(a)    Executive’s conviction of a felony or other crime involving fraud, dishonesty or moral turpitude, excluding Limited Vicarious Liability;

(b)    Executive’s willful or reckless material misconduct in the performance of Executive’s duties;

(c)    Executive’s willful habitual neglect of material duties; or

(d)    Executive’s willful or intentional material breach of this Agreement;

provided, however, that for purposes of clauses (b), (c), and (d), Cause shall not include any one or more of the following:

(i)    bad judgment or negligence;

(ii)    any act or omission believed by Executive in good faith to have been in or not opposed to the interest of the Company (without intent of Executive to gain, directly or indirectly, a profit to which Executive was not legally entitled);

(iii)    any act or omission with respect to which a determination could properly have been made by the Board that Executive met the applicable standard of conduct for indemnification or reimbursement under the Company’s by-laws, any applicable indemnification agreement, or applicable law, in each case in effect at the time of such act or omission; or


(iv)    any act or omission with respect to which the Company gives Executive a Notice of Consideration more than six (6) months after the earliest date on which any member of the Board, not a party to the act or omission, knew or should have known of such act or omission; and

further provided that, if a breach of this Agreement involved an act, or a failure to act, which was done, or omitted to be done, by Executive in good faith and with a reasonable belief that Executive’s act, or failure to act, was in the best interests of the Company or was required by applicable law or administrative regulation, such breach shall not constitute Cause if, within thirty (30) days after Executive is given written notice of such breach that specifically refers to this Section, Executive cures such breach to the fullest extent that it is curable.

1.17.    “Change of Control” means the happening of any of the following events:

(a)    the acquisition by any Person of “beneficial ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of 20% or more of either (A) the then-outstanding shares of Stock (“Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this
Section 1.17(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (4) any acquisition by any entity pursuant to a transaction that complies with Sections 1.17(c)(i), (ii) and (iii); or

(b)    individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(c)    consummation of a reorganization, merger, statutory share exchange of consolidation or similar corporate transaction involving the Company and/or any entity controlled by the Company, or a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any entity controlled by the Company (each, a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectfully, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or


(d)    approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

1.18.    “Code” means the Internal Revenue Code of 1986, as amended.

1.19.    “Company” means McDonald’s Corporation.

1.20.    “Company Certificate” – see Section 5.1(a).

1.21.    “Company Counsel Opinion” – see Section 5.5.

1.22.    “Confidential Information” means any information not generally known in the relevant trade or industry of the Company, which was obtained from the Company, or which was learned, discovered, developed, conceived, originated or prepared during or as a result of the performance of any services by Executive on behalf of the Company and which:

(a)    relates to one or more of the following:

(i)    trade secrets of the Company or any customer or supplier of the Company;

(ii)    existing or contemplated products, services, technology, designs, processes, formulae, algorithms, research or product developments of the Company or any customer or supplier of the Company;

(iii)    business plans, sales or marketing methods, methods of doing business, customer lists, customer usages and/or requirements, supplier information of the Company or any customer or supplier of the Company; or

(iv)    information obtained by the Company from a third party and which the Company is required to preserve as confidential pursuant to a confidentiality agreement, applicable law or court or administrative order;

(b)    the Company or any customer or supplier of the Company may reasonably have the right to protect by patent, copyright or by keeping it secret and confidential; or

(c)    otherwise offers the Company a competitive advantage in the relevant industry or in any other business in which the Company is engaged.

Confidential Information does not include any information that is or may become publicly known other than through the improper actions of Executive.

1.23.    “Consummation Date” means the date upon which a Business Combination is consummated.

1.24.    “Disability” means any medically determinable physical or mental impairment that has lasted for a continuous period of not less than six (6) months and can be expected to be permanent or of indefinite duration and that renders Executive unable to perform the duties required under this Agreement.

1.25.    “Disability Effective Date” – see Section 3.1.

1.26.    “Effective Date” means each date on which a Change of Control first occurs during the Agreement Term.

1.27.    “Employer Defined Contribution Plan Contribution” means the product of (i) the average annual percentage of Executive’s annual base salary paid within the three-year period immediately preceding the Effective Date by the Company to or for the benefit of Executive as an employer contribution (including matching


contributions) under the Company’s Non-Qualified Plans and Qualified Plans which are defined contribution plans on behalf of Executive, multiplied by (ii) Executive’s Base Salary as of the Termination Date or, if greater, during the 12-month period immediately preceding the Effective Date.

1.28.    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

1.29.    “Excise Taxes” – see Section 5.1(a).

1.30.    “Executive Counsel Opinion” – see Section 5.5.

1.31.    “Executive Retention Replacement Plan” means the Company’s Executive Retention Replacement Plan, as amended and restated effective as of January 1, 2008, and as further amended from time to time.

1.32.    “Executive Retention Replacement Plan Benefits” means the sum of the cash severance benefits, if any, paid or payable to Executive pursuant to Section 4.1 of the Company’s Executive Retention Replacement Plan.

1.33.    “Executive’s Gross-Up Determination” – see Section 5.2(a).

1.34.    “Good Reason” means the occurrence of any one or more of the following actions or omissions that, unless otherwise specified, occurs during a Post-Change Employment Period:

(a)    any failure to pay Executive’s Base Salary or Annual Bonus in violation of Section 2.2 or any failure to increase Executive’s Base Salary to the extent, if any, required by such Section;

(b)    any failure by the Company to comply with any provision of Article II;

(c)    any material adverse change in Executive’s position (including offices, titles, reporting requirements or responsibilities), authority, duties or other terms and conditions of Executive’s employment;

(d)    requiring Executive to be based at any office or location other than the location specified in Section 2.1(a);

(e)    any material breach of this Agreement by the Company;

(f)    any Termination of Employment by the Company that purports to be for Cause, but is not in full compliance with all of the substantive and procedural requirements of this Agreement (any such purported termination shall be treated as a Termination of Employment without Cause for all purposes of this Agreement); or

(g)    the failure at any time of a successor to the Company or a Parent Corporation of a successor to the Company explicitly to assume and agree to be bound by this Agreement.

Notwithstanding the foregoing, in the case of the events or circumstances constituting Good Reason described in (a) through (e), above, Executive may terminate for Good Reason only if the Company fails to cure such events or circumstances within thirty (30) days after receiving written notice from Executive of Executive’s intent to terminate for Good Reason. No such written notice or opportunity to cure must be provided by Executive if Executive terminates for Good Reason as provided in (f) through (g), above, or in the event that the Company has caused repeated events or circumstances described in (a) through (e), above, or if the Company’s action(s) and/or omission(s) entitling Executive to terminate for Good Reason were either intentional or willful.

1.35.    “Gross-up Multiple” – see Section 5.4.

1.36.    “Gross-up Payment” – see Section 5.1(a).


1.37.    “Imminent Change Date” means any date on which one or more of the following occurs (i) a presentation to the Company’s stockholders generally or any of the Company’s directors or executive officers of a proposal or offer which, if consummated, would be a Change of Control, (ii) the public announcement (whether by advertisement, press release, press interview, public statement, SEC filing or otherwise) of a proposal or offer which if consummated would be a Change of Control, or (iii) such proposal or offer remains effective and unrevoked.

1.38.    “Imminent Change Period” means the period commencing on the Imminent Change Date and ending on the earlier to occur of (a) a Change of Control or (b) the date the offer or proposal for a Change of Control is no longer effective or has been revoked.

1.39.    “Including” means including without limitation.

1.40.    “Incumbent Board” means, as of any specified baseline date, individuals then serving as members of the Board who were members of the Board as of the date immediately preceding such baseline date; provided that any subsequently-appointed or elected member of the Board whose election, or nomination for election by stockholders of the Company or the Surviving Corporation, as applicable, was approved by a vote or written consent of at least two-thirds of the directors then comprising the Incumbent Board shall also thereafter be considered to be on the Incumbent Board, unless the initial assumption of office of such subsequently-elected or appointed director was in connection with (i) an actual or threatened election contest, including a consent solicitation, relating to the election or removal of one or more members of the Board, (ii) a “tender offer” (as such term is used in Section 14(d) of the Exchange Act), or (iii) a proposed Business Combination.

1.41.    “IRS” means the Internal Revenue Service.

1.42.    “Key Employee” means a “specified employee” as determined in accordance with the McDonald’s Corporation Section 409A Specified Key Employee Policy adopted as in effect on January 1, 2008 and as amended from time to time in accordance with Treasury Regulation Section 1.409A-1(i).

1.43.    “Limited Vicarious Liability” means any liability which is (i) based on acts of the Company for which Executive is responsible solely as a result of his office(s) with the Company and (ii) provided that (x) he was not directly involved in such acts and either had no prior knowledge of such intended actions or promptly acted reasonably and in good faith to attempt to prevent the acts causing such liability or (y) he did not have a reasonable basis to believe that a law was being violated by such acts.

1.44.    “Maximum Annual Bonus” means the maximum bonus amount achievable by Executive under a Bonus Plan for a given Annual Performance Period; provided that in no event shall such amount be less than the amount required to be paid pursuant to Section 2.2(b).

1.45.    “Non-Competition and Release Agreement” is an agreement, in substantially the form attached hereto in Annex A, executed by and between Executive and the Company as a condition to Executive’s receipt of the benefits described in Section 4.1.

1.46.    “Non-Qualified Plan” means any deferred compensation Plan that is not qualified under Section 401(a) of the Code.

1.47.    “Notice of Consideration” – see Section 3.3(b)(ii).

1.48.    “Notice of Termination” means a written notice given in accordance with Section 10.8 which sets forth (a) the specific termination provision in this Agreement relied upon by the party giving such notice, (b) in reasonable detail the specific facts and circumstances claimed to provide a basis for such Termination of Employment, and (c) if the Termination Date is other than the date of receipt of such Notice of Termination, the Termination Date.

1.49.    “Original Agreement” – see the introductory paragraph of this Agreement.


1.50.    “Original Agreement Date” means [                    ], the date as of which Executive first executed an Original Agreement, if any, or the Agreement Date if there is no Original Agreement.

1.51.    “Outstanding Company Common Stock” means Shares of Stock of the Company that are outstanding as of the Effective Date.

1.52.    “Outstanding Company Voting Securities” means Voting Securities of the Company that are outstanding as of the Effective Date.

1.53.    “Parent Corporation” means a corporation which owns 50% or more of the common stock or Voting Securities of any corporation and any other corporation which owns any corporation which is in an unbroken chain of corporations each of which owns successively in an unbroken chain of corporations which includes the subject corporation.

1.54.    “Person” means any individual, sole proprietorship, partnership, joint venture, limited liability company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government instrumentality, division, agency, body or department.

1.55.    “Plans” means plans, programs, or Policies of the Company.

1.56.    “Policies” means policies, practices or procedures of the Company.

1.57.    “Post-Change Employment Period” means the period commencing on the Effective Date and ending on the earlier of (a) the third anniversary of the Effective Date or (b) Executive’s Termination of Employment.

1.58.    “Post-Retirement Medical Plan” means the McDonald’s Corporation Post-Retirement Medical Plan or any other similar plan or program hereinafter sponsored by the Company or a subsidiary thereof.

1.59.    “Potential Parachute Payments” – see Section 5.1.

1.60.    “Pro-Rata LTIP Awards” means, with respect to each award under any long-term cash incentive plan maintained by the Company that is outstanding on the Effective Date (an “LTIP Award”), an amount equal to the product of (a) 100% of the amount to which Executive would be entitled under such LTIP Award if the performance goals established with respect to such LTIP Award were achieved at the 100% level as of the end of the applicable performance period, multiplied by (b) a fraction, the numerator of which equals the number of full and fractional months from and including the first day of the performance period with respect to such LTIP Award through and including the Effective Date, and the denominator of which equals the total number of months in such performance period.

1.61.    “Pro-Rata Performance-Based Annual Bonus” means, in respect of the Annual Performance Period during which the Effective Date (in the case of a Pro-Rata Performance-Based Annual Bonus payable pursuant to Section 2.3(b) hereof) or the Termination Date (in the case of a Pro-Rata Performance-Based Annual Bonus payable pursuant to Article IV hereof), as applicable, occurs, an amount equal to the product of (i) Executive’s actual Annual Bonus for the Annual Performance Period during which the Effective Date or the Termination Date, as applicable, occurs, determined in accordance with the next sentence of this Section 1.61 multiplied by (ii) a fraction, the numerator of which equals the number of days from and including the first day of such Annual Performance Period through and including the Effective Date or the Termination Date, as applicable, and the denominator of which equals 365. Executive’s actual Annual Bonus for the relevant Annual Performance Period shall be the actual bonus to which Executive would have been entitled had Executive continued in employment throughout the relevant Annual Performance Period determined based on the actual performance of McDonald’s Corporation and its subsidiaries and business units during such Annual Performance Period but without regard to any discretionary individual performance factors.


1.62.    “Pro-Rata Target Annual Bonus” means, in respect of the Annual Performance Period during which the Effective Date (in the case of a Pro-Rata Target Annual Bonus payable pursuant to Section 2.3(a) hereof) occurs, an amount equal to the product of Executive’s Target Annual Bonus for such Annual Performance Period multiplied by a fraction, the numerator of which equals the number of days from and including the first day of such Annual Performance Period through and including the Effective Date, and the denominator of which equals 365.

1.63.    “Qualified Plan” means any plan that meets the qualification requirements of Internal Revenue Service Code Section 401(a) or 403(a).

1.64.    “Release Date” means the date on which the rescission period set forth in Executive’s Non-Competition and Release Agreement expires without any revocation or rescission of such agreement by the Executive within such rescission period.

1.65.    “SEC” means the Securities and Exchange Commission.

1.66.    “Section 409A” – see the Recitals to this Agreement.

1.67.    “Severance Period” means a period equal to three years.

1.68.    “Surviving Corporation” means the corporation resulting from a Business Combination and any Parent Corporation of such corporation.

1.69.    “Target Annual Bonus” as of a certain date means the amount equal to the product of Base Salary determined as of such date multiplied by the percentage of such Base Salary to which Executive would have been entitled immediately prior to such date under any Bonus Plan for the Annual Performance Period for which the Annual Bonus is awarded if the performance goals established pursuant to such Bonus Plan were achieved at the 100% level as of the end of the Annual Performance Period.

1.70.    “Taxes” means federal, state, local or other income or other taxes.

1.71.    “Termination Date” means the date on which Executive incurs a Termination of Employment for any reason.

1.72.    “Termination of Employment” means the date on which Executive incurs a “separation from service” with the Company within the meaning of Section 409A and the regulations issued thereunder.

1.73.    “Voting Securities” of a corporation means securities of such corporation that are entitled to vote generally in the election of directors of such corporation, but not including any other class of securities of such corporation that may have voting power by reason of the occurrence of a contingency which contingency has not occurred.

ARTICLE II.

POST-CHANGE EMPLOYMENT PERIOD

2.1.    Position and Duties.

(a)    During the Post-Change Employment Period, Executive’s position (including offices, titles, reporting requirements and responsibilities), authority and duties shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 90-day period immediately before the Effective Date and Executive’s services shall be performed at the location where Executive was employed immediately before the Effective Date or any other location no more than 30 miles from such former location.

(b)    During the Post-Change Employment Period (other than any periods of vacation, sick leave or disability to which Executive is entitled), Executive agrees to devote Executive’s full attention and


time to the business and affairs of the Company and, to the extent necessary to discharge the duties assigned to Executive in accordance with this Agreement, to use Executive’s best efforts to perform such duties. During the Post-Change Employment Period, Executive may (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (iii) manage personal investments, so long as such activities are consistent with the Policies of the Company at the Effective Date and do not significantly interfere with the performance of Executive’s duties under this Agreement. To the extent that any such activities have been conducted by Executive immediately prior to the Effective Date and were consistent with the Policies of the Company at the Effective Date, the continued conduct of such activities (or activities similar in nature and scope) after the Effective Date shall not be deemed to interfere with the performance of Executive’s duties under this Agreement.

2.2.    Compensation.

(a)    Base Salary. During the Post-Change Employment Period, the Company shall pay or cause to be paid to Executive an annual base salary in cash, which shall be paid in a manner consistent with the Company’s payroll practices in effect immediately before the Effective Date, at an annual rate not less than 12 times the highest monthly base salary paid or payable to Executive by the Company in respect of the 12-month period immediately before the Effective Date (such annual rate salary, the “Base Salary”). During the Post-Change Employment Period, the Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be substantially consistent with increases in base salary awarded to other peer executives of the Company. Any increase in Base Salary shall not limit or reduce any other obligation of the Company to Executive under this Agreement. After any such increase, the Base Salary shall not be reduced and the term “Base Salary” shall thereafter refer to the increased amount.

(b)    Annual Bonus. In addition to Base Salary, the Company shall pay or cause to be paid to Executive a bonus (the “Annual Bonus”) for Annual Performance Period which ends during the Post-Change Employment Period. “Annual Performance Period” means each 12-consecutive-month period of time designated in accordance with any annual bonus arrangement (a “Bonus Plan”) which is based upon performance and approved by the Board or any committee of the Board, or in the absence of any Bonus Plan or any such designated period of time, each calendar year; provided, however, that the Annual Bonus paid to the Executive with respect to the Annual Performance Period in which the Effective Date occurs shall be reduced (but not below zero) by the amount of the Pro-Rata Target Annual Bonus, if any, paid to Executive pursuant to Section 2.3(a) or the Pro-Rata Performance-Based Annual Bonus, if any, paid to Executive pursuant to Section 2.3(b). The Target Annual Bonus for any Annual Performance Period which ends during the Post-Change Employment Period shall be not less than the Target Annual Bonus determined as of the Effective Date. In addition, the performance goals under the Bonus Plan shall not be materially more difficult to achieve than the performance goals in the Bonus Plan (or designated by the Board) in effect during the Annual Performance Period immediately before the Effective Date and the Maximum Annual Bonus shall not be less than the maximum bonus achievable under the Bonus Plan (or designated by the Board) during the Annual Performance Period ended immediately before the Effective Date (or if higher, the Maximum Annual Bonus for the Annual Performance Period that commenced immediately before the Effective Date).

(c)    Incentive, Savings and Retirement Plans. In addition to Base Salary and Annual Bonus, Executive shall be entitled to participate during the Post-Change Employment Period in all incentive (including long-term incentives), profit sharing, ESOP, 401(k), savings and retirement Plans applicable to other peer executives of the Company, but in no event shall such Plans provide Executive with incentive (including long-term incentives), profit sharing, ESOP, 401(k), savings and retirement benefits during the Post-Change Employment Period which, in any case, are materially less favorable, in the aggregate, than the most favorable of those provided by the Company for Executive under such Plans as in effect at any time during the 12-month period immediately before the Effective Date.

(d)    Welfare Benefit Plans. During the Post-Change Employment Period, Executive and Executive’s family shall be eligible to participate in, and receive all benefits under, welfare benefit Plans


provided by the Company (including medical, prescription, dental, disability, salary continuance, individual life, group life, dependent life, accidental death and travel accident insurance Plans) and applicable to other peer executives of the Company and their families, but in no event shall such Plans provide benefits during the Post-Change Employment Period which are materially less favorable, in the aggregate, than the most favorable of those provided to Executive under such Plans as in effect at any time during the 12-month period immediately before the Effective Date.

(e)    Fringe Benefits. During the Post-Change Employment Period, Executive shall be entitled to fringe benefits in accordance with the most favorable Plans applicable to peer executives of the Company, but in no event shall such Plans provide fringe benefits which in any case are materially less favorable, in the aggregate, than the most favorable of those provided by the Company to Executive under such Plans in effect at any time during the 12-month period immediately before the Effective Date.

(f)    Expenses. During the Post-Change Employment Period, Executive shall be entitled to prompt reimbursement of all reasonable employment-related expenses incurred by Executive upon the Company’s receipt of accountings in accordance with the most favorable Policies applicable to peer executives of the Company, but in no event shall such Policies be materially less favorable, in the aggregate, than the most favorable of those provided by the Company for Executive under such Policies in effect at any time during the 12-month period immediately before the Effective Date.

(g)    Office and Support Staff. During the Post-Change Employment Period, Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to secretarial and other assistance in accordance with the most favorable Policies applicable to peer executives of the Company, but in no event shall such Policies be materially less favorable, in the aggregate, than the most favorable of those provided by the Company for Executive under such Policies in effect at any time during the 12-month period immediately before the Effective Date.

(h)    Vacation. During the Post-Change Employment Period, Executive shall be entitled to paid vacation in accordance with the most favorable Policies applicable to peer executives of the Company, but in no event shall such Policies be materially less favorable, in the aggregate, than the most favorable of those provided by the Company for Executive under such Policies in effect at any time during the 12-month period immediately before the Effective Date.

2.3.    Pro-Rata Annual Bonus.

(a)    409A Change of Control. Within thirty (30) days after the Effective Date of a 409A Change of Control, the Company shall pay Executive a lump-sum cash payment equal to the Pro-Rata Target Annual Bonus determined as of the Effective Date.

(b)    Change of Control Other Than a 409A Change of Control. In the event of a Change of Control that is not a 409A Change of Control, the Company shall pay Executive (or, in the event of Executive’s death, his or her estate or Beneficiary) a lump-sum cash payment equal to the Pro-Rata Performance-Based Annual Bonus payable with respect to the Annual Performance Period during which the Effective Date occurs, determined based on the relevant measurements of the actual performance of the Company and its subsidiaries and business units during such Annual Performance Period and payable on the date on which annual bonuses for such Annual Performance Period are paid to employees of the Company generally (without regard to Executive’s employment status with the Company as of such date).

2.4.    Pro-Rata Annual LTIP Awards.

(a)    409A Change of Control. Within thirty (30) days after the Effective Date of a 409A Change of Control, the Company shall pay Executive, with respect to each LTIP Award that is outstanding on the Effective Date, a lump-sum cash payment equal to the Pro-Rata LTIP Award determined as of the Effective Date and the remaining portion of each such LTIP Award shall be cancelled.


(b)    Change of Control Other Than a 409A Change of Control. In the event of a Change of Control that is not a 409A Change of Control, the Company shall pay Executive, with respect to each LTIP Award that is outstanding on the Effective Date, a lump-sum cash payment equal to the Pro-Rata LTIP Award determined as of the Effective Date and the remaining portion of each such LTIP Award shall be cancelled. This payment will be made on the same date that LTIP Awards with respect to the applicable performance period would have been paid to eligible employees had the Change of Control not occurred.

ARTICLE III.

TERMINATION OF EMPLOYMENT

3.1.    Disability. During the Post-Change Employment Period, the Company may terminate Executive’s employment because of Executive’s Disability by giving Executive or his legal representative, as applicable, (i) written notice in accordance with Section 10.8 of the Company’s intention to terminate Executive’s employment pursuant to this Section, and (ii) a certification of Executive’s Disability by a physician jointly selected by the Company and the Executive; provided that, if the Company and Executive cannot reach agreement on the physician, the certification shall be by a panel of physicians consisting of one physician selected by the Company, one physician selected by the Executive and a third physician jointly selected by those two physicians. Executive’s employment shall terminate effective on the 30th day (the “Disability Effective Date”) after Executive’s receipt of such notice unless, before the Disability Effective Date, Executive shall have resumed the full-time performance of Executive’s duties.

3.2.    Death. Executive’s employment shall terminate automatically upon Executive’s death during the Post-Change Employment Period.

3.3.    Cause.

(a)    During the Post-Change Employment Period, the Company may terminate Executive’s employment for Cause solely in accordance with all of the substantive and procedural provisions of this Section.

(b)    The Company shall strictly observe each of the following procedures in connection with any Termination of Employment for Cause:

(i)    The issue of determining whether Executive’s acts or omissions satisfy the definition of “Cause” as set forth in Section 1.15 and, if so, whether to terminate Executive’s employment for Cause shall be raised and discussed at a meeting of the Board.

(ii)    Not less than thirty (30) days prior to the date of such meeting, the Company shall provide Executive and each member of the Board written notice (a “Notice of Consideration”) of (x) a detailed description of the acts or omissions alleged to constitute Cause, (y) the date, time and location of such meeting of the Board, and (z) Executive’s rights under clause (iii) below.

(iii)    Executive shall have the opportunity to appear before the Board at such meeting in person and, at Executive’s option, with legal counsel, and to present to the Board a written and/or oral response to the Notice of Consideration.

(iv)    Executive’s employment may be terminated for Cause only if (x) the acts or omissions specified in the Notice of Consideration did in fact occur and do constitute Cause, (y) the Board makes a specific determination to such effect and to the effect that Executive’s employment should be terminated for Cause, and (z) the Company thereafter provides Executive with a Notice of Termination which specifies in specific detail the basis of such Termination of Employment for Cause and which Notice shall be based upon one or more of the acts or omissions set forth in the Notice of Consideration. The Board’s determination specified in clause (y) of the preceding sentence shall require the affirmative vote of at least 75% of the members of the Board.


(v)    In the event that the issue of whether Executive was properly terminated for Cause becomes a disputed issue in any action or proceeding between the Company and Executive, the Company shall, notwithstanding the determination referenced in clause (iv) of this Section 3.3(b), have the burden of establishing by clear and convincing evidence that the actions or omissions specified in the Notice of Termination did in fact occur, do constitute Cause, were the basis for Executive’s termination and that the Company has, in each and every respect, satisfied the procedural requirements of this Section 3.3(b).

3.4.    Good Reason.

(a)    During the Post-Change Employment Period, Executive may terminate his or her employment for Good Reason in accordance with the substantive and procedural provisions of this Section.

(b)    In the event Executive determines there is Good Reason to terminate, Executive shall notify the Company of the events constituting such Good Reason by a Notice of Termination. A delay in the delivery of such Notice of Termination or a failure by Executive to include in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of Executive under this Agreement or preclude Executive from asserting such fact or circumstance in enforcing rights under this Agreement; provided that no act or omission by the Company shall qualify as Good Reason if Executive’s Termination of Employment occurs more than 12 months after Executive first obtains actual knowledge of such act or omission.

(c)    If the Termination Date occurs during any portion of a Post-Change Employment Period, any reasonable determination by Executive that any of the events specified in the definition of Good Reason in Section 1.34 above, has occurred and constitutes Good Reason shall be conclusive and binding for all purposes, unless the Company establishes by clear and convincing evidence that Executive did not have any reasonable basis for such determination.

(d)    In the event that the Company conceals any act or omission by the Company that occurs during the Post-Change Employment Period and qualifies as Good Reason, any subsequent Termination of Employment (whether by the Company or by Executive and regardless of the circumstances of such termination) that occurs at any time after such act or omission shall conclusively be deemed to be a Termination of Employment by Executive for Good Reason, notwithstanding any provision of this Agreement to the contrary.

3.5.    Delivery of Non-Competition and Release Agreement. In the event the Company terminates Executive’s employment for any reason other than for Cause or Disability, the Company shall, not later than the date it delivers the Notice of Termination to Executive, present Executive with a Non-Competition and Release Agreement for execution by Executive. In the event Executive terminates his employment for Good Reason, the Company shall, not later than ten (10) business days after the Company receives the Notice of Termination, present Executive with a Non-Competition and Release Agreement for execution by Executive.

ARTICLE IV.

COMPANY’S OBLIGATIONS UPON A TERMINATION OF EMPLOYMENT

4.1.    If by Executive for Good Reason or by the Company Other Than for Cause or Disability. If, during the Post-Change Employment Period, (i) the Company terminates Executive’s employment other than for Cause or Disability, or if Executive terminates employment for Good Reason, and (ii) Executive delivers an executed Non-Competition and Release Agreement to the Company within sixty (60) days after Executive’s Termination Date (and does not rescind such agreement within the rescission period set forth in such agreement), the Company’s sole obligations to Executive under Articles II and IV shall be as follows:

(a)    The Company shall pay Executive, in addition to all vested rights arising from Executive’s employment as specified in Article II, a cash amount equal to the sum of the following:

(i)    all Accrued Obligations;


(ii)    Executive’s Pro-Rata Performance-Based Annual Bonus reduced (but not below zero) by the amount of the Pro-Rata Target Annual Bonus, if any, previously paid to Executive pursuant to Section 2.3(a) with respect to the Annual Performance Period in which the Termination Date occurs or the Pro-Rata Performance-Based Annual Bonus payable pursuant to Section 2.3(b) with respect to the Annual Performance Period in which the Termination Date occurs;

(iii)    an amount equal to the number of years in the Severance Period times the sum of:

(A)    Base Salary,

(B)    the Target Annual Bonus, and

(C)    Employer Defined Contribution Plan Contribution;

each determined as of the Termination Date; provided, however, that any reduction in Executive’s Base Salary or Target Annual Bonus that would qualify as Good Reason shall be disregarded for purposes of this clause.

The amount payable pursuant to clause (i) above shall be paid no more than thirty (30) days after the Termination Date. The amount payable pursuant to clause (ii) above shall be paid on the same date that annual bonuses for the Annual Performance Period are paid to employees of the Company but not prior to the Release Date. The amount payable pursuant to clause (iii) shall be paid at any time during the ninety (90) day period following Executive’s Termination Date as determined by the Company in its sole discretion (even if prior to the Release Date); provided, however, that if Executive is a Key Employee as of the Termination Date, the payment of the amount specified in clause (iii) shall be delayed until and shall be paid on the date that is six (6) months after Executive’s Termination Date or, if Executive dies before the end of such six-month period, as soon as practicable after Executive’s death. Notwithstanding the foregoing, if Executive fails to deliver an executed Non-Competition and Release Agreement to the Company within sixty (60) days after Executive’s Termination Date (or having timely delivered an executed Non-Competition and Release Agreement, Executive rescinds such agreement during the rescission period set forth in such agreement), the Company shall have no obligation to pay the amount specified in clause (iii) and Executive shall return to the Company the full amount, if any, previously paid to Executive pursuant to clause (iii). The Company shall have the right to seek enforcement of this repayment right in any court of competent jurisdiction.

(b)    If Executive and/or Executive’s family members are entitled to file, and do timely file, an election to continue any group health benefits under a medical, dental and/or vision benefit program maintained by the Company in accordance with the group healthcare continuation coverage provisions set forth in Part 6 of Subpart B of Title I of ERISA (“COBRA”), the Company shall pay a portion of the premiums for such coverage, as specified in the next sentence, during the portion of the Severance Period during which such COBRA coverage remains in effect. During such period, Executive shall be required to pay a portion of the COBRA premiums in an amount equal to the amount Executive would have paid for such group health benefits under the applicable program of the Company had Executive remained an employee of the Company during such period and the Company shall pay the balance of such COBRA premiums.

(c)    Until the end of the Severance Period or such later date as any Plan may specify, the Company shall continue to provide Executive with fringe and other benefits which are at least as favorable as the most favorable Plans of the Company applicable to other peer executives as of the Termination Date, but which are in no event less favorable than the most favorable Plans of the Company applicable to other peer executives during the 12-month period immediately before the Effective Date. To the extent that any benefits provided under this Section 4.1(c) are subject to Section 409A of the Code, they shall be provided only to the extent that they are reimbursements or in-kind benefits that satisfy the requirements described in U.S. Treasury Department Regulation Section 1.409A-3(i)(1)(iv). For instance, any such benefits provided


under this Section 4.1(c) in one calendar year shall not affect the amount of benefits provided in another calendar year. Any reimbursement by the Company of an expense eligible for reimbursement pursuant to this Section 4.1(c) shall be made no later than the last day of the calendar year following the year in which the expense was incurred. The Company may not pay Executive any cash (other than as reimbursement for an expense eligible for reimbursement) or other benefit in lieu of, or in exchange for, any right to benefits pursuant to this Section 4.1(c).

(d)    For purposes of determining Executive’s eligibility under the Company’s Post-Retirement Medical Plan or any other plan or arrangement providing retiree medical benefits, Executive shall be credited with a length of service that includes both the period of Executive’s actual service and Executive’s Severance Period. Executive shall also be treated for purposes of the Company’s Post-Retirement Medical Plan as having already attained the age that Executive will attain upon the conclusion of Executive’s Severance Period.

(e)    If Executive has a Termination of Employment and has completed at least eight (8) years of service towards his entitlement to paid sabbatical leave under the Company’s policies concerning sabbatical leave (and has not yet taken such sabbatical leave), Executive shall receive an additional amount, in a lump sum payment, equal to eight (8) weeks of Executive’s Base Salary, payable at the same time Executive receives the payment described in Section 4.1(c)(iii).

(f)    If Executive is a participant in the Executive Retention Replacement Plan, Executive shall receive the greater of, but not both of: (i) the aggregate benefits provided under this Agreement determined without regard to this Section 4.1(f); or (ii) the aggregate benefits provided under the Executive Retention Replacement Plan plus the tax Gross-up Payments provided under Article V of this Agreement, to the extent that such tax Gross-up Payments are applicable to the benefits provided to the Executive under the Executive Retention Replacement Plan. The value of such benefits shall be determined based on the present value of the benefits provided under each of this Agreement or the Executive Retention Replacement Plan as of the Termination Date.

If Executive has a Termination of Employment that would entitle Executive to benefits under this Section 4.1 but Executive fails to timely deliver an executed Non-Competition and Release Agreement to the Company (or having timely delivered an executed Non-Competition and Release Agreement, Executive rescinds such agreement during the rescission period set forth in the Non-Competition and Release Agreement), the Company’s sole obligation to Executive under Articles II and IV shall be to pay Executive a lump-sum cash amount equal to all Accrued Obligations determined as of the Termination Date.

4.2.    If by the Company for Cause. If the Company terminates Executive’s employment for Cause during the Post-Change Employment Period, the Company’s sole obligation to Executive under Articles II and IV shall be to pay Executive a lump-sum cash amount equal to all Accrued Obligations determined as of the Termination Date.

4.3.    If by Executive Other Than for Good Reason. If Executive terminates employment during the Post-Change Employment Period other than for Good Reason, Disability or death, the Company’s sole obligation to Executive under Articles II and IV shall be to pay Executive a lump-sum cash amount equal to all Accrued Obligations determined as of the Termination Date.

4.4.    If by the Company for Disability. If the Company terminates Executive’s employment by reason of Executive’s Disability during the Post-Change Employment Period, the Company’s sole obligation to Executive under Articles II and IV shall be as follows:

(a)    to pay Executive a lump-sum cash amount equal to all Accrued Obligations determined as of the Termination Date; and

(b)    to provide Executive disability and other benefits after the Termination Date that are not less than the most favorable of such benefits then available under Plans of the Company to disabled peer


executives of the Company or, if more favorable, those such benefits provided by the Company at any time during the 12-month period immediately preceding the Effective Date.

4.5.    If Upon Death. If Executive’s employment is terminated by reason of Executive’s death during the Post-Change Employment Period, the Company’s sole obligations to Executive under Articles II and IV shall be as follows:

(a)    to pay Executive’s estate or Beneficiary a lump-sum cash amount equal to all Accrued Obligations; and

(b)    to provide Executive’s estate or Beneficiary survivor and other benefits that are not less than the most favorable survivor and other benefits then available under Plans of the Company to the estates or the surviving families of peer executives of the Company or, if more favorable, those such benefits provided by the Company at any time during the 12-month period immediately preceding the Effective Date.

ARTICLE V.

CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

5.1.    Gross-up for Certain Taxes.

(a)    If it is determined (by the reasonable computation of the Company’s independent auditors, which determinations shall be certified to by such auditors and set forth in a written certificate (“Company Certificate”) delivered to the Executive) that any benefit received or deemed received by the Executive from the Company pursuant to this Agreement or otherwise (collectively, the “Potential Parachute Payments”) is or will become subject to any excise tax under Section 4999 of the Code or any similar tax payable under any United States federal, state, local or other law (such excise tax and all such similar taxes collectively, “Excise Taxes”), then the Company shall, no later than the last day of the calendar year following the calendar year in which Executive pays such Excise Taxes, pay the Executive an amount (the “Gross-up Payment”) equal to the product of:

(i)    the amount of such Excise Taxes

multiplied by

(ii)    the Gross-up Multiple (as defined in Section 5.4).

The Gross-up Payment is intended to compensate the Executive for the Excise Taxes and any federal, state, local or other income or excise taxes or other taxes payable by the Executive with respect to the Gross-up Payment. For all purposes of this Article V, Executive shall be deemed to be subject to the highest effective marginal rate of Taxes.

The Executive or the Company may at any time request the preparation and delivery to the Executive of a Company Certificate. The Company shall, in addition to complying with Section 5.2, cause all determinations and certifications under the Article to be made as soon as reasonably possible and in adequate time to permit the Executive to prepare and file the Executive’s individual tax returns on a timely basis.

(b)    Limitation on Gross-up Payment. Notwithstanding any other provision of this Article V, if the aggregate After-Tax Amount (defined below) of the Potential Parachute Payments and Gross-up Payment that, but for this Section (b), would be payable to Executive does not exceed 110% of the After-Tax Floor Amount (defined below), then no Gross-up Payment shall be made to Executive and the aggregate amount of Potential Parachute Payments payable to Executive shall be reduced (but not below the Floor Amount, defined below) to the largest amount which would both (i) not cause any Excise Tax to be payable by Executive and (ii) not cause any Potential Parachute Payments to become nondeductible by the Company by reason of Section 280G of the Code (or any successor provision).


(c)    For purposes of this Agreement:

(i)    “After-Tax Amount” means the portion of a specified amount that would remain after payment of all Taxes paid or payable by Executive in respect of such specified amount;

(ii)    “Floor Amount” means the greatest pre-tax amount of Potential Parachute Payments that could be paid to Executive without causing Executive to become liable for any Excise Taxes in connection therewith; and

(iii)    “After-Tax Floor Amount” means the After-Tax Amount of the Floor Amount.

5.2.    Determination by the Executive.

(a)    If the Company shall fail to deliver a Company Certificate to the Executive (and to pay to the Executive the amount of the Gross-up Payment, if any) within fourteen (14) days after receipt from the Executive of a written request for a Company Certificate, or if at any time following receipt of a Company Certificate the Executive disputes the amount of the Gross-up Payment set forth therein, the Executive may elect to demand the payment of the amount which the Executive, in accordance with an opinion of counsel to the Executive (“Executive Counsel Opinion”) (as defined in Section 5.5, below), determines to be the Gross-up Payment. Any such demand by the Executive shall be made by delivery to the Company of a written notice which specifies the Gross-up Payment determined by the Executive and an Executive Counsel Opinion regarding such Gross-up Payment (such written notice and opinion collectively, the “Executive’s Gross-Up Determination”). Within fourteen (14) days after delivery of the Executive’s Gross-Up Determination to the Company, the Company shall either (1) pay the Executive the Gross-up Payment set forth in the Executive’s Gross-Up Determination (less the portion of such amount, if any, previously paid to the Executive by the Company) or (2) deliver to the Executive a Company Certificate specifying the Gross-up Payment determined by the Company’s independent auditors, together with an opinion of the Company’s counsel (“Company Counsel Opinion” (as defined in Section 5.5, below)), and pay the Executive the Gross-up Payment specified in such Company Certificate. If for any reason the Company fails to comply with clause (2) of the preceding sentence, the Gross-up Payment specified in the Executive’s Gross-Up Determination shall be final, binding and controlling for all purposes.

(b)    If the Executive does not make a request for, and the Company does not deliver to the Executive, a Company Certificate, the Company shall be deemed to have determined that no Gross-up Payment is due; provided that the absence of such request by Executive or the issuance of a Company Certificate shall not preclude Executive from making such request at any future date.

5.3.    Additional Gross-up Amounts. If, despite the initial conclusion of the Company and/or the Executive that certain payments are either not subject to Excise Taxes or not to be counted in determining whether other payments are subject to Excise Taxes (any such item, a “Non-Parachute Item”), it is later determined (pursuant to the subsequently-enacted provisions of the Code, final regulations or published rulings of the IRS, final judgment of a court of competent jurisdiction or the Company’s independent auditors) that any of the Non-Parachute Items are subject to Excise Taxes, or are to be counted in determining whether any payments are subject to Excise Taxes, with the result that the amount of Excise Taxes payable by the Executive is greater or the amount of the Excise Taxes due are greater for any other reason than the amount determined by the Company or the Executive pursuant to Section 5.1 or 5.2, as applicable, then the Company shall pay the Executive an amount (which shall also be deemed a Gross-up Payment) equal to the product of:

(a)    the sum of (1) such additional Excise Taxes, and (2) any interest, fines, penalties, expenses or other costs incurred by the Executive as a result of having taken a position in accordance with a determination made pursuant to Section 5.1

multiplied by

(b)    the Gross-up Multiple.


5.4.    Gross-up Multiple. The Gross-up Multiple shall equal a fraction, the numerator of which is one (1.0), and the denominator of which is one (1.0) minus the sum, expressed as a decimal fraction, of the effective marginal rates of all federal, state, local and other income and other taxes and any Excise Taxes applicable to the Gross-up Payment; provided that, if such sum exceeds 0.8, it shall be deemed equal to 0.8 for purposes of this computation. (If different effective marginal rates of tax are applicable to various portions of a Gross-up Payment, the weighted average of such rates shall be used.)

5.5.    Opinion of Counsel. “Executive Counsel Opinion” means a legal opinion of nationally recognized executive compensation counsel that there is a reasonable basis to support a conclusion that the Gross-up Payment determined by the Executive has been calculated in accord with this Article and applicable law. “Company Counsel Opinion” means a legal opinion of nationally recognized executive compensation counsel that (a) there is a reasonable basis to support a conclusion that the Gross-up Payment set forth in the Company Certificate has been calculated in accord with this Article and applicable law, and (b) there is no reasonable basis for the calculation of the Gross-up Payment determined by the Executive.

5.6.    Amount Increased or Contested. The Executive shall notify the Company in writing of any claim by the IRS or other taxing authority that, if successful, would require the payment by the Company of a Gross-up Payment. Such notice shall include the nature of such claim and the date on which such claim is due to be paid. The Executive shall give such notice as soon as practicable, but no later than ten (10) business days, after the Executive first obtains actual knowledge of such claim; provided, however, that any failure to give or delay in giving such notice shall affect the Company’s obligations under this Article only if and to the extent that such failure results in actual prejudice to the Company. The Executive shall not pay such claim less than thirty (30) days after the Executive gives such notice to the Company (or, if sooner, the date on which payment of such claim is due). If the Company notifies the Executive in writing before the expiration of such period that it desires to contest such claim, the Executive shall:

(a)    give the Company any information that it reasonably requests relating to such claim;

(b)    take such action in connection with contesting such claim as the Company reasonably requests in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company;

(c)    cooperate with the Company in good faith to contest such claim; and

(d)    permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including related interest and penalties, imposed as a result of such representation and payment of costs and expenses. Without limiting the foregoing, the Company shall control all proceedings in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner. The Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify the Executive, on an after-tax basis, for any Excise Tax or Taxes, including related interest or penalties, imposed with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of Taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. The Company’s control of the contest shall be limited to issues with respect to which a Gross-up Payment would be payable. The Executive shall in Executive’s discretion be entitled to settle or contest, as the case may be, any other issue raised by the IRS or other taxing authority.

5.7.    Refunds. If, after the receipt by the Executive of an amount paid or advanced by the Company pursuant to Section 5.1, 5.3 and/or 5.6, the Executive becomes entitled to receive any refund with respect to such


claim or amount, the Executive shall (subject to the Company’s complying with the requirements of Section 5.6) promptly pay the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount paid or advanced by the Company pursuant to Section 5.1, 5.3 and/or 5.6, a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such determination before the earlier of (a) the expiration of thirty (30) days after such determination; or (b) the date such determination becomes final and non-appealable, then such advance shall be forgiven and shall not be required to be repaid and the Company shall pay Executive an amount sufficient to provide Executive with an After-Tax Amount equal to any amount of Taxes and Excise Taxes which Executive shall incur with respect to such amount being forgiven. Any contest of a denial of refund shall be controlled by Section 5.6.

ARTICLE VI.

EXPENSES AND INTEREST

6.1.    Legal Fees and Other Expenses.

(a)    If Executive incurs legal fees or other expenses (including expert witness and accounting fees) on or after the Effective Date, in an effort to enforce this Agreement, or to secure, preserve, establish entitlement to, or obtain benefits under this Agreement (including the fees and other expenses of Executive’s legal counsel in connection with the delivery of an Executive Counsel Opinion), the Company shall, regardless of the outcome of such effort, reimburse Executive on a current basis (in accordance with Section 6.1(b)) for such reasonable fees and expenses, and shall also pay Executive an additional payment such that, after payment of all Taxes and Excise Taxes on such amount, there remains a balance sufficient to pay all such fees and other expenses.

(b)    Reimbursement of legal fees and expenses and Gross-up Payments shall be made monthly within ten (10) days after Executive’s written submission of a request for reimbursement together with evidence that such fees and expenses were incurred; provided, however, that the reimbursement of legal fees and expenses shall be paid no later than the last day of the calendar year after such fees and expenses are incurred and the payment of the Gross-up Payments shall be paid no later than the last day of the calendar year following the calendar year in which the Executive pays the taxes to which the Gross-up Payments relate.

(c)    If Executive does not prevail (after exhaustion of all available judicial remedies) in respect of a claim by Executive or by the Company hereunder, and the Company establishes before a court of competent jurisdiction, by clear and convincing evidence, that Executive had no reasonable basis for his claim hereunder, or for his response to the Company’s claim hereunder, or acted in bad faith, no further reimbursement for legal fees and expenses shall be due to Executive in respect of such claim and Executive shall refund any amounts previously reimbursed hereunder with respect to such claim.

(d)    If there is a dispute between the Executive and the Company as to Executive’s rights to reimbursement of legal or other fees and expenses under this Agreement or the amount of such reimbursement, any amount of reimbursement requested by Executive and accompanied by legal opinion of nationally recognized executive compensation counsel that such amount should be paid under the Agreement shall be final, binding and controlling on the Company unless and to the extent the Company establishes otherwise by clear and convincing evidence.

6.2.    Interest. If the Company does not pay any amount due to Executive under this Agreement within five (5) business days after such amount first became due and owing, interest shall accrue on such amount from the date it became due and owing until the date of payment at an annual rate equal to 200 basis points above the base commercial lending rate published in The Wall Street Journal in effect from time to time during the period of such nonpayment.


ARTICLE VII.

NO SET-OFF OR MITIGATION

7.1.    No Set-Off by Company. Executive’s right to receive when due the payments and other benefits provided for under this Agreement is absolute, unconditional and not subject to set-off, counterclaim or legal or equitable defense. Time is of the essence in the performance by the Company of its obligations under this Agreement. Any claim which the Company may have against Executive, whether for a breach of this Agreement or otherwise, shall be brought in a separate action or proceeding and not as part of any action or proceeding brought by Executive to enforce any rights against the Company under this Agreement.

7.2.    No Mitigation. Executive shall not have any duty to mitigate the amounts payable by the Company under this Agreement by seeking new employment or self-employment following termination. Except as specifically otherwise provided in this Agreement, all amounts payable pursuant to this Agreement shall be paid without reduction regardless of any amounts of salary, compensation or other amounts which may be paid or payable to Executive as the result of Executive’s employment by another employer or self-employment.

ARTICLE VIII.

CONFIDENTIALITY

8.1.    Confidential Information.

(a)    Executive acknowledges that it is the policy of the Company to maintain as secret and confidential all Confidential Information, and that Confidential Information has been and will be developed at substantial cost and effort to the Company. Executive acknowledges that he will have access to Confidential Information with respect to the Company which information is a valuable and unique asset of the Company and that disclosure of such Confidential Information would cause irreparable damage to the Company’s business and operations.

(b)    Executive acknowledges that (i) Confidential Information is, as between the Company and Executive, the exclusive property of the Company, (ii) whatever Executive creates in the performance of duties in the course of Executive’s employment, including ideas, developments, writings, improvements, designs, graphic and musical works (the “Work Product”) is the property of the Company, and (iii) to the extent that any of the Work Product is capable of protection by copyright, it is created within the scope of Executive’s employment and is work made for hire. To the extent that any such Work Product may not be a work made for hire, Executive hereby assigns to the Company all rights in such Work Product. To the extent that any of the Work Product is an invention, Executive hereby assigns to the Company all right, title, and interest in and to inventions, improvements, discoveries, or ideas conceived or invented by Executive during the term of Executive’s employment (the “Inventions”). The Company acknowledges that this Agreement does not apply to an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on Executive’s own time, unless the Invention (x) relates to the business of the Company or to the Company’s actual or demonstrably anticipated research or development, or (y) results from any work performed by Executive for the Company. Executive agrees to execute any documents at any time reasonably required by the Company in connection with the registration of copyright, the assignment or securing of patent protection for any Invention, or other perfection of the Company’s ownership of the Work Product.

(c)    Both during Executive’s employment by the Company and at any time after the Termination Date, Executive:

(i)    shall not, directly or indirectly, divulge, furnish or make accessible to any Person, except:

(A)    to the extent Executive reasonably and in good faith believes that such actions are related to, and required by, Executive’s performance of his duties under this Agreement; or


(B)    as may be compelled by applicable law or administrative regulation; provided that Executive, to the extent not prohibited from doing so by applicable law or administrative regulation, shall give the Company written notice of the information to be so disclosed pursuant to clause (B) of this sentence as far in advance of its disclosure as is practicable, shall cooperate with the Company in its efforts to protect the information from disclosure, and shall limit Executive’s disclosure of such information to the minimum disclosure required by law or administrative regulation (unless the Company agrees in writing to a greater level of disclosure);

(ii)    shall not use for his own benefit in any manner, any Confidential Information;

(iii)    shall not cause any such Confidential Information to become publicly known; and

(iv)    shall take all reasonable steps to safeguard such Confidential Information and to protect it against disclosure, misuse, loss and theft.

(d)    For purposes of this Agreement, Confidential Information represents trade secrets subject to protection under the Uniform Trade Secrets Act, or to any comparable protection afforded by other applicable laws.

8.2.    Reasonableness of Restrictive Covenants.

(a)    Executive acknowledges that the covenants contained in Section 8.1 are reasonable in the scope of the activities restricted, and that such covenants are reasonably necessary to protect the Company’s legitimate interests in its Confidential Information. Executive further acknowledges such covenants are essential elements of this Agreement and that, but for such covenants, the Company would not have entered into this Agreement.

(b)    The Company and Executive have each consulted with their respective legal counsel and have been advised concerning the reasonableness and propriety of such covenants.

8.3.    Right to Injunction, Survival of Undertakings.

(a)    In recognition of the confidential nature of the Confidential Information, and in recognition of the necessity of the limited restrictions imposed by Section 8.1, the parties agree that it would be impossible to measure solely in money the damages which the Company would suffer if Executive were to breach any of his obligations under such Section. Executive acknowledges that any breach of any provision of such Section would irreparably injure the Company. Accordingly, Executive agrees that if he breaches any of the provisions of such Section, the Company shall be entitled, in addition to any other remedies to which the Company may be entitled under this Agreement or otherwise, to an injunction to be issued by a court of competent jurisdiction, to restrain any breach, or threatened breach, of such provisions, and Executive hereby waives any right to assert any claim or defense that the Company has an adequate remedy at law for any such breach.

(b)    If a court determines that any of the covenants included in this Article VIII is unenforceable in whole or in part, such court shall have the power to modify the provision, as necessary, so as to cause such covenant as so modified to be enforceable.

(c)    All of the provisions of this Article VIII shall survive any Termination of Employment without regard to (i) the reasons for such termination, or (ii) the expiration of the Agreement Term.

8.4.    If Executive breaches the restrictive covenants contained in this Article VIII, such violation shall be remedied as provided herein, but shall not affect the Company’s obligation to pay benefits or otherwise fulfill its


obligations under this Agreement except and to the extent that such violation is the basis for Executive’s Termination with Cause.

ARTICLE IX.

NON-EXCLUSIVITY OF RIGHTS

9.1.    Waiver of Certain Other Rights. To the extent that payments are made to Executive pursuant to Section 4.1(a) or 4.1(b), Executive hereby waives the right to receive severance payments or severance benefits under any other severance Plan, agreement or Policy of the Company, including but not limited to, any benefits to which Executive shall become entitled under an Executive retention agreement.

9.2.    Other Rights. Except as expressly provided in Section 9.1, this Agreement shall not prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other Plans provided by the Company and for which Executive may qualify, nor shall this Agreement limit or otherwise affect such rights as Executive may have under any other agreements with the Company. Amounts which are vested benefits or which Executive is otherwise entitled to receive under any Plan and any other payment or benefit required by law at or after the Termination Date shall be payable in accordance with such Plan or applicable law except as expressly modified by this Agreement.

9.3.    Executive Employment Contract. It is not the intent of this Agreement to supersede the Company’s Executive Retention Replacement Plan. Upon a Termination of Employment that causes Executive to be entitled to severance benefits under this Agreement and under the Executive Retention Replacement Plan, the provisions of Section 4.1(f) shall control.

ARTICLE X.

MISCELLANEOUS

10.1.    No Assignability. This Agreement is personal to Executive and, without the prior written consent of the Company, shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

10.2.    Successors. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company or any Parent Corporation of any successor (whether direct or indirect) by purchase, merger, consolidation or otherwise to all or substantially all of the business assets of the Company, to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Any successor to the business or assets of the Company which assumes or agrees to perform this Agreement by operation of law, contract, or otherwise shall be jointly and severally liable with the Company under this Agreement as if such successor were the Company.

10.3.    Payments to Beneficiary. If Executive dies before receiving amounts to which Executive is entitled under this Agreement, such amounts shall be paid in a lump sum to one or more beneficiaries designated in writing by Executive (each, a “Beneficiary”), or if none is so designated, to Executive’s estate.

10.4.    Non-Alienation of Benefits. Benefits payable under this Agreement 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, before actually being received by Executive, and any such attempt to dispose of any right to benefits payable under this Agreement shall be void.

10.5.    No Deference. Unless otherwise expressly provided in this Agreement, no determination pursuant to, or interpretation of, this Agreement made by the board of directors (or any committee thereof) of the Company or any Successor Corporation following a Change of Control or Imminent Change Date shall be entitled to any


presumptive validity or other deference in connection with any judicial or administrative proceeding relating to or arising under this Agreement.

10.6.    Severability. If any one or more Articles, Sections or other portions of this Agreement are declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not serve to invalidate any Article, Section or other portion not so declared to be unlawful or invalid. Any Article, Section or other portion so declared to be unlawful or invalid shall be construed so as to effectuate the terms of such Article, Section or other portion to the fullest extent possible while remaining lawful and valid.

10.7.    Amendments. This Agreement shall not be amended or modified at any time except by written instrument executed by the Company and Executive. The Company shall not amend or terminate this Agreement in any manner following the Effective Date or during any Imminent Change Period without the prior written consent of the Executive.

10.8.    Notices. All notices and other communications under this Agreement shall be in writing and delivered by hand, by nationally-recognized delivery service that promises overnight delivery, or by first-class registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:

at Executive’s most recent home address on file with the Company.

If to the Company:

McDonald’s Corporation

One McDonald’s Plaza

Oak Brook, IL 60523

Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing. Notice and communications shall be effective when actually received by the addressee.

10.9.    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together constitute one and the same instrument.

10.10.    Governing Law. This Agreement shall be interpreted and construed in accordance with the laws of the State of Illinois without regard to its choice of law principles.

10.11.    Captions. The captions of this Agreement are not a part of the provisions hereof and shall have no force or effect.

10.12.    Number and Gender. Wherever appropriate, the singular shall include the plural, the plural shall include the singular, and the masculine shall include the feminine.

10.13.    Tax Withholding. The Company may withhold from any amounts payable under this Agreement any Taxes that are required to be withheld pursuant to any applicable law or regulation.

10.14.    No Waiver. Executive’s failure to insist upon strict compliance with any provision of this Agreement shall not be deemed a waiver of such provision or any other provision of this Agreement. A waiver of any provision of this Agreement shall not be deemed a waiver of any other provision, and any waiver of any default in any such provision shall not be deemed a waiver of any later default thereof or of any other provision.

10.15.    Entire Agreement; Waiver of Consent. This Agreement contains the entire understanding of the Company and Executive with respect to its subject matter set forth herein and Executive acknowledges and agrees that this Agreement supersedes the Original Agreement with respect to any Change of Control occurring on or after the Agreement Date.


10.16.    Company Subsidiaries and Successors. References in the Agreement to employment by “the Company” shall be deemed to include employment by (1) any entity in which the Company directly or through intervening subsidiaries owns 100% of the total combined voting power or value of all classes of stock, or, in the case of an unincorporated entity, 100% interest in the capital and profits and (2) any successor or assign of the Company pursuant to Section 10.2, and any obligation of the Company hereunder shall be deemed satisfied if and to the extent an entity described in clause (1) or (2) of this sentence performs such obligation.

IN WITNESS WHEREOF, Executive and the Company have executed this Change of Control Employment Agreement as of the date first above written.

 

EXECUTIVE

 

McDONALD’S CORPORATION

 

By:

 

 

 

Title:

 

 

 


ANNEX A

FORM OF

NON-COMPETITION AND RELEASE AGREEMENT

This agreement, release and waiver (the “Agreement”), made as of the          day of                     ,             , is made by and between McDonald’s Corporation and (together with all successors thereto, the “Company”) and                      (“Executive”).

WHEREAS, the Company and the Executive have previously entered into a Change of Control Employment Agreement, dated as of                     , 2008 (“Change of Control Agreement”);

NOW THEREFORE, in consideration for receiving benefits and severance under Section 4.1 of the Change of Control Agreement and in consideration of the representations, covenants and mutual promises set forth in this Agreement, the parties agree as follows:

 

1.

Defined Terms. When used herein, unless otherwise specified, terms shall have the same definitions as provided in the Change of Control Agreement.

 

2.

Release. Except with respect to the Company’s obligations under the Change of Control Agreement, the Executive, and Executive’s heirs, executors, assigns, representatives, agents, legal representatives, and personal representatives, hereby releases, acquits and forever discharges the Company, its Subsidiaries, the Surviving Corporation and their respective directors, officers, agents, servants, employees, attorneys, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or in any way related to agreements, events, acts or conduct at any time prior to the day prior to execution of this Agreement, including but not limited to: any and all such claims and demands directly or indirectly arising out of or in any way connected with the Executive’s employment with the Company; the Executive’s termination of employment with the Company; claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, sabbatical benefits, severance benefits, or any other form of compensation or equity; claims pursuant to any federal, state, local law, statute, ordinance or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination in Employment Act of 1967, as amended; the federal Americans with Disabilities Act of 1990; tort law; contract law; wrongful discharge; discrimination; fraud; defamation; harassment; emotional distress; or breach of the implied covenant of good faith and fair dealing. This Release does not apply to any compensation or benefits to which the Executive may be entitled under this Agreement or the Change of Control Agreement or to any rights to indemnification under by-laws or other agreements of the Company or any other Employer.

 

3.

No Inducement. Executive agrees that no promise or inducement to enter into this Agreement has been offered or made except as set forth in this Agreement, that the Executive is entering into this Agreement without any threat or coercion and without reliance on any statement or representation made on behalf of the Company or by any person employed by or representing the Company, except for the written provisions and promises contained in this Agreement.

 

4.

Confidential Information.

(a)    Executive acknowledges that it is the policy of the Company to maintain as secret and confidential all Confidential Information, and that Confidential Information has been and will be developed at substantial cost and effort to the Company. Executive acknowledges that he will have access to Confidential Information with respect to the Company which information is a valuable and unique asset of the Company and that disclosure of such Confidential Information would cause irreparable damage to the Company’s business and operations.


(b)    Executive acknowledges that (i) Confidential Information is, as between the Company and Executive, the exclusive property of the Company, (ii) whatever Executive creates in the performance of duties in the course of Executive’s employment, including ideas, developments, writings, improvements, designs, graphic and musical works (the “Work Product”) is the property of the Company, and (iii) to the extent that any of the Work Product is capable of protection by copyright, it is created within the scope of Executive’s employment and is work made for hire. To the extent that any such Work Product may not be a work made for hire, Executive hereby assigns to the Company all rights in such Work Product. To the extent that any of the Work Product is an invention, Executive hereby assigns to the Company all right, title, and interest in and to inventions, improvements, discoveries, or ideas conceived or invented by Executive during the term of Executive’s employment (the “Inventions”). The Company acknowledges that this Agreement does not apply to an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on Executive’s own time, unless the Invention (x) relates to the business of the Company or to the Company’s actual or demonstrably anticipated research or development, or (y) results from any work performed by Executive for the Company. Executive agrees to execute any documents at any time reasonably required by the Company in connection with the registration of copyright, the assignment or securing of patent protection for any Invention, or other perfection of the Company’s ownership of the Work Product.

(c)    Both during Executive’s employment by the Company and at any time after the Termination Date, Executive:

(i)    shall not, directly or indirectly, divulge, furnish or make accessible to any Person confidential information, except:

(A)    to the extent Executive reasonably and in good faith believes that such actions are related to, and required by, Executive’s performance of his duties under this Agreement; or

(B)    as may be compelled by applicable law or administrative regulation; provided that Executive, to the extent not prohibited from doing so by applicable law or administrative regulation, shall give the Company written notice of the information to be so disclosed pursuant to clause (B) of this sentence as far in advance of its disclosure as is practicable, shall cooperate with the Company in its efforts to protect the information from disclosure, and shall limit Executive’s disclosure of such information to the minimum disclosure required by law or administrative regulation (unless the Company agrees in writing to a greater level of disclosure);

(ii)    shall not use for his own benefit in any manner, any Confidential Information;

(iii)    shall not cause any such Confidential Information to become publicly known; and

(iv)    shall take all reasonable steps to safeguard such Confidential Information and to protect it against disclosure, misuse, loss and theft.

(d)    For purposes of this Agreement, Confidential Information represents trade secrets subject to protection under the Uniform Trade Secrets Act, or to any comparable protection afforded by other applicable laws.

 

5.

Non-Solicitation. During the period beginning on the Agreement Date and ending on the first anniversary of the Termination Date, Executive shall not, directly or indirectly:

(a)    other than in connection with the good-faith performance of his duties as an officer of the Company, encourage any employee of the Company and/or its Subsidiaries to terminate his or her relationship with the Company and/or its Subsidiaries;


(b)    solicit the employment or engagement as a consultant or adviser of any employee of the Company and/or its Subsidiaries (other than by the Company or its Subsidiaries) or cause or encourage any Person to do any of the foregoing;

(c)    establish (or take preliminary steps to establish) a business with, or encourage others to establish (or take preliminary steps to establish) a business with, any employee of the Company and/or its Subsidiaries; or

(d)    interfere with the relationship of the Company and/or its Subsidiaries with, or endeavor to entice away from the Company and/or its Subsidiaries, any Person who or which at any time (whether before or after Executive’s Termination Date) was or is an employee, customer, vendor or supplier of, or maintained a business relationship (whether as a franchisee or otherwise) with, the Company and/or its Subsidiaries.

 

6.

Non-Competition Covenant. Executive covenants that during the period beginning on the Termination Date and ending on the first anniversary of the Termination Date, Executive shall not:

(i)    directly or indirectly, in any capacity, engage or participate in, or become employed by or render advisory or consulting services in connection with any Prohibited Business, provided that nothing in this clause (i) shall preclude Executive from performing services on behalf of an investment banking or commercial banking, auditing or consulting firm so long as he or she is not engaged in rendering services to or soliciting business of a Prohibited Business; or

(ii)    make any financial investment, whether in the form of equity or debt, or own any interest, directly or indirectly, in any Prohibited Business, provided that nothing in this clause (ii) shall restrict Executive from making any investment not in excess of 5% of the Common Stock in any company whose stock is listed on a national securities exchange or actively traded in the over-the-counter market if such investment does not give Executive the right or ability to control or influence the policy decisions of any Prohibited Business.

For purposes of this Section, “Prohibited Business” shall mean any Person and any branches, offices or operations thereof, which is a direct and material competitor of the Company or any of its Subsidiaries in any country of the world or in any state of the United States, which is one of the ten (10) or fewer Persons designated as a Prohibited Business on Exhibit 1 to this Agreement at the time this Agreement is executed.

 

7.

Reasonableness of Restrictive Covenants.

(a)    Executive acknowledges that the covenants contained in Sections 4, 5 and 6 are reasonable in the scope of the activities restricted, the geographic area covered by the restrictions, and the duration of the restrictions, and that such covenants are reasonably necessary to protect the Company’s legitimate interests in its Confidential Information and in its relationships with its employees, customers and suppliers. Executive further acknowledges such covenants are essential elements of this Agreement and that, but for such covenants, the Company would not have entered into this Agreement.

(b)    The Company and Executive have each consulted with their respective legal counsel and have been advised concerning the reasonableness and propriety of such covenants.

 

8.

Right to Injunction, Survival of Undertakings.

(a)    In recognition of the confidential nature of the Confidential Information, and in recognition of the necessity of the limited restrictions imposed by Sections 4, 5 and 6, the parties agree that it would be impossible to measure solely in money the damages which the Company would suffer if Executive were to breach any of his obligations under such Sections. Executive acknowledges that any breach of any provision of such Sections would irreparably injure the Company. Accordingly, Executive agrees that if he breaches any of the provisions of such Sections, the Company shall be entitled, in addition


to any other remedies to which the Company may be entitled under this Agreement or otherwise, to an injunction to be issued by a court of competent jurisdiction, to restrain any breach, or threatened breach, of such provisions, and Executive hereby waives any right to assert any claim or defense that the Company has an adequate remedy at law for any such breach.

(b)    If a court determines that any of the covenants included in Sections 4, 5 and 6 is unenforceable in whole or in part because of such covenant’s duration or geographical or other scope, such court shall have the power to modify the duration or scope of such provision, as the case may be, so as to cause such covenant as so modified to be enforceable.

(c)    All of the provisions of Sections 4, 5 and 6 shall survive any Termination of Employment without regard to (i) the reasons for such termination or (ii) the expiration of the Agreement Term.

(d)    If Executive breaches the restrictive covenants contained in Sections 4, 5 and 6, such violation shall be remedied as provided herein, but shall not affect the Company’s obligation to pay benefits or otherwise fulfill its obligations under this Agreement except and to the extent that such violation is the basis for Executive’s Termination with Cause.

 

9.

Compliance to Date. Executive hereby covenants and promises that he has not taken or caused to be taken, during a period of at least ninety (90) days prior to the Effective Date, any action that would violate the covenants contained in Sections 4, 5 and 6 of this Agreement.

 

10.

Advice of Counsel; Time to Consider; Revocation. Executive acknowledges the following:

(i)    Executive received a copy of this Agreement on                     , 200    .

(ii)    Executive has read this Agreement and understands its legal and binding effect. Executive is acting voluntarily and of Executive’s own free will in executing this Agreement.

(iii)    Executive has been advised to seek and has had the opportunity to seek legal counsel in connection with this Agreement.

(iv)    Executive was given [21/45] days (the “Consideration Period”) to consider the terms of this Agreement before signing it.

(v)    If Executive does not deliver a signed copy of this Agreement to the Company on or before the last day of the Consideration Period, this Agreement shall be void and Executive will not receive the benefits described in Section 4.1 of the Change of Control Agreement.

Executive understands that, if Executive timely signs this Agreement and delivers it to the Company, Executive may rescind this Agreement at any time within seven (7) days after signing it by delivering a written notice to the Company. Executive understands that this Agreement will not be effective until after the seven-day rescission period has expired.

 

11.

Severability. If all or any part of this Agreement is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other portion of this Agreement. Any section or a part of a section declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of the section to the fullest extent possible while remaining lawful and valid.

 

12.

Amendment. This Agreement shall not be altered, amended, or modified except by written instrument executed by the Company and the Executive. A waiver of any portion of this Agreement shall not be deemed a waiver of any other portion of this Agreement.

 

13.

Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.


14.

Headings. The headings of this Agreement are not part of the provisions hereof and shall not have any force or effect.

 

15.

Applicable Law. The provisions of this Agreement shall be interpreted and construed in accordance with the laws of the State of Illinois without regard to its choice of law principles.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the dates specified below.

 

EXECUTIVE

 

Date:

 

 

 

McDONALD’S CORPORATION

 

By:

 

 

 

Title:

 

 

 

Date:

 

 

 


ANNEX B

FORM OF

EXHIBIT 1 TO NON-COMPETITION AND RELEASE AGREEMENT

PROHIBITED BUSINESSES