Exhibit 10(g). Executive Retention Plan

 

As amended and restated effective as of December 1, 2004

 

Introduction

 

McDonald’s Corporation, a Delaware corporation (the “Company”), has established
the Executive Retention Plan (this “Plan”) effective as of October 1, 1998 (the
“Effective Date”). This Plan was amended and restated on March 20, 2001, March
20, 2002, October 29, 2002, December 18, 2002, December 2, 2003, January 21,
2004 and December 1, 2004. The amendments made to this Plan by the amendment and
restatement of October 29, 2002 are not applicable to any Executive (as defined
in the Plan before October 29, 2002) whose termination of employment or
Change-in-Status Date (as defined in the Plan before October 29, 2002) occurred
before October 29, 2002, for whom the Plan provisions as in effect on the date
of his or her termination of employment or Change-in-Status Date, as applicable,
shall control.

 

Article 1 Purpose; Employment Periods Generally

 

1.01 Purpose. It is in the best interests of the Company and its shareholders to
assure that the Company has the continued dedication of its key executives in a
highly competitive global marketplace. This Plan is established to promote the
retention of these key executives and provide the Company with a smooth
succession process. This Plan is also intended to provide these key executives
with incentives that are designed to focus their energy on contributing to the
ultimate success of the Company.

 

1.02 Employment Periods.

 

  (a) Definition of Employment Periods. This Plan provides for the continued
employment, subject to the terms and conditions of this Plan, of the individuals
identified on Appendix A as “Tier I Executives,” “Tier II Executives” and “Tier
III Executives” (collectively, the “Executives”) during three successive
periods, each of which is defined below: the Retention Period; the Transition
Period; and the Continued Employment Period (collectively referred to as the
“Employment Periods”).

 

  (b) Requirement of Execution of Agreement and Continued Employment. In order
to be eligible for continued employment during each successive Employment
Period, with the pay and benefits set forth herein, an Executive must satisfy
the requirements summarized in this Section 1.02(b) and more fully set forth
below in the Plan. The Executive must properly execute the following agreements
(each, an “Agreement”) at the following times: (i) on or before the Executive’s
Change-in-Status Date, an Agreement substantially in the form set forth in
Exhibit A (a “Transition Period Agreement”); (ii) on or before the first day of
the Executive’s Continued Employment Period, an Agreement substantially in the
form set forth in Exhibit B (a “Continued Employment Period Agreement”); and
(iii) upon a termination of the Executive’s employment at the end of the
Continued Employment Period or under circumstances described in Section 7.01
below, an Agreement substantially in the form set forth in Exhibit C (a
“Termination Agreement”). In addition, the Executive must not revoke, and must
comply with, such Agreements. Finally, the Executive must otherwise comply with
the requirements of this Plan. An Executive may also be eligible in some cases
for certain pay and benefits upon termination of his or her employment, as more
fully set forth in Articles 6 and 7 below (the “Termination Benefits”). Exhibit
B to each Agreement shall be completed by the Company at the time of the
Agreement’s preparation by the insertion of a list of the “Specified
Competitors,” consisting of twenty-five (25) competitors of McDonald’s
determined by the Company in its sole discretion.

 

  (c) Violations by the Executive. If an Executive commits a “Violation” (as
defined below), the Company shall be entitled to cancel any and all future
obligations of the Company to the Executive under this Plan and recoup the value
of all Relevant Prior Benefits (as defined below), together with the Company’s
costs and reasonable attorney’s fees. In addition, the Company shall be entitled
to pursue any other remedy available to enforce the terms of the Executive’s
Agreements. A “Violation” shall have occurred if an Executive (i) files a
lawsuit, charge, complaint or other claim asserting any claim or demand within
the scope of the releases given in any of his or her Agreements, (ii) fails
properly to execute and deliver a required Agreement, or (iii) purports to
revoke any of his or her Agreements. The “Relevant Prior Benefits” means (i) in
the case of a Violation committed by an Executive during an Employment Period,
all payments and benefits that have been provided to the Executive under this
Plan during that Employment Period, and (ii) in the case of a Violation
committed by an Executive after termination of the Executive’s employment, all
Termination Benefits provided to the Executive under the Plan.

 

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  (d) Status and Benefits Generally during Employment Periods. During an
Executive’s continued employment during each of his or her Employment Periods,
except as otherwise specifically provided in this Plan: (i) the Executive shall
be entitled to participate in the Company’s employee compensation plans,
practices, policies and programs as in effect from time to time, including
without limitation all equity compensation, bonus and other incentive
compensation plans, policies and programs (collectively, the “Compensation
Plans”), to the extent that the Executive is eligible under, and in accordance
with, the applicable terms and conditions thereof as modified by this Plan; and
(ii) the Executive shall be entitled to participate in the Company’s employee
benefit plans, practices, policies and programs as in effect from time to time
(collectively, the “Employee Plans”), to the extent that the Executive is
eligible under, and in accordance with, the applicable terms and conditions
thereof. Without limiting the generality of the foregoing, except as
specifically provided in Section 7.01(b) below, during an Executive’s Employment
Periods and upon and following the termination of his or her employment for any
reason, the Executive’s stock options shall continue to vest, be exercisable,
expire and otherwise be subject to the express terms of the related stock option
plan and the applicable Golden M Certificate (or other applicable award
agreement).

 

  (e) Deferred Compensation Plans. Without limiting the generality of Section
1.02(d) above, except as specifically provided in Section 4.02(b) below, amounts
paid to an Executive during the Executive’s Employment Periods shall be treated
as “compensation” for purposes of the McDonald’s Corporation Profit Sharing and
Savings Plan, McDonald’s Corporation Supplemental Profit Sharing and Savings
Plan and any successor or other deferred compensation plans for which the
Executive may be eligible (collectively, the “Deferred Compensation Plans”) and
all life insurance benefit plans sponsored by McDonald’s Corporation, in each
case to the extent permitted by the terms of such plans as in effect from time
to time. No requirement that the Company make payments under this Plan to an
Executive shall be considered violated by the Company’s crediting all or any
portion thereof to the Executive’s account under any Deferred Compensation Plan
in which the Executive is eligible to participate, to the extent that the
Executive has elected to defer such payment under the terms of such Deferred
Compensation Plan.

 

Article 2 Plan Administration

 

2.01 The Committee. The Compensation Committee of the Board of Directors of the
Company (the “Board”), as such committee is constituted from time to time (the
“Committee”), shall have overall responsibility for the establishment,
amendment, administration and operation of this Plan. The Committee shall have
the responsibilities and duties and powers under this Plan which are not
specifically delegated to anyone else, including without limitation the
following powers:

 

  (i) subject to any limitations under this Plan or applicable law, to make and
enforce such rules and regulations of this Plan and prescribe the use of such
forms as it shall deem necessary for the efficient administration of this Plan;

 

  (ii) to require any person to furnish such information as it may reasonably
request as a condition to receiving any benefit under this Plan;

 

  (iii) to decide on questions concerning this Plan;

 

  (iv) to amend Appendix A hereto to add additional Executives, to delete
Executives whose employment has terminated without the right to receive any
additional benefits under this Plan or whose rights hereunder have been
satisfied in full, and to reflect any changes that are agreed with the affected
Executives;

 

  (v) to compute or cause to be computed the amount of benefits which shall be
payable to any person in accordance with the provisions of this Plan; and

 

  (vi) to appoint and remove, as it deems advisable, the Plan Administrator.

 

2.02 The Plan Administrator. The Committee may appoint a Plan Administrator who
may (but need not) be a member of the Committee, and in the absence of such
appointment, the Committee shall be the Plan Administrator. The Plan
Administrator shall perform the administrative responsibilities delegated to the
Plan Administrator from time to time by the Committee.

 

2.03 Discretionary Power of the Committee. The Committee from time to time may
establish rules for the administration of this Plan. The Committee shall have
the sole discretion to make decisions and take any action with respect to
questions arising in connection with this Plan, including without limitation the
construction and interpretation of this Plan and the determination of
eligibility for and the amount of benefits under this Plan. The decisions or
actions of the Committee as to any questions arising in connection with this
Plan, including without limitation the construction and interpretation of this
Plan, shall be final and binding upon all Executives and their respective
beneficiaries.

 

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2.04 Action of the Committee. The Committee may act at a meeting, including
without limitation a telephonic meeting, by the consent of a majority of the
members of the Committee at the time in office, or without a meeting, by the
unanimous written consent of the individual members of the Committee. An
executed document signed by an individual member of the Committee and
transmitted by facsimile shall be valid as the original signed document for all
purposes. Any person dealing with the Committee shall be entitled to rely upon a
certificate of any member of the Committee, or the Secretary or any Assistant
Secretary of the Company, as to any act or determination of the Committee.

 

2.05 Advisors and Agents of the Committee. The Committee may, subject to
periodic review, (a) authorize one or more of its members or an agent to execute
or deliver any instrument, and make any payment on its behalf, and (b) utilize
the services of associates and engage accountants, agents, legal counsel, record
keepers, professional consultants (any of whom may also be serving the Company)
or authorized Company personnel to assist in the administration of this Plan or
to render advice with regard to any responsibility or issue arising under this
Plan.

 

2.06 Records and Reports of the Committee. The Committee shall maintain records
and accounts relating to the administration of this Plan. An Executive shall be
entitled to review any records relating to his or her individual participation
in this Plan and to make copies of such records upon written request to the
Committee.

 

2.07 Liability of the Committee; Indemnification. The members of the Committee
and the Plan Administrator shall have no liability with respect to any action or
omission made by them in good faith nor from any action or omission made in
reliance upon (a) the advice or opinion of any accountant, legal counsel,
medical adviser or other professional consultant or (b) any resolutions of the
Committee or the Board certified by the Secretary or Assistant Secretary of the
Company. Each member of the Committee and the Plan Administrator shall be
indemnified, defended and held harmless by the Company and its respective
successors against all claims, liabilities, fines and penalties and all expenses
(including without limitation reasonable attorneys’ fees and disbursements and
other professional costs incurred in enforcing this provision) reasonably
incurred by or imposed upon such individual which arise as a result of his or
her actions or failure to act in connection with the operation and
administration of this Plan, to the extent lawfully allowable and to the extent
that such claim, liability, fine, penalty or expense is not paid for by
liability insurance purchased by or paid for by the Company or an affiliate
thereof. Notwithstanding the foregoing, the Company shall not indemnify any
person for any such amount incurred through any settlement or compromise of any
action unless the Company consents in writing to such settlement or compromise,
which consent shall not be unreasonably withheld.

 

2.08 Plan Expenses. All expenses under or relating to this Plan shall be paid
from the general assets of the Company. To the extent required by applicable
law, the Company may require any member of the Committee to furnish a fidelity
bond satisfactory to the Company.

 

2.09 Service in More than One Capacity. Any person or group of persons may serve
this Plan in more than one capacity.

 

2.10 Named Fiduciary. The named fiduciary of this Plan shall be the Committee.

 

2.11 Delegation of Responsibility. The Committee shall have the authority to
delegate from time to time, in writing, all or any part of its responsibilities
under this Plan to one or more members of the Committee. The Committee may also
delegate administrative functions to the Plan Administrator pursuant to Section
2.02 above. The Committee may in the same manner revise or revoke any such
delegation of responsibility. Any action of the delegate in the exercise of such
delegated responsibilities shall have the same force and effect for all purposes
hereunder as if such action had been taken by the Committee. The Committee shall
not be liable for any acts or omissions of any such delegate. The delegate shall
periodically report to the Committee concerning the discharge of the delegated
responsibilities.

 

2.12 Filing a Claim.

 

  (a) Each individual eligible for benefits under this Plan (“Claimant”) may
submit a claim for benefits (“Claim”) to the Plan Administrator in writing on a
form provided or approved by the Plan Administrator or, if no such form has been
so provided or approved, in a written document that specifies, in reasonable
detail, facts and circumstances and the applicable Plan provisions which the
Claimant believes entitle him or her to compensation or benefits under this
Plan. A Claimant shall have no right to seek review of a denial of benefits, or
to bring any action in any court to enforce a Claim, prior to his or her filing
a Claim and exhausting his or her rights to review under this Article 2.

 

  (b) 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 45
days after the receipt of such Claim unless special circumstances require an
extension of time for processing the Claim. If such an extension is required,
written notice of the extension shall be furnished to the Claimant prior to the
end of the initial 45-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 90 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

 

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or in part. If a Claim is denied, in whole or in part, the notice shall contain
(i) the specific reasons for the denial, (ii) references to pertinent Plan
provisions upon which the denial is based, (iii) 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 (iv) the Claimant’s right to seek
review of the denial.

 

  (c) An election to become a Transition Officer pursuant to Section 4.01 shall
not be considered a Claim and shall not be subject to this Section 2.12.

 

2.13 Review of Claim Denial. (a) If a Claim is denied, in whole or in part, the
Claimant shall have the right to (i) request a review of the denial by the
Committee or its delegate, (ii) review pertinent documents, (iii) submit issues
and comments in writing to the Committee and (iv) appear before the Committee in
person to present such issues and comments; provided that the Claimant files a
written request for review with the Committee within 60 days after the
Claimant’s receipt of written notice of the denial. Within 60 days after the
Committee receives a request for review, 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 such review, in which case the
Claimant shall be given a written notice within such initial 60-day period
specifying the reasons for the extension and when such review shall be
completed; provided that such review shall be completed within 120 days after
the filing of the request for review. The Committee’s decision on review shall
be sent to the Claimant in writing and shall include (i) specific reasons for
the decision and (ii) references to Plan provisions upon which the decision is
based. A decision on review shall be binding on all persons for all purposes.

 

If a Claimant shall fail to file a request for review in accordance with the
procedures herein outlined, such Claimant shall have no right to obtain such a
review or to bring an action in any court, and the denial of the Claim shall
become final and binding on all persons for all purposes except upon a showing
of good cause for such failure.

 

Article 3 Retention Period

 

During an Executive’s Retention Period (as defined in the next sentence), the
Executive shall remain employed by the Company as an officer, on an at-will
basis. Each Executive’s “Retention Period” shall mean the period commencing on
the Executive’s Plan Start Date and ending on the later of the Executive’s End
Date (as specified on Appendix A) or the day before the Executive’s
Change-in-Status Date (as determined pursuant to Section 4.01 below).

 

Article 4 Transition Period

 

4.01 Election to Become a Transition Officer.

 

  (a) Transition Officer. Subject to the conditions set forth below, each
Executive may elect to become a “Transition Officer” entitled to the benefits
provided to Transition Officers hereunder (the “Transition Benefits”), effective
on a date (hereinafter referred to as the Executive’s “Change-in-Status Date”)
not earlier than the day after the Executive’s End Date.

 

  (b) Conditions. The conditions that must be satisfied in order for an
Executive’s election to become a Transition Officer to be effective are as
follows: (i) the Executive must remain employed by the Company through the end
of his or her Retention Period; (ii) the Executive must properly execute a
Transition Period Agreement not later than the Change-in-Status Date; (iii) the
Executive must not revoke such Transition Period Agreement; (iv) in the case of
a Tier II Executive or a Tier III Executive whose Change-in-Status Date occurs
before his or her 62nd birthday, a successor to the Executive must have been
selected by the Company and approved by the Chief Executive Officer of the
Company (the “CEO”) in the CEO’s sole discretion; and (v) in the case of an
Executive whose Change-in-Status Date occurs before his or her 62nd birthday,
the Committee or the CEO, as applicable, must consent to the Executive’s
becoming a Transition Officer, in accordance with Section 4.01(c) below.

 

  (c) Election. An Executive shall make an election to become a Transition
Officer by delivering to the Committee (in the case of an election by the CEO)
or to the CEO (in the case of an election by any other Executive) a written
notice indicating the proposed Change-in-Status Date, on such form as the
Committee may from time to time prescribe. If the proposed Change-in-Status Date
occurs before the Executive’s 62nd birthday, the Committee or the CEO, as
applicable, shall notify the Executive whether such election is accepted. If the
proposed Change-in-Status Date occurs on or after the Executive’s 62nd birthday,
such election shall automatically be deemed accepted. If such election is
accepted or deemed accepted, the Committee or the CEO, as applicable, shall also
(1) notify the Executive whether the actual Change-in-Status Date will be the
date proposed by the Executive or a later or earlier date reasonably selected by
the Committee or the CEO, as applicable (but in no event earlier than the
Executive’s End Date), and (2) enclose with such notice the Transition Period
Agreement for execution by the Executive.

 

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  (d) Transition Period. If an Executive properly executes and returns the
Transition Period Agreement, does not revoke the Transition Period Agreement and
satisfies the other conditions set forth above, his or her election to become a
Transition Officer shall become effective upon the applicable Change-in-Status
Date, and the Executive shall thereafter serve as a Transition Officer during a
number of months (the “Transition Period”) equal to the lesser of (i) the number
of the Executive’s Years of Service (as defined below), or (ii) 18 months,
subject to the provisions of this Plan. An Executive’s “Years of Service” shall
equal the number of 12-month intervals during the period beginning on the
earlier of the Executive’s historical service date or company service date and
ending on the Change-in-Status Date, rounded down to the nearest complete
12-month interval (e.g., a period of 128 months and 3 days shall equal 10 “Years
of Service”).

 

4.02 Transition Benefits.

 

  (a) Base Salary. During an Executive’s Transition Period, the Company shall
pay the Executive a base salary at the annualized rate in effect on the day
immediately preceding the Change-in-Status Date, but in no event lower than the
highest base salary in effect at any time between the Executive’s Plan Start
Date and Change-in-Status Date, provided that the base salary payable under this
Section 4.02(a) shall be reduced in accordance with any across-the-board
reductions approved by the Committee prior to the Change-in-Status Date, which
reductions affect Company officers generally. (The annualized amount of such
base salary as in effect from time to time is referred to as the “Annual Base
Salary.”) In no event shall an Executive be eligible for merit increases in base
salary during his or her Transition Period.

 

  (b) Annual Bonus. In respect of each calendar year which ends during or on the
last day of an Executive’s Transition Period, the Company shall pay to the
Executive an Annual Bonus (as defined below) in a lump sum on April 1st of the
following year (or such other date on which bonuses for such year are paid to
participants in the Company’s Target Incentive Program or any successor plan
(“TIP”) generally). If the Transition Period ends on a date other than the last
day of a calendar year, the Company shall pay to the Executive (in lieu of an
Annual Bonus) a Prorated Annual Bonus (as defined below) in a lump sum in cash
within 60 days after the end of the Transition Period. The Executive shall not
be entitled to elect to defer any portion of the Prorated Annual Bonus under any
Deferred Compensation Plan.

 

For purposes of this Plan,

 

  (i) “Annual Bonus” shall mean an annual bonus equal to the product of the
Annual Base Salary and the Full Target Percentage (as defined below);

 

  (ii) “Full Target Percentage” shall mean the target percentage which the
Executive was eligible to receive under TIP on the day immediately preceding the
Change-in-Status Date without any adjustment, but in no event lower than the
Executive’s highest target percentage in effect at any time between the
Executive’s Plan Start Date and Change-in-Status Date, provided that the target
percentage shall be reduced in accordance with any across-the-board reductions
approved by the Committee prior to the Change-in-Status Date which reductions
affect Company officers generally; and

 

  (iii) “Prorated Annual Bonus” shall mean a bonus in an amount equal to the
Annual Bonus multiplied by a fraction, the numerator of which is the number of
days which have elapsed during the calendar year in question through the last
day of the Transition Period, and the denominator of which is 365.

 

  (c) Three-Year Incentive Plan Awards. During an Executive’s Transition Period,
any outstanding awards that the Executive has been granted under the Company’s
Three-Year Incentive Plan or any successor plan (“LTIP”) shall continue to vest
and become payable in accordance with the Company’s policies as in effect from
time to time; provided, that such LTIP awards (“LTIP Awards”) granted before
December 2, 2003 shall be computed by reference to 100% of the target percentage
the Executive would have received pursuant to the terms of the original LTIP
grant without any adjustment; and provided, further, that in the case of a Tier
III Executive, such an LTIP Award granted before December 2, 2003 shall not be
paid unless the minimum corporate performance thresholds for the applicable
performance period are met. Notwithstanding the foregoing, in the case of an
LTIP Award granted under the Company’s Cash Performance Unit Program to an
Executive whose Change in Status Date occurs before the end of the performance
period for such LTIP Award, the amount of such LTIP Award that actually vests
and becomes payable shall be the amount computed in accordance with the
foregoing, multiplied by a fraction, the numerator of which is the number of
days in the performance period for such LTIP Award that precede the Change in
Status Date, and the denominator of which is the total number of days in the
performance period for such LTIP Award.

 

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  (d) Benefit Programs and Policies. During an Executive’s Transition Period, he
or she shall participate in Employee Plans and Compensation Plans as provided in
Section 1.02(d) above, except that: (i) the Executive shall not be eligible to
participate in TIP except to the extent and on the terms provided for above in
this Section 4.02; (ii) no new stock option grants shall be made to the
Executive; (iii) no new awards shall be granted to the Executive under LTIP;
(iv) no other new awards shall be granted to the Executive under any
Compensation Plans; (v) the Executive shall not be entitled to participate in
any other Compensation Plans; and (vi) the effect of the Executive’s entering
the Transition Period for any incentive awards that the Executive holds
immediately before his or her Change in Status Date that are not specifically
provided for above shall be as provided in the applicable plans and/or
agreements.

 

  (e) Special Benefits for Tier I Executives. Without limiting the generality of
the foregoing, during his or her Transition Period, each Tier I Executive shall
be provided by the Company with an office and secretarial services.

 

4.03 Duties During Transition Period. During an Executive’s Transition Period,
the Executive shall serve as an officer of the Company in a position that is
less senior than his or her position during the Retention Period (and in any
case not an executive officer position), and shall devote substantially all of
his or her normal business time and efforts to the business of the Company, its
subsidiaries and its affiliates, the amount of such time to be sufficient to
permit him or her to diligently and faithfully serve and endeavor to further its
interests to the best of his or her ability. Subject to the foregoing, and to
the requirements of the Executive’s Agreement(s) then in effect, the Executive
may participate in various civic and philanthropic activities, may serve on
boards of directors and committees of not-for-profit organizations of the
Executive’s choice, and, to the extent consistent with the policies of the
Company, may serve as a non-employee director of one or more corporations
(unless the Committee concludes that such service would be inappropriate or not
in the best interests of the Company).

 

Article 5 Continued Employment Period

 

5.01 Employee Status. For the five-year period beginning immediately following
the end of the Transition Period (the “Continued Employment Period”), the
Executive shall serve as a staff employee of the Company, with the pay and
benefits provided for in this Article 5, provided that the Executive: (a)
remains an employee of the Company through the end of his or her Transition
Period; (b) properly executes a Continued Employment Period Agreement not later
than the last day of the Transition Period; (c) does not revoke such Continued
Employment Period Agreement; and (d) complies with all Agreements that he or she
is required under this Plan to execute.

 

5.02 Continued Employment Benefits.

 

  (a) Base Salary. During an Executive’s Continued Employment Period, the
Company shall pay the Executive a base salary (the “Continued Employment Period
Salary”) at an annual rate equal to a percentage of his or her Annual Base
Salary as in effect at the end of the Transition Period, which percentage is set
forth opposite his or her name on Appendix A hereto. In no event shall an
Executive be eligible for merit increases in base salary during his or her
Continued Employment Period.

 

  (b) Three-Year Incentive Plan Awards. During an Executive’s Continued
Employment Period, any outstanding awards under LTIP shall be treated as
provided in Section 4.02(c) above.

 

  (c) Benefit Programs and Policies. During an Executive’s Continued Employment
Period, he or she shall participate in Employee Plans and Compensation Plans as
provided in Section 1.02(d) above, except that: (i) the Executive shall not be
eligible to participate in TIP; (ii) no new stock option grants shall be made to
the Executive; (iii) no new awards shall be granted to the Executive under LTIP;
(iv) no other new awards shall be granted to the Executive under any
Compensation Plans; (v) the Executive shall not be entitled to participate in
any other Compensation Plans; and (vi) the effect of the Executive’s entering
the Continued Employment Period for any incentive awards that the Executive
holds immediately before the beginning of his or her Continued Employment Period
that are not specifically provided for above shall be as provided in the
applicable plans and/or agreements.

 

  (d) Special Benefits for Tier I Executives. Without limiting the generality of
the foregoing, during the portion of his or her Continued Employment Period
ending on the second anniversary of his or her Change-in-Status Date, each Tier
I Executive shall be provided by the Company with an office and secretarial
services.

 

5.03 Time Devoted to Duties During Continued Employment Period. During an
Executive’s Continued Employment Period, the Executive shall devote such time to
the business of the Company as may be reasonably requested by the Company from
time to time, which requests shall be appropriate taking into account the
compensation the Executive is receiving hereunder and the Executive’s outside
activities, services and arrangements permitted by the next sentence; provided,
that in any event the Executive may be required by the Company to devote
sufficient time to qualify for “part-time benefits-eligible” status (which is 20
hours per week, as of December 2, 2003). During the

 

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Continued Employment Period, the Executive may participate in various civic and
philanthropic activities, may serve on boards of directors and committees of
not-for-profit organizations of the Executive’s choice, may serve as a member of
one or more corporate boards of directors and may engage in a full-time
employment arrangement with another organization of the Executive’s choice,
provided that such activities do not violate the Executive’s obligations under
the Executive’s Agreement(s) then in effect.

 

5.04 No Offset. In the event that an Executive shall engage in any employment
arrangement permitted by Section 5.03 above (including without limitation
self-employment) during the Continued Employment Period, no amount paid to or
earned by such Executive therefrom shall reduce any payments or other benefits
due such Executive pursuant to this Plan.

 

Article 6 Termination of Employment

 

6.01 Death or Disability. An Executive’s employment shall terminate
automatically upon his or her death during any Employment Period. In the event
that (a) the Committee determines in good faith that an Executive is suffering
from a “Disability” (together with its various cognates, as defined below) and
(b) the appropriate decisionmaker under any applicable Company plan or program
providing long-term disability benefits to the Executive (a “Disability Plan”)
similarly determines that the Executive is eligible for such benefits by virtue
of the Executive’s disability (as defined for purposes of such plan or program),
the Company may deliver to the Executive written notice (a “Disability
Termination Notice”) in accordance with Section 6.05 above of the Company’s
intention to terminate the Executive’s employment. In such event, the
Executive’s employment shall terminate effective on the later of (y) the 30th
day after receipt of such Disability Termination Notice by the Executive or (z)
the first date on which the Executive becomes eligible for long-term disability
benefits under the principal Disability Plan applicable to the Executive (the
“Disability Effective Date”), provided, however, that (1) in the interim the
Executive shall not have returned to full-time performance of the Executive’s
duties and/or (2) the Executive shall not have delivered to the Committee within
30 days of receipt of a Disability Termination Notice a written objection
thereto (an “Objection”). In the event of a timely Objection, any termination of
the Executive shall be suspended and the Executive shall be promptly examined by
two physicians or other professionals skilled in the relevant field, one
selected by the Executive and one by the Committee. Each of the two
professionals shall issue a written opinion within 15 days following the
completion of his or her examination as to whether the Executive is Disabled in
accordance with the definition provided in this Plan. If the two professionals
agree, each of the Executive and the Company shall be bound by their joint
conclusion. If the two professionals disagree, they shall jointly agree on a
third professional to conduct a similar examination. Each of the Executive and
the Company shall be bound by the conclusion of such third professional. The
Executive agrees to each such examination and to waive any confidentiality
rights necessary to allow each of the professionals conducting such examinations
to do so. The Company shall pay all fees and costs of all such examinations. In
the event of a disagreement as to the determination of the Executive’s
disability for purposes of a Disability Plan, such disagreement shall be
resolved as provided for in such Disability Plan. For purposes of this Plan, the
term “Disability” shall mean the material inability of the Executive, due to
injury, illness, disease or bodily, mental or emotional infirmity, to carry out
the job responsibilities which such Executive held or the tasks to which such
Executive was assigned at the time of the incurrence of such Disability, which
inability is reasonably expected to be permanent or of indefinite duration
exceeding one year.

 

6.02 Cause. The Company may terminate an Executive’s employment at any time for
Cause. For purposes of this Plan, “Cause” means: (i) the willful failure of an
Executive to perform substantially all of the Executive’s material duties with
the Company (other than any failure resulting from incapacity resulting from
physical or mental illness), after written demand for substantial performance is
delivered to the Executive by the Committee or the CEO; or (ii) a willful
violation of the Company’s material rules and policies (including without
limitation the Standards of Business Conduct) as in effect from time to time; or
(iii) the Executive’s commission of any act or acts involving dishonesty, breach
of fiduciary obligation to the Company, fraud, illegality, malfeasance or moral
turpitude; or (iv) the Executive commits a criminal or civil violation or other
improper act involving fraud or dishonesty; or (v) the Executive is found liable
for or guilty in a civil matter of engaging in discriminatory conduct in
violation of any labor or employment laws or in violating or contributing to a
violation of an employee’s civil rights; or (vi) the Executive materially
breaches the terms of the Plan by revoking any Agreement that the Executive is
required to execute, or by failing properly to execute, or violating any one or
more of the provisions of, any Agreement that the Executive is required to
execute; or (vii) the Executive refuses to carry out clearly assigned material
duties or is otherwise insubordinate. Any act or failure to act, on the part of
an Executive, that is described in clause (i), (ii), (vi) or (vii) of the
preceding sentence of which the Committee receives actual notice shall not be
considered “Cause” unless the Committee, the Board or an executive officer of
the Company notifies the Executive that such act or failure to act is or may be
considered “Cause” within one year after the Committee first receives such
actual notice.

 

McDonald’s Corporation    71

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For purposes of this provision, no act or failure to act, on the part of an
Executive, shall be considered “willful,” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of the Company. Any
act, or failure to act, on the part of an Executive, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the instructions of
the CEO or an officer of the Company senior in rank to the Executive to whom the
Executive reports or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of an Executive shall not be deemed to be for Cause unless and until there shall
have been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of a majority of the Board at a meeting of the Board called and
held upon appropriate notice (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive is guilty of the conduct described in this paragraph, and
specifying the particulars thereof in detail.

 

6.03 Good Reason. During a Tier I Executive’s Retention Period and Transition
Period, the Tier I Executive may terminate his or her employment at any time for
Good Reason. For purposes of this Plan, “Good Reason” shall mean:

 

  (a) the assignment to the Executive of any duties inconsistent in any respect
with the Executive’s position (including without limitation status, offices,
titles and reporting requirements), authority, duties or responsibilities as of
the Executive’s Plan Start Date, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose (1) an isolated, insubstantial and inadvertent
action, and (2) any material change in status, duties and responsibilities that
is expressly contemplated by this Plan; or

 

  (b) the relocation of the Executive’s principal place of employment to a
location outside the greater Chicago metropolitan area.

 

Notwithstanding the foregoing: (A) a Tier I Executive’s termination of his or
her employment shall not be considered to be for Good Reason if he or she has
consented in writing to the occurrence of the event that constitutes Good
Reason; and (B) a Tier I Executive’s termination of his or her employment shall
not be considered to be for Good Reason unless the Executive shall have
delivered a written notice to the Committee within 30 days of his or her first
having actual knowledge of the occurrence of the event that constitutes Good
Reason, stating that he or she intends to terminate his or her employment for
Good Reason and specifying the factual basis for such termination, and such
event is not cured within 30 days of the Committee’s receipt of such notice.

 

6.04 Termination of Employment By the Company For Any Other Reason. During an
Executive’s Retention Period, the Company may also terminate the Executive’s
employment for any reason other than Cause by written notice to the Executive in
accordance with Section 6.05 below of its intention to terminate the Executive’s
employment. During an Executive’s Transition Period and Continued Employment
Period, the Company may not terminate the Executive’s employment other than for
Cause or Disability.

 

6.05 Notice of Termination. Any termination of an Executive’s employment by the
Company or the Executive pursuant to this Article 6 shall be communicated by
Notice of Termination to the other party hereto given in accordance with this
Section 6.05. For purposes of this Plan, a “Notice of Termination” means a
written notice which (i) indicates the specific termination provision in this
Plan relied upon, (ii) to the extent applicable, sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated, and (iii) if the Date
of Termination (as defined in Section 6.06 below) is other than the date of
receipt of such notice, specifies the termination date (which date shall be not
more than 30 days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

6.06 Date of Termination. “Date of Termination” means (i) if an Executive’s
employment is terminated other than as a result of the Executive’s death or
Disability, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive’s employment is
terminated as a result of the Executive’s death, the date of death, and (iii) if
the Executive’s employment is terminated as a result of the Executive’s
Disability, the Disability Effective Date.

 

72    McDonald’s Corporation

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Article 7 Obligations of the Company upon Termination

 

7.01 By an Executive for Good Reason; By the Company Other Than for Cause. This
Section 7.01 sets forth the consequences of the following terminations of
employment: (i) a termination of the employment of a Tier I, Tier II or Tier III
Executive by the Company during his or her Retention Period other than for
Cause; and (ii) a termination by a Tier I Executive of his or her employment for
Good Reason during his or her Retention Period or Transition Period. In each
such case, provided that the Executive properly executes a Termination
Agreement, does not revoke such Termination Agreement, and complies with all
Agreements that he or she is required under this Plan to execute:

 

  (a) the Company shall pay the following amounts (collectively, the
“Termination Payments”) to the Executive in a lump sum in cash:

 

  (i) the Accrued Obligations (as defined below),

 

  (ii) the Earned Bonus (as defined below), if any,

 

  (iii) the Severance Benefit (as defined below), and

 

  (iv) the Welfare Benefit (as defined below); and

 

  (b) the following categories of stock options shall vest as of the Executive’s
Date of Termination and remain exercisable until the first to occur of (x) the
fifth anniversary (if the Executive is a Tier I Executive or a Tier II
Executive) or the third anniversary (if the Executive is a Tier III Executive)
of the Date of Termination or (y) the latest date on which such options would
have expired, had the Executive’s employment not terminated: (i) all options
that are vested as of the Executive’s Date of Termination; and (ii) all options
that would have vested within five years (if the Executive is a Tier I Executive
or a Tier II Executive) or within three years (if the Executive is a Tier III
Executive) following the Executive’s Date of Termination, if the Executive had
remained employed by the Company.

 

The Termination Payments shall be paid not later than the latest of (1) the 60th
day following the Date of Termination, (2) the first day on which the Executive
has properly executed the Termination Agreement and the Termination Agreement
has ceased to be revocable (and has not been revoked), and (3) in the case of
any Earned Bonus for a year that ends during the Executive’s Retention Period,
the date on which bonuses under TIP for such year are paid to TIP participants
generally.

 

For purposes of this Plan:

 

  (A) “Accrued Obligations” shall mean the sum of (1) any unpaid base salary
accrued through the Date of Termination and (2) any accrued vacation pay, in
each case to the extent not previously paid;

 

  (B) “Discount Rate” shall mean the interest rate equal to the Prime Rate as
reported in The Wall Street Journal, Midwest Edition, as in effect on the Date
of Termination;

 

  (C) “Earned Bonus” means any annual bonus under TIP in respect of any calendar
year ended before the Date of Termination to which the Executive would have been
entitled under TIP (if the Date of Termination is during the Retention Period)
and under this Plan (if the Date of Termination is during the Transition
Period), if his or her employment had not terminated;

 

  (D) “Severance Benefit” means a lump sum payment equal to the aggregate
amounts of Annual Base Salary, Annual Bonuses (excluding Earned Bonuses) and/or
Continued Employment Period Salary that would have been payable to the Executive
if his or her employment had continued through the end of the Continued
Employment Period, discounted from the scheduled payment dates to the Date of
Termination by reference to the Discount Rate;

 

  (E) “Target Percentage” shall mean the target percentage of the annual bonus
that the Executive was eligible to receive under TIP on the day immediately
preceding the Change-in-Status Date without any adjustment, but in no event
lower than the Executive’s highest target percentage in effect at any time
between the Executive’s Plan Start Date and Change-in-Status Date, provided that
the target percentage shall be reduced to reflect any across-the-board
reductions implemented by the Committee prior to the Change-in-Status Date,
which reductions affect Company officers generally; and

 

  (F) “Welfare Benefit” shall mean a lump sum payment in lieu of continued
participation in those Benefit Plans that provide health, medical, dental and
life insurance benefits an amount equal to the estimated cost that the Company
would have incurred to provide benefits under such plans to the Executive
through the end of the Continued Employment Period (as reasonably determined by
the Committee in its sole discretion on the Date of Termination).

 

In determining the Severance Benefit and the Welfare Benefit, the following
rules shall apply. If an Executive’s employment has terminated during his or her
Retention Period, such amounts shall be determined as if Date of Termination had
been his or her Change-in-Status Date, and he or she had remained employed
during the Transition

 

McDonald’s Corporation    73

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Period and a full five-year Continued Employment Period thereafter. If an
Executive’s employment has terminated during his or her Transition Period, such
amounts shall be determined as if he or she shall had remained employed during
the remainder of the Transition Period and for a full five-year Continued
Employment Period thereafter.

 

7.02 Death; Disability. If, during any of an Executive’s Employment Periods, the
Executive dies or the Executive’s employment is terminated by reason of
Disability, the Company shall have no further obligations to the Executive or
the Executive’s legal representatives pursuant to this Plan, other than for:

 

  (a) payment of the Accrued Obligations and any Earned Bonus for a year that
ends after the Retention Period in a lump sum in cash within 60 days of the Date
of Termination, and any Earned Bonus for a year that ends during the Retention
Period at the same time as bonuses under TIP for that year are paid to TIP
participants generally; and

 

  (b) payment or provision of death benefits or disability benefits, as
applicable, equal to the benefits provided by the Company to the estates and
beneficiaries of other employees of the Company at the level in which the
Executive was serving at the time of his or her death or termination for
Disability, as applicable.

 

7.03 By the Company for Cause. If an Executive’s employment is terminated during
any of his or her Employment Periods by the Company for Cause, the Company shall
have no further obligations to the Executive pursuant to this Plan other than to
pay the Executive the Accrued Obligations in a lump sum in cash within 60 days
after the Date of Termination.

 

7.04 By a Tier I Executive Without Good Reason or a Tier II or Tier III
Executive for any Reason. If (a) a Tier I Executive terminates his or her
employment during his or her Retention Period or Transition Period without Good
Reason, or during his or her Continued Employment Period for any reason, or (b)
a Tier II or Tier III Executive terminates his or her employment during any of
his or her Employment Periods for any reason or no reason, the Company shall
have no obligation to the Executive pursuant to this Plan other than to pay the
Executive the Accrued Obligations and any Earned Bonus for a year that ends
after the Retention Period in a lump sum in cash within 60 days of the Date of
Termination, and any Earned Bonus for a year that ends during the Retention
Period at the same time as bonuses for that year under TIP are paid to TIP
participants generally.

 

7.05 Change of Control Employment Agreement. Notwithstanding any other provision
of this Plan, in no event shall an Executive be entitled to receive Termination
Benefits under this Plan in connection with a termination of employment for
which the Executive is eligible to elect, and does elect, to receive severance
benefits under a change of control employment agreement with the Company.

 

Article 8 Legal Fees and Other Expenses

 

8.01 Entitlement to Reimbursement. If an Executive incurs legal and other fees
or other expenses in a good faith effort to obtain pay or benefits under this
Plan, regardless of whether the Executive ultimately prevails, the Company shall
reimburse the Executive on a monthly basis upon the written request for such
fees and expenses to the extent not reimbursed under the Company’s officers and
directors liability insurance policy, if any. The existence of any controlling
case or regulatory law which is directly inconsistent with the position taken by
the Executive shall be evidence that the Executive did not act in good faith.

 

8.02 Method of Reimbursement. Reimbursement of legal fees and expenses under
this Article 8 shall be made monthly upon the written submission of a request
for reimbursement, together with evidence that such fees and expenses are due
and payable or were paid by the Executive. If the Company shall have reimbursed
the Executive for legal fees and expenses and it is later determined that the
Executive was not acting in good faith, all amounts paid on behalf of, or
reimbursed to, the Executive shall be promptly refunded to the Company.

 

Article 9 Amendment and Termination of this Plan

 

This Plan shall be effective on the Effective Date and shall remain in effect
until the later of (i) October 24, 2007, or (ii) a date that is two years after
the date on which the Company gives written notice to all Executives of its
intention to terminate this Plan. The Company has the right to amend this Plan
in whole or in part at any time; provided that no amendment of this Plan shall
be effective as to any Executive who is or may reasonably be expected to be
materially adversely affected thereby (an “Affected Executive”) until the later
of (i) October 1, 2004, or (ii) a date that is two years after the date on which
the Company gives written notice to all Affected Executives of its intention to
adopt such amendment, unless such Executive consents in writing. Notwithstanding
the foregoing, no Plan termination or amendment shall become effective during
the Transition Period or Continued Employment Period as to any Affected
Executive unless such Executive consents in writing. Any purported Plan
termination or amendment in violation of this Article 9 shall be void and of no
effect.

 

74    McDonald’s Corporation

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Article 10 Miscellaneous Provisions

 

10.01 Successors. This Plan shall be binding upon the Company and its successors
and assigns.

 

10.02 Executive Information. Each Executive shall notify the Committee of his or
her mailing address and each change of mailing address to the extent that he or
she has not previously informed the Company thereof. In addition, each Executive
shall furnish the Committee with any other information and data that the
Committee reasonably considers necessary for the proper administration of this
Plan and the Executive’s Agreements. The information provided by the Executive
under this Section 10.02 shall be binding upon the Executive, his or her
dependents and any beneficiaries for all purposes of this Plan and the
Agreements. The Committee shall be entitled to rely on any representations
regarding personal facts made by a Executive, his or her dependents or
beneficiaries, unless it has knowledge that such representations are false.

 

10.03 Payments to Beneficiary. If an Executive dies before receiving amounts to
which he or she is entitled under this Plan or any Agreement, such amounts shall
be paid to the Beneficiary (as defined below) or if none, to the Executive’s
estate. If a Beneficiary dies before complete payment of any benefits
attributable to a deceased Executive, the remaining benefits shall be paid the
Beneficiary’s estate. For purposes of this Plan, a “Beneficiary” shall mean any
person, firm, corporation, partnership, venture or other entity of any kind,
including without limitation any entity which is tax-exempt under Section
501(c)(3) of the Internal Revenue Code, designated in writing by an Executive in
accordance with procedures established by the Committee.

 

10.04 Notices. Any notice, request, election, or other official communication
under this Plan or any Agreement shall be in writing and shall be delivered
personally, by courier service, by registered or certified mail, return receipt
requested or (in the case of the Company, the CEO or the HR Official (as defined
in the Agreements)) by facsimile, and shall be effective upon actual receipt by
the party to which such notice shall be directed, and shall be addressed as
follows: (i) if to the Company, or McDonald’s Corporation, One McDonald’s Plaza,
Oak Brook IL 60523, Attention: Corporate Secretary, facsimile: (630) 623-0497,
(ii) if to the CEO or the HR Official, to such official at One McDonald’s Plaza,
Oak Brook, Illinois 60523, facsimile: (630) 623-7409, and (iii) if to an
Executive, the last mailing address as specified by the Executive in accordance
with Section 10.02 above.

 

10.05 Right to Amend Compensation Plans and Employee Plans. Nothing in this Plan
or any Agreement shall be construed to limit the ability of the Company to amend
or terminate any of the Compensation Plans and Employee Plans, and any such
terminations or amendments shall be effective as to the Executives.

 

10.06 Non-Alienation. No Executive shall have the right to assign, transfer or
anticipate an interest in any benefit under this Plan or any Agreement.

 

10.07 Severability. If any one or more articles, sections or other portions of
this Plan or of any 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.

 

10.08 No Waiver. The Company’s or an Executive’s failure to insist upon strict
compliance with any provision of this Plan or of any Agreement shall not be
deemed a waiver of such provision or any other provision of this Plan or of any
Agreement. The Company or an Executive may waive any or all of the provisions of
this Plan or of any Agreement only by signing a document to that effect. A
waiver of any provision of this Plan or of any 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.

 

10.09 Governing Law. This Plan is an “employee benefit plan” within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”). It is intended to constitute a “welfare plan” within the
meaning of Section 3(1) of ERISA, but to the extent it is held to be a “pension
plan” within the meaning of Section 3(2) of ERISA, it constitutes an unfunded
plan maintained primarily for the purpose of providing deferred compensation for
a select group of management or highly compensated employees. To the extent not
preempted by federal law, this Plan and all Agreements shall be interpreted and
construed in accordance with the laws of the State of Illinois, without regard
to any otherwise applicable conflicts of law or choice of law principles.

 

McDonald’s Corporation    75

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10.10 Captions. The captions of the Sections and Articles of this Plan are not a
part of the provisions hereof and shall have no force or effect.

 

10.11 No Mitigation or Offset. In no event shall any Executive or the Company be
obligated to take any action by way of mitigation of any damages caused by the
breach by the Company or any Executive, as applicable, of its, his or her
obligations under this Plan. No Executive’s Termination Benefits shall be
reduced by any compensation that the Executive earns after his or her Date of
Termination from employment or self-employment, provided that such employment or
self-employment does not violate the Executive’s obligations under his or her
Agreements.

 

10.12 Company Subsidiaries and Successors. References in this Plan 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 10.01, 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.

 

Date: January 31, 2005   McDonald’s Corporation    

          /S/ Richard Floersch

--------------------------------------------------------------------------------

    By   Richard Floersch         Corporate Executive Vice President–        
Human Resources

 

76    McDonald’s Corporation

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Appendix A.

 

Tier

--------------------------------------------------------------------------------

  

Name

--------------------------------------------------------------------------------

   Plan start date

--------------------------------------------------------------------------------

   End date

--------------------------------------------------------------------------------

   Percentage for salary
during continued
employment period

--------------------------------------------------------------------------------

 

I

   Jack M. Greenberg    April 29, 1998    April 29, 2003    50 %

I

   James R. Cantalupo    April 29, 1998    April 29, 2001    50 %

I

   James A. Skinner    October 1, 1998    October 1, 2001    50 %

II

   Claire H. Babrowski    October 1, 1998    October 1, 2001    35 %

II

   Stanley R. Stein    October 1, 1998    October 1, 2001    35 %

III

   Charles Bell    October 29, 2002    October 29, 2005    35 %

III

   Michael J. Roberts    October 29, 2002    October 29, 2005    35 %

III

   Gloria Santona    October 29, 2002    October 29, 2005    35 %

III

   Jack Daly    October 29, 2002    October 29, 2005    35 %

III

   Eduardo Sanchez    October 29, 2002    October 29, 2005    35 %

III

   Matthew H. Paull    October 29, 2002    October 29, 2005    35 %

III

   Lynn Crump-Caine    October 29, 2002    October 29, 2005    35 %

III

   Russell P. Smyth    October 29, 2002    October 29, 2005    35 %

 

McDonald’s Corporation    77

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Appendix B. Index of Defined Terms

 

Accrued Obligations    Section 7.01(A) Affected Executive    Article 9 Agreement
   Section 1.02(b) Annual Base Salary    Section 4.02(a)(i) Annual Bonus   
Section 4.02(b) Beneficiary    Section 10.03 Board    Section 2.01 Cause   
Section 6.02 CEO    Section 4.01(b) Change-in-Status Date    Section 4.01(a)
Claim    Section 2.13(a) Claimant    Section 2.13(a) Committee    Section 2.01
Company    Introduction Compensation Plans    Section 1.02(d) Continued
Employment Period    Section 5.01 Continued Employment Period Agreement   
Section 1.02(c) Continued Employment Period Salary    Section 5.02 Date of
Termination    Section 6.06 Deferred Compensation Plans    Section 1.02(e)
Disability    Section 6.01 Disability Effective Date    Section 6.01 Disability
Plan    Section 6.01 Discount Rate    Section 7.01(B) Earned Bonus    Section
7.01(C) Effective Date    Introduction Employee Plans    Section 1.02(d)
Employment Periods    Section 1.02(a) End Date    Appendix A Executives   
Section 1.02(a) Full Target Percentage    Section 4.02(b)(ii) Good Reason   
Section 6.03 HR Official    Section 10.04 LTIP    Section 4.02(c) LTIP Awards   
Section 4.02(c) Notice of Termination    Section 6.05 Objection    Section 6.01
Plan    Introduction Plan Administrator    Section 2.02 Prorated Annual Bonus   
Section 4.02(b)(iii) Relevant Prior Benefits    Section 1.02(c) Retention Period
   Article 3 Severance Benefit    Section 7.01(D) Target Percentage    Section
7.01(E) Termination Agreement    Section 1.02(b) Termination Benefits    Section
1.02(b) Termination Payments    Section 7.01(a) Tier I Executive    Appendix A
Tier II Executive    Appendix A Tier III Executive    Appendix A TIP    Section
4.02(b) Transition Benefits    Section 4.01(a) Transition Officer    Section
4.01(a) Transition Period    Section 4.01(d) Transition Period Agreement   
Section 1.02(b) Violation    Section 1.02(c) Welfare Benefit    Section 7.01(F)
Years of Service    Section 4.01(d)

 

78    McDonald’s Corporation

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Exhibit A. Transition Period Agreement

 

THIS TRANSITION PERIOD AGREEMENT (this “Agreement”) is entered into as of this
     day of                     ,         , by and between McDonald’s
Corporation, a Delaware corporation (the “Company”) and                     
(the “Executive”), pursuant to the Company’s Executive Retention Plan (the
“Plan”), a copy of which is attached hereto as Exhibit A.

 

WITNESSETH:

 

WHEREAS, the Executive is a Tier              Executive under the Plan; and

 

WHEREAS, if the Executive complies with his/her obligations under the Plan,
he/she will hereafter be entitled to substantial compensation and benefits under
the Plan to which he/she would not otherwise be entitled; and

 

WHEREAS, the Executive is required under the Plan to execute this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:

 

1. Definitions. Capitalized terms used but not defined in this Agreement shall
have the meanings given to them in the Plan. The following terms shall have the
meanings set forth below:

 

Agreement: defined in the first paragraph above.

 

Company: defined in the first paragraph above.

 

Company Property: all records, documents, materials, papers, computer records or
print-outs belonging to McDonald’s, including without limitation those
containing Confidential Information and Trade Secrets.

 

Competing Business: any Person (and any branches, offices or operations thereof)
that is a material and direct competitor of McDonald’s in any country in the
world or in any state of the United States by virtue of selling, manufacturing,
processing or promoting any product that is substantially similar to, competes
with, or is intended to compete with, replace, or duplicate in the market any
product that was sold or under development by McDonald’s during the five years
(or shorter period of the Executive’s employment with the Company) preceding the
date of execution of this Agreement or with respect to which the Executive has
had specific knowledge and involvement.

 

Confidential Information and Trade Secrets: all valuable and unique tangible and
intangible information and techniques acquired, developed or used by McDonald’s
relating to its business, operations, employees and customers, which gives
McDonald’s a competitive advantage in the businesses in which McDonald’s is
engaged, including without limitation processes, methods, techniques, systems,
computer data, formulae, patents, models, devices, compilations, customer lists,
supplier lists or any information of whatever nature that gives McDonald’s an
opportunity to obtain an advantage over competitors who do not know or use such
data or information.

 

Executive: defined in the first paragraph above.

 

HR Official: the Company’s Senior Executive Vice President of Human Resources
(or any successor position).

 

McDonald’s: the Company and its subsidiaries, divisions, affiliates and related
companies.

 

McDonald’s-Related Person: any director, officer, employee or franchisee of the
Company or any of its subsidiaries, divisions, affiliates and related companies.

 

Other Separation Benefits: defined in Section 9(c) below.

 

Person: a person, firm, corporation, partnership, venture or other entity of any
kind.

 

Plan: defined in the first paragraph above.

 

Recovery Period: defined in Section 10(c)(iii) below.

 

Release Date: the Executive’s Change-in-Status Date.

 

Released Persons: defined in Section 9(a) below.

 

Specified Competitors: the entities listed on Exhibit B hereto and their
respective subsidiaries and affiliates, as required by Section 1.02(b) of the
Plan.

 

Stock Option Gains: defined in Section 10(c)(iv) below.

 

Violation: defined in Section 8(a) below.

 

McDonald’s Corporation    79

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2. Relationship of Agreement to Plan. The Executive hereby agrees to be bound by
the terms of the Plan, and to fulfill all of his/her obligations under the Plan,
including without limitation to render services as set forth in the Plan and to
execute additional Agreement(s) as and when required by the Plan. The provisions
of the Plan, including without limitation the provision regarding administration
in Article 2 of the Plan, are applicable to this Agreement and to the
obligations of the Company and the Executive hereunder, and are hereby
incorporated by reference into this Agreement. However, any amendments made to
the Plan after the date of this Agreement will not apply to the Executive.

 

3. Circumstances Requiring Agreement. The Executive has given notice pursuant to
Section 4.01 of the Plan of his/her election to become a Transition Officer[,
and the [CEO](1) [Committee](2) has consented to such election](3). Accordingly,
the Executive’s Change-in-Status Date shall be                     ,
             and the Executive’s Transition Period shall be the period from
                    ,              to                     ,             . This
Agreement constitutes the Executive’s Transition Period Agreement.

 

4. Compensation and Benefits. During the Executive’s Transition Period, the
Executive shall receive the compensation and benefits provided for in Article 4
of the Plan, subject to the Executive’s compliance with the requirements of the
Plan and this Agreement. In addition, if the Executive remains employed through
the end of the Transition Period and otherwise complies with the requirements of
the Plan and this Agreement, including without limitation executing and not
revoking a Continued Employment Period Agreement, the Executive shall receive
the compensation and benefits provided for in Article 5 of the Plan during
his/her Continued Employment Period. Finally, upon the termination of the
Executive’s employment, he/she shall receive the compensation and benefits (if
any) provided for in such circumstances under Article 7 of the Plan.

 

5. Company Property and Confidentiality.

 

  (a) Acknowledgements. The Executive acknowledges that (i) it is the policy of
McDonald’s to maintain as secret and confidential all Confidential Information
and Trade Secrets; (ii) all Confidential Information and Trade Secrets are the
sole and exclusive property of McDonald’s; and (iii) disclosure of Confidential
Information and Trade Secrets would cause significant damage to McDonald’s.

 

  (b) Company Property. The Executive agrees to turn all Company Property over
to the CEO or the CEO’s designee, at or as promptly as practicable following the
execution of this Agreement, except for Company Property that is necessary to
perform his or her assigned functions during the Transition Period or the
Continued Employment Period. The Executive also agrees to turn any Company
Property that the Executive retains after the date of this Agreement pursuant to
the preceding sentence over to the CEO or the CEO’s designee as soon as it is no
longer necessary for the Executive to retain such Company Property in order to
perform such assigned functions, and in any event not later than the last day of
the Executive’s employment with the Company.

 

  (c) Confidentiality. The Executive shall not, without obtaining the Company’s
consent pursuant to Section 7 below, use, disclose, furnish or make accessible
to any Person any Confidential Information and Trade Secrets obtained during the
Executive’s employment with the Company at any time (including, without
limitation, during or after the Retention Period, the Transition Period or the
Continued Employment Period) for so long as such information remains
confidential or secret, except as required by the duties of the Executive’s
employment with the Company.

 

6. Other Covenants.

 

  (a) Acknowledgements. The Executive acknowledges that McDonald’s is engaged in
a highly competitive, global business that requires the preservation of
Confidential Information and Trade Secrets. The Executive further acknowledges
that McDonald’s has near-permanent relationships with vendors, affiliates,
customers, suppliers, manufacturers, alliance partners, employees and service
organizations, which McDonald’s has a legitimate interest in protecting.
Finally, the Executive acknowledges that the covenants set forth in this Section
6 are reasonable under the circumstances, that he or she has the skill and
ability to find alternative commensurate work not in violation of such covenants
and the Executive has the wherewithal to support himself/herself and his/her
family without violating such covenants, including without limitation the
covenant not to compete provided for in Section 6(b) below.

 

  (b) Noncompetition. The Executive agrees to not work for or provide services
to a Competing Business or to the Specified Competitors during the portion of
his/her Employment Periods that follows the date of execution of the Agreement
and for two years following any termination of the Executive’s employment.

 

--------------------------------------------------------------------------------

(1) For Agreements other than with the CEO.

(2) For Agreements with the CEO.

 

(3) Include only if the Change-in-Status Date is before the Executive’s 62nd
birthday.

 

80    McDonald’s Corporation

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  (c) Other Covenants. In addition, the Executive shall not, at any time during
the Executive’s employment with the Company:

 

  (i) Promote, sell or create any product sold by a Competing Business or a
Specified Competitor;

 

  (ii) Provide marketing services, consultation or services to enhance the sales
of a Competing Business or a Specified Competitor; or

 

  (iii) Use the McDonald’s name or any other brand name of McDonald’s, or the
fact of the Executive’s affiliation or former affiliation with McDonald’s, in
any manner that aids or benefits, or is intended to aid or benefit, a Competing
Business or a Specified Competitor.

 

  (d) Exceptions. It shall not be considered a violation of this Section 6 for
the Executive to engage in any of the following:

 

  (i) The performance of services for and on behalf of an investment banking or
commercial banking, auditing or consulting firm during the Continued Employment
Period or at any time after the termination of the Executive’s employment, so
long as the Executive is not personally engaged in rendering services to or
soliciting business of a Competing Business or any of the Specified Competitors;
and

 

  (ii) Being the record or beneficial owner of up to one (1) percent of the
outstanding voting securities of any publicly traded entity, provided that such
investment does not create a conflict of interest between the Executive’s duties
hereunder and the Executive’s interest in such investment or otherwise violate
the Company’s rules and policies (including without limitation the Standards of
Business Conduct).

 

  (e) No Solicitation or Hiring of Employees. The Executive shall not, during
the portion of his/her Employment Periods that follows the date of execution of
the Agreement and for two years following any termination of the Executive’s
employment, solicit or attempt to solicit any employee (other than the
Executive’s administrative assistant), consultant, franchisee, supplier or
independent contractor of McDonald’s to terminate, alter, or lessen that party’s
affiliation with McDonald’s or to interfere with or violate the terms of any
agreement or understanding between such entity, employee or person and
McDonald’s.

 

  (f) No Disparagement. The Executive shall not, during the portion of his/her
Employment Periods that follows the date of execution of the Agreement and for
three years following any termination of the Executive’s employment, (i) make
any public disclosures or publish any articles or books about McDonald’s, its
business or any McDonald’s-Related Person, or grant an interview to any
representative of the public media, without the prior written consent of the
CEO, or (ii) intentionally publish any statement or make any disclosure about
McDonald’s, its business or any McDonald’s-Related Person that is disparaging,
derogatory or otherwise casts a bad light on McDonald’s, its business or any
McDonald’s-Related Person.

 

7. Consent Procedure.

 

  (a) Seeking Consent. The Executive may seek the Company’s consent to engage in
any of the activities prohibited by Section 6 above, by providing written notice
thereof to the Company addressed to the HR Official [or to the CEO], (4)
including a full and complete disclosure in writing to the Company of all the
relevant facts, including without limitation the services to be rendered or
activities to be engaged in, places of employment, performance of services or
activities, compensation to be paid, expertise to be provided, amount to be
invested, stock or debt to be received, and business plan or plans to be
executed by such entity or person. The Company thereafter shall have fourteen
(14) calendar days to consider the Executive’s contemplated activities as
disclosed and shall in writing, either consent or object to such activities. It
is agreed that consent shall not be unreasonably withheld.

 

  (b) Binding Decisions. All decisions of the Company under this Section 7 shall
be final and binding upon the Executive, and the Executive shall not engage in
any such activities if the Company shall object.

 

8. Legal Compulsion.

 

  (a) Notice. If the Executive reasonably and in good faith believes that he or
she is or may be compelled by law or by a court or governmental agency by a
proper proceeding to disclose Confidential Information and Trade Secrets, or to
make a statement or take other action that would, absent this Section 8, violate
Section 6(f) above (each such disclosure, statement or action, a “Violation”),
then the Executive shall give the Company written notice thereof as far in
advance of such Violation as is lawful and practicable, shall cooperate (at the
Company’s sole expense) with the Company in its efforts to prevent such
Violation from being compelled, and shall limit his or her Violation to the
minimum compelled by law or court order, except to the extent the Company agrees
otherwise in writing.

 

--------------------------------------------------------------------------------

(4) Do not include in an Agreement signed by the CEO.

 

McDonald’s Corporation    81

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  (b) No Violation. If the Executive complies with the foregoing procedure to
the greatest extent possible without violating applicable law, then the
Executive shall not be deemed to have breached Section 5(c) or 6(f) above, as
applicable, as a result of the Violation.

 

9. Release Provisions. For the entire period of the Executive’s employment by
the Company, including his Retention Period, up to the Release Date:

 

  (a) Release. The Executive understands, intends and agrees that this Section 9
constitutes full, complete and final satisfaction of all claims, demands,
lawsuits or actions of any kind, whether known or unknown, against McDonald’s
and/or their respective directors, officers or employees (with McDonald’s,
collectively, the “Released Persons”), arising at any time up to and including
the Release Date, and the Executive hereby forever releases each Released Person
from all such matters. This includes, but is not limited to, a release of
claims, demands, lawsuits and actions of any kind relating to any employment or
application for employment or franchise, claims relating to resignation and/or
cessation of employment, claims alleging breach of contract of any tort, claims
for wrongful termination, defamation, intentional infliction of emotional
distress, personal injury, violation of public policy and/or negligence related
to employment or resignation, claims under Title VII of the Civil Rights Act of
1964, as amended, Section 1981 of the Civil Rights Act of 1866, as amended, the
Age Discrimination in Employment Act of 1967, as amended, the Rehabilitation Act
of 1973, the Americans with Disabilities Act of 1990, the Employee Retirement
Income Security Act of 1974, as amended, the Worker Adjustment and Retraining
Notification Act, the Family and Medical Leave Act of 1993, the Illinois Human
Rights Act, or any other state, Federal or local law prohibiting discrimination,
and claims based on any other law, regulation, or common law, whether before any
Federal, state or local agency, in any court of law or before any other forum.
Notwithstanding the foregoing, the Executive’s release shall not extend to any
claims (i) for benefits under Employee Plans that are qualified under Section
401(a) of the Internal Revenue Code, (ii) for compensation or benefits to which
the Executive is entitled under the Plan as provided in Section 4 above, (iii)
for compensation or benefits under any Employee Plan or Compensation Plan to
which the Executive is entitled by the terms thereof, except as provided
otherwise in Section 9(c) below and except to the extent such entitlements are
specifically amended or eliminated by the Plan, or (iv) for indemnification
under the Company’s policy on indemnification of officers and directors and
coverage under any related insurance policies.

 

  (b) Advice, Time to Consider and Revocation. [The Executive is hereby advised
to consult with an attorney prior to executing this Agreement. The Executive is
further advised that he/she has a period of 21 days within which to consider the
terms of this Agreement and whether or not to execute it. In addition, for a
period of 7 days following the Executive’s execution of this Agreement, he/she
has the right to revoke this Agreement, and no portion of this Agreement shall
become effective or enforceable until such revocation period has expired.](5)

 

  (c) Other Benefits. The Executive acknowledges and agrees that the payments
and benefits provided to the Executive under the Plan are in lieu of any
payments, benefits or arrangements to which the Executive might otherwise be
entitled to under any Employee Plan or other plan or arrangement which provides
for severance or separation (“Other Separation Benefits”), and the Executive
hereby waives any and all rights and claims that he or she may now or hereafter
have to any Other Separation Benefits; provided, that the foregoing waiver shall
not apply to any right the Executive may have to any gross-up payments related
to the excise tax on excess parachute payments imposed by Section 4999 of the
Internal Revenue Code under any change of control employment agreement with the
Company. The foregoing shall not be construed as affecting in any manner the
Executive’s benefits and entitlements (if any) under any Employee Plan that
provides pension or retiree medical or life insurance benefits.

 

  (d) Acknowledgments. The Executive acknowledges having read and understood the
provisions of this Section 9 as well as the other provisions of this Agreement,
and represents that his/her execution of this Agreement constitutes his/her
knowing and voluntary act, made without coercion or intimidation. The Executive
acknowledges and agrees that the release set forth in this Section 9 is being
given only in exchange for consideration in addition to anything of value to
which the Executive already is entitled. The Executive finally agrees not to
file any lawsuits against the Company or any of the released entities or persons
with respect to claims covered by the release given in this Section 9.

--------------------------------------------------------------------------------

(5) This language may be deleted or modified by the Company, depending upon
individual circumstances and/or changes in law relating to age discrimination or
otherwise.

 

82    McDonald’s Corporation

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10. Remedies.

 

  (a) Acknowledgments. In recognition of the confidential nature of the
Confidential Information and Trade Secrets, and in recognition of the necessity
of the limited restrictions imposed by the Agreement, the Executive acknowledges
it would be impossible to measure solely in money the damages which McDonald’s
would suffer if the Executive were to breach any of his/her obligations under
Sections 5 and 6 above. The Executive also acknowledges that his/her breach of
any such obligations would irreparably injure the Company.

 

  (b) Entitlement to Injunctive Relief. If the Executive breaches any of his/her
obligations under Sections 5 and 6 above, McDonald’s shall be entitled, in
addition to any other remedies to which McDonald’s may be entitled under the
Agreement or otherwise, to an injunction issued by a court of competent
jurisdiction, to restrain any breach or threatened breach, of such provisions,
and the Executive waives any right to assert any claim or defense that
McDonald’s has an adequate remedy at law for any such breach and any right to
require, or request a court to require, that McDonald’s post a bond in
connection therewith.

 

  (c) Effect on Other Benefits. In the event of a breach by the Executive of any
of his/her obligations under this Agreement, excluding for this purpose an
isolated, insubstantial and inadvertent action, the Company shall be entitled
to:

 

  (i) discontinue any and all payments and other benefits to which the Executive
or his/her beneficiaries would otherwise be entitled pursuant to this Agreement
and/or the Plan;

 

  (ii) terminate any and all unexercised stock options then held by the
Executive or by any transferee of the Executive;

 

  (iii) in the case of any such breach occurring after the Executive’s
Change-in-Status Date, require the Executive to repay to the Company the
aggregate amount of cash payments received by the Executive from the Company
pursuant to this Agreement and/or the Plan during the period commencing on the
Executive’s Change-in-Status Date and ending on the date on which the Company
requests such repayment (the “Recovery Period”); and

 

  (iv) in the case of any such breach occurring after the Executive’s
Change-in-Status Date, require the Executive to pay to the Company any Stock
Option Gains (as defined in the next two sentences). “Stock Option Gains” with
respect to the Executive’s stock options that were not vested as of his or her
Change-in-Status Date means the aggregate amount of any gain recognized upon
exercise of such stock options during the Recovery Period. “Stock Option Gains”
with respect to the Executive’s stock options that were vested as of his or her
Change-in-Status Date means the excess, if any, of (A) the aggregate amount of
any gain recognized upon exercise of such stock options during the Recovery
Period, over (B) the amount of gain that would have been recognized, had such
exercises instead occurred on the Executive’s Change-in-Status Date.

 

11. Successors. This Agreement shall be binding upon and inure to the benefit of
the Company and the Executive and their respective heirs, representatives and
successors.

 

12. Jurisdiction and Venue. Any action arising under this Agreement or between
the Company and the Executive shall be instituted and brought exclusively under
the jurisdiction and venue of the appropriate state or federal courts for the
City of Oak Brook, Illinois, County of DuPage. The Executive hereby consents to
the exclusive jurisdiction of said courts regardless of where the Executive may
be domiciled at the time such suit is brought. It is further agreed that in the
event the Company shall be required to institute any proceedings to enforce the
terms of this Agreement, then the Company shall be entitled to recover its
attorney fees and attendant expenses as part of any recovery.

 

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

 

14. Entire Agreement. This Agreement, together with the Plan, contain the entire
agreement between the parties, and supersede any and all previous agreements,
written or oral, between the Executive and the Company relating to the subject
matter hereof. No amendment or modification of the terms of this Agreement shall
be binding upon the parties hereto unless reduced to writing and signed by each
of the parties hereto.

 

McDonald’s Corporation    83

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15. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original.

 

16. Severability. If any one or more 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
Section or other portion not so declared to be unlawful or invalid. Any Section
or other portion so declared to be unlawful or invalid shall be construed so as
to effectuate the terms of such Section or other portion to the fullest extent
possible while remaining lawful and valid.

 

17. Governing Law. To the extent not preempted by federal law, this Agreement
shall be interpreted and construed in accordance with the laws of the State of
Illinois, without regard to any otherwise applicable conflicts of law or choice
of law principles.

 

IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

 

McDonald’s Corporation

 

--------------------------------------------------------------------------------

By

 

 

--------------------------------------------------------------------------------

Title

 

 

--------------------------------------------------------------------------------

Name

 

84    McDonald’s Corporation

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Exhibit A. Executive Retention Plan

 

[Attach]

 

McDonald’s Corporation    85

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Exhibit B. Specified Competitors

 

[List of 25 to be inserted upon preparation of specific Agreement]

 

86    McDonald’s Corporation

--------------------------------------------------------------------------------

Exhibit B. Continued Employment Period Agreement

 

THIS CONTINUED EMPLOYMENT PERIOD AGREEMENT (this “Agreement”) is entered into as
of this      day of                     ,     , by and between McDonald’s
Corporation, a Delaware corporation (the “Company”) and                     
(the “Executive”), pursuant to the Company’s Executive Retention Plan (the
“Plan”), a copy of which is attached hereto as Exhibit A.

 

WITNESSETH:

 

WHEREAS, the Executive is a Tier          Executive under the Plan; and

 

WHEREAS, if the Executive complies with his/her obligations under the Plan,
he/she will hereafter be entitled to substantial compensation and benefits under
the Plan to which he/she would not otherwise be entitled; and

 

WHEREAS, during the Executive’s Transition Period, the Executive has received
substantial compensation and benefits under the Plan to which he/she would not
otherwise have been entitled; and

 

WHEREAS, the Executive is required under the Plan to execute this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:

 

1. Definitions. Capitalized terms used but not defined in this Agreement shall
have the meanings given to them in the Plan. The following terms shall have the
meanings set forth below:

 

Agreement: defined in the first paragraph above.

 

Company: defined in the first paragraph above.

 

Company Property: all records, documents, materials, papers, computer records or
print-outs belonging to McDonald’s, including without limitation those
containing Confidential Information and Trade Secrets.

 

Competing Business: any Person (and any branches, offices or operations thereof)
that is a material and direct competitor of McDonald’s in any country in the
world or in any state of the United States by virtue of selling, manufacturing,
processing or promoting any product that is substantially similar to, competes
with, or is intended to compete with, replace, or duplicate in the market any
product that was sold or under development by McDonald’s during the five years
(or shorter period of the Executive’s employment with the Company) preceding the
date of execution of this Agreement or with respect to which the Executive has
had specific knowledge and involvement.

 

Confidential Information and Trade Secrets: all valuable and unique tangible and
intangible information and techniques acquired, developed or used by McDonald’s
relating to its business, operations, employees and customers, which gives
McDonald’s a competitive advantage in the businesses in which McDonald’s is
engaged, including without limitation processes, methods, techniques, systems,
computer data, formulae, patents, models, devices, compilations, customer lists,
supplier lists or any information of whatever nature that gives McDonald’s an
opportunity to obtain an advantage over competitors who do not know or use such
data or information.

 

Executive: defined in the first paragraph above.

 

HR Official: the Company’s Senior Executive Vice President of Human Resources
(or any successor position).

 

McDonald’s: the Company and its subsidiaries, divisions, affiliates and related
companies.

 

McDonald’s-Related Person: any director, officer, employee or franchisee of the
Company or any of its subsidiaries, divisions, affiliates and related companies.

 

Other Separation Benefits: defined in Section 9(c) below.

 

Person: a person, firm, corporation, partnership, venture or other entity of any
kind.

 

Plan: defined in the first paragraph above.

 

Recovery Period: defined in Section 10(c)(iii) below.

 

Release Date: the last day of the Executive’s Transition Period.

 

Released Persons: defined in Section 9(a) below.

 

Specified Competitors: the entities listed on Exhibit B hereto and their
respective subsidiaries and affiliates, as required by Section 1.02(b) of the
Plan.

 

Stock Option Gains: defined in Section 10(c)(iv) below.

 

Violation: defined in Section 8(a) below.

 

McDonald’s Corporation    87

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2. Relationship of Agreement to Plan. The Executive hereby agrees to be bound by
the terms of the Plan, and to fulfill all of his/her obligations under the Plan,
including without limitation to render services as set forth in the Plan and to
execute additional Agreement(s) as and when required by the Plan. The provisions
of the Plan, including without limitation the provision regarding administration
in Article 2 of the Plan, are applicable to this Agreement and to the
obligations of the Company and the Executive hereunder, and are hereby
incorporated by reference into this Agreement. However, any amendments made to
the Plan after the date of this Agreement will not apply to the Executive.

 

3. Circumstances Requiring Agreement. The Executive’s Continued Employment
Period shall be the period from                     ,          to
                    ,         . This Agreement constitutes the Executive’s
Continued Employment Period Agreement.

 

4. Compensation and Benefits. During the Executive’s Continued Employment
Period, the Executive shall receive the compensation and benefits provided for
in Article 5 of the Plan, subject to the Executive’s compliance with the
requirements of the Plan and this Agreement. In addition, upon the termination
of the Executive’s employment, he/she shall receive the compensation and
benefits (if any) provided for in such circumstances under Article 7 of the
Plan.

 

5. Company Property and Confidentiality.

 

  (a) Acknowledgements. The Executive acknowledges that (i) it is the policy of
McDonald’s to maintain as secret and confidential all Confidential Information
and Trade Secrets; (ii) all Confidential Information and Trade Secrets are the
sole and exclusive property of McDonald’s; and (iii) disclosure of Confidential
Information and Trade Secrets would cause significant damage to McDonald’s.

 

  (b) Company Property. The Executive agrees to turn all Company Property over
to the CEO or the CEO’s designee, at or as promptly as practicable following the
execution of this Agreement, except for Company Property that is necessary to
perform his or her assigned functions during the Continued Employment Period.
The Executive also agrees to turn any Company Property that the Executive
retains after the date of this Agreement pursuant to the preceding sentence over
to the CEO or the CEO’s designee as soon as it is no longer necessary for the
Executive to retain such Company Property in order to perform such assigned
functions, and in any event not later than the last day of the Executive’s
employment with the Company.

 

  (c) Confidentiality. The Executive shall not, without obtaining the Company’s
consent pursuant to Section 7 below, use, disclose, furnish or make accessible
to any Person any Confidential Information and Trade Secrets obtained during the
Executive’s employment with the Company at any time (including, without
limitation, during or after the Retention Period, the Transition Period or the
Continued Employment Period) for so long as such information remains
confidential or secret, except as required by the duties of the Executive’s
employment with the Company.

 

6. Other Covenants.

 

  (a) Acknowledgements. The Executive acknowledges that McDonald’s is engaged in
a highly competitive, global business that requires the preservation of
Confidential Information and Trade Secrets. The Executive further acknowledges
that McDonald’s has near-permanent relationships with vendors, affiliates,
customers, suppliers, manufacturers, alliance partners, employees and service
organizations, which McDonald’s has a legitimate interest in protecting.
Finally, the Executive acknowledges that the covenants set forth in this Section
6 are reasonable under the circumstances, that he or she has the skill and
ability to find alternative commensurate work not in violation of such covenants
and the Executive has the wherewithal to support himself/herself and his/her
family without violating such covenants, including without limitation the
covenant not to compete provided for in Section 6(b) below.

 

  (b) Noncompetition. The Executive agrees to not work for or provide services
to a Competing Business or to the Specified Competitors during the portion of
his/her Employment Periods that follows the date of execution of the Agreement
and for two years following any termination of the Executive’s employment.

 

  (c) Other Covenants. In addition, the Executive shall not, at any time during
the Executive’s employment with the Company:

 

  (i) Promote, sell or create any product sold by a Competing Business or a
Specified Competitor;

 

  (ii) Provide marketing services, consultation or services to enhance the sales
of a Competing Business or a Specified Competitor; or

 

  (iii) Use the McDonald’s name or any other brand name of McDonald’s, or the
fact of the Executive’s affiliation or former affiliation with McDonald’s, in
any manner that aids or benefits, or is intended to aid or benefit, a Competing
Business or a Specified Competitor.

 

88    McDonald’s Corporation

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  (d) Exceptions. It shall not be considered a violation of this Section 6 for
the Executive to engage in any of the following:

 

  (i) The performance of services for and on behalf of an investment banking or
commercial banking, auditing or consulting firm during the Continued Employment
Period or at any time after the termination of the Executive’s employment, so
long as the Executive is not personally engaged in rendering services to or
soliciting business of a Competing Business or any of the Specified Competitors;
and

 

  (ii) Being the record or beneficial owner of up to one (1) percent of the
outstanding voting securities of any publicly traded entity, provided that such
investment does not create a conflict of interest between the Executive’s duties
hereunder and the Executive’s interest in such investment or otherwise violate
the Company’s rules and policies (including without limitation the Standards of
Business Conduct).

 

  (e) No Solicitation or Hiring of Employees. The Executive shall not, during
the portion of his/her Employment Periods that follows the date of execution of
the Agreement and for two years following any termination of the Executive’s
employment, solicit or attempt to solicit any employee (other than the
Executive’s administrative assistant), consultant, franchisee, supplier or
independent contractor of McDonald’s to terminate, alter, or lessen that party’s
affiliation with McDonald’s or to interfere with or violate the terms of any
agreement or understanding between such entity, employee or person and
McDonald’s.

 

  (f) No Disparagement. The Executive shall not, during the portion of his/her
Employment Periods that follows the date of execution of the Agreement and for
three years following any termination of the Executive’s employment, (i) make
any public disclosures or publish any articles or books about McDonald’s, its
business or any McDonald’s-Related Person, or grant an interview to any
representative of the public media, without the prior written consent of the
CEO, or (ii) intentionally publish any statement or make any disclosure about
McDonald’s, its business or any McDonald’s-Related Person that is disparaging,
derogatory or otherwise casts a bad light on McDonald’s, its business or any
McDonald’s-Related Person.

 

7. Consent Procedure.

 

  (a) Seeking Consent. The Executive may seek the Company’s consent to engage in
any of the activities prohibited by Section 6 above, by providing written notice
thereof to the Company addressed to the HR Official [or to the CEO],(1)
including a full and complete disclosure in writing to the Company of all the
relevant facts, including without limitation the services to be rendered or
activities to be engaged in, places of employment, performance of services or
activities, compensation to be paid, expertise to be provided, amount to be
invested, stock or debt to be received, and business plan or plans to be
executed by such entity or person. The Company thereafter shall have fourteen
(14) calendar days to consider the Executive’s contemplated activities as
disclosed and shall in writing, either consent or object to such activities. It
is agreed that consent shall not be unreasonably withheld.

 

  (b) Binding Decisions. All decisions of the Company under this Section 7 shall
be final and binding upon the Executive, and the Executive shall not engage in
any such activities if the Company shall object.

 

8. Legal Compulsion.

 

  (a) Notice. If the Executive reasonably and in good faith believes that he or
she is or may be compelled by law or by a court or governmental agency by a
proper proceeding to disclose Confidential Information and Trade Secrets, or to
make a statement or take other action that would, absent this Section 8, violate
Section 6(f) above (each such disclosure, statement or action, a “Violation”),
then the Executive shall give the Company written notice thereof as far in
advance of such Violation as is lawful and practicable, shall cooperate (at the
Company’s sole expense) with the Company in its efforts to prevent such
Violation from being compelled, and shall limit his or her Violation to the
minimum compelled by law or court order, except to the extent the Company agrees
otherwise in writing.

 

  (b) No Violation. If the Executive complies with the foregoing procedure to
the greatest extent possible without violating applicable law, then the
Executive shall not be deemed to have breached Section 5(c) or 6(f) above, as
applicable, as a result of the Violation.

--------------------------------------------------------------------------------

(1) Do not include in an Agreement signed by the CEO.

 

McDonald’s Corporation    89

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9. Release Provisions. For the entire period of the Executive’s employment by
the Company, including his Retention Period, up to the Release Date:

 

  (a) Release. The Executive understands, intends and agrees that this Section 9
constitutes full, complete and final satisfaction of all claims, demands,
lawsuits or actions of any kind, whether known or unknown, against McDonald’s
and/or their respective directors, officers or employees (with McDonald’s,
collectively, the “Released Persons”), arising at any time up to and including
the Release Date, and the Executive hereby forever releases each Released Person
from all such matters. This includes, but is not limited to, a release of
claims, demands, lawsuits and actions of any kind relating to any employment or
application for employment or franchise, claims relating to resignation and/or
cessation of employment, claims alleging breach of contract of any tort, claims
for wrongful termination, defamation, intentional infliction of emotional
distress, personal injury, violation of public policy and/or negligence related
to employment or resignation, claims under Title VII of the Civil Rights Act of
1964, as amended, Section 1981 of the Civil Rights Act of 1866, as amended, the
Age Discrimination in Employment Act of 1967, as amended, the Rehabilitation Act
of 1973, the Americans with Disabilities Act of 1990, the Employee Retirement
Income Security Act of 1974, as amended, the Worker Adjustment and Retraining
Notification Act, the Family and Medical Leave Act of 1993, the Illinois Human
Rights Act, or any other state, Federal or local law prohibiting discrimination,
and claims based on any other law, regulation, or common law, whether before any
Federal, state or local agency, in any court of law or before any other forum.
Notwithstanding the foregoing, the Executive’s release shall not extend to any
claims (i) for benefits under Employee Plans that are qualified under Section
401(a) of the Internal Revenue Code, (ii) for compensation or benefits to which
the Executive is entitled under the Plan as provided in Section 4 above, (iii)
for compensation or benefits under any Employee Plan or Compensation Plan to
which the Executive is entitled by the terms thereof, except as provided
otherwise in Section 9(c) below and except to the extent such entitlements are
specifically amended or eliminated by the Plan, or (iv) for indemnification
under the Company’s policy on indemnification of officers and directors and
coverage under any related insurance policies.

 

  (b) Advice, Time to Consider and Revocation. [The Executive is hereby advised
to consult with an attorney prior to executing this Agreement. The Executive is
further advised that he/she has a period of 21 days within which to consider the
terms of this Agreement and whether or not to execute it. In addition, for a
period of 7 days following the Executive’s execution of this Agreement, he/she
has the right to revoke this Agreement, and no portion of this Agreement shall
become effective or enforceable until such revocation period has expired.](2)

 

  (c) Other Benefits. The Executive acknowledges and agrees that the payments
and benefits provided to the Executive under the Plan are in lieu of any
payments, benefits or arrangements to which the Executive might otherwise be
entitled to under any Employee Plan or other plan or arrangement which provides
for severance or separation (“Other Separation Benefits”), and the Executive
hereby waives any and all rights and claims that he or she may now or hereafter
have to any Other Separation Benefits; provided, that the foregoing waiver shall
not apply to any right the Executive may have to any gross-up payments related
to the excise tax on excess parachute payments imposed by Section 4999 of the
Internal Revenue Code under any change of control employment agreement with the
Company. The foregoing shall not be construed as affecting in any manner the
Executive’s benefits and entitlements (if any) under any Employee Plan that
provides pension or retiree medical or life insurance benefits.

 

  (d) Acknowledgements. The Executive acknowledges having read and understood
the provisions of this Section 9 as well as the other provisions of this
Agreement, and represents that his/her execution of this Agreement constitutes
his/her knowing and voluntary act, made without coercion or intimidation. The
Executive acknowledges and agrees that the release set forth in this Section 9
is being given only in exchange for consideration in addition to anything of
value to which the Executive already is entitled. The Executive finally agrees
not to file any lawsuits against the Company or any of the released entities or
persons with respect to claims covered by the release given in this Section 9.

--------------------------------------------------------------------------------

(2) This language may be deleted or modified by the Company, depending upon
individual circumstances and/or changes in law relating to age discrimination or
otherwise.

 

90    McDonald’s Corporation

--------------------------------------------------------------------------------

10. Remedies.

 

  (a) Acknowledgements. In recognition of the confidential nature of the
Confidential Information and Trade Secrets, and in recognition of the necessity
of the limited restrictions imposed by the Agreement, the Executive acknowledges
it would be impossible to measure solely in money the damages which McDonald’s
would suffer if the Executive were to breach any of his/her obligations under
Sections 5 and 6 above. The Executive also acknowledges that his/her breach of
any such obligations would irreparably injure the Company.

 

  (b) Entitlement to Injunctive Relief. If the Executive breaches any of his/her
obligations under Sections 5 and 6 above, McDonald’s shall be entitled, in
addition to any other remedies to which McDonald’s may be entitled under the
Agreement or otherwise, to an injunction issued by a court of competent
jurisdiction, to restrain any breach or threatened breach, of such provisions,
and the Executive waives any right to assert any claim or defense that
McDonald’s has an adequate remedy at law for any such breach and any right to
require, or request a court to require, that McDonald’s post a bond in
connection therewith.

 

  (c) Effect on Other Benefits. In the event of a breach by the Executive of any
of his/her obligations under this Agreement, excluding for this purpose an
isolated, insubstantial and inadvertent action, the Company shall be entitled
to:

 

  (i) discontinue any and all payments and other benefits to which the Executive
or his/her beneficiaries would otherwise be entitled pursuant to this Agreement
and/or the Plan;

 

  (ii) terminate any and all unexercised stock options then held by the
Executive or by any transferee of the Executive;

 

  (iii) in the case of any such breach occurring after the Executive’s
Change-in-Status Date, require the Executive to repay to the Company the
aggregate amount of cash payments received by the Executive from the Company
pursuant to this Agreement and/or the Plan during the period commencing on the
Executive’s Change-in-Status Date and ending on the date on which the Company
requests such repayment (the “Recovery Period”); and

 

  (iv) in the case of any such breach occurring after the Executive’s
Change-in-Status Date, require the Executive to pay to the Company any Stock
Option Gains (as defined in the next two sentences). “Stock Option Gains” with
respect to the Executive’s stock options that were not vested as of his or her
Change-in-Status Date means the aggregate amount of any gain recognized upon
exercise of such stock options during the Recovery Period. “Stock Option Gains”
with respect to the Executive’s stock options that were vested as of his or her
Change-in-Status Date means the excess, if any, of (A) the aggregate amount of
any gain recognized upon exercise of such stock options during the Recovery
Period, over (B) the amount of gain that would have been recognized, had such
exercises instead occurred on the Executive’s Change-in-Status Date.

 

11. Successors. This Agreement shall be binding upon and inure to the benefit of
the Company and the Executive and their respective heirs, representatives and
successors.

 

12. Jurisdiction and Venue. Any action arising under this Agreement or between
the Company and the Executive shall be instituted and brought exclusively under
the jurisdiction and venue of the appropriate state or federal courts for the
City of Oak Brook, Illinois, County of DuPage. The Executive hereby consents to
the exclusive jurisdiction of said courts regardless of where the Executive may
be domiciled at the time such suit is brought. It is further agreed that in the
event the Company shall be required to institute any proceedings to enforce the
terms of this Agreement, then the Company shall be entitled to recover its
attorney fees and attendant expenses as part of any recovery.

 

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

 

14. Entire Agreement. This Agreement, together with the Plan, contain the entire
agreement between the parties, and supersede any and all previous agreements,
written or oral, between the Executive and the Company relating to the subject
matter hereof. No amendment or modification of the terms of this Agreement shall
be binding upon the parties hereto unless reduced to writing and signed by each
of the parties hereto.

 

McDonald’s Corporation    91

--------------------------------------------------------------------------------

15. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original.

 

16. Severability. If any one or more 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
Section or other portion not so declared to be unlawful or invalid. Any Section
or other portion so declared to be unlawful or invalid shall be construed so as
to effectuate the terms of such Section or other portion to the fullest extent
possible while remaining lawful and valid.

 

17. Governing Law. To the extent not preempted by federal law, this Agreement
shall be interpreted and construed in accordance with the laws of the State of
Illinois, without regard to any otherwise applicable conflicts of law or choice
of law principles.

 

IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

 

McDonald’s Corporation

 

 

--------------------------------------------------------------------------------

By

 

 

--------------------------------------------------------------------------------

Title

 

 

--------------------------------------------------------------------------------

Name

 

92    McDonald’s Corporation

--------------------------------------------------------------------------------

Exhibit A. Executive Retention Plan

 

[Attach]

 

McDonald’s Corporation    93

--------------------------------------------------------------------------------

Exhibit B. Specified Competitors

 

[List of 25 to be inserted upon preparation of specific Agreement]

 

94    McDonald’s Corporation

--------------------------------------------------------------------------------

Exhibit C. Termination Agreement

 

THIS TERMINATION AGREEMENT (this “Agreement”) is entered into as of this     
day of                     ,     , by and between McDonald’s Corporation, a
Delaware corporation (the “Company”) and                                  (the
“Executive”), pursuant to the Company’s Executive Retention Plan (the “Plan”), a
copy of which is attached hereto as Exhibit A.

 

WITNESSETH:

 

WHEREAS, the Executive is a Tier              Executive under the Plan; and

 

WHEREAS, if the Executive complies with his/her obligations under the Plan,
he/she will hereafter be entitled to substantial compensation and benefits under
the Plan to which he/she would not otherwise be entitled; and

 

[WHEREAS, during the Executive’s Transition Period [and Continued Employment
Period],(1) the Executive has received substantial compensation and benefits
under the Plan to which he/she would not otherwise have been entitled; and](2)

 

WHEREAS, the Executive is required under the Plan to execute this Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:

 

1. Definitions. Capitalized terms used but not defined in this Agreement shall
have the meanings given to them in the Plan. The following terms shall have the
meanings set forth below:

 

Agreement: defined in the first paragraph above.

 

Company: defined in the first paragraph above.

 

Company Property: all records, documents, materials, papers, computer records or
print-outs belonging to McDonald’s, including without limitation those
containing Confidential Information and Trade Secrets.

 

Competing Business: any Person (and any branches, offices or operations thereof)
that is a material and direct competitor of McDonald’s in any country in the
world or in any state of the United States by virtue of selling, manufacturing,
processing or promoting any product that is substantially similar to, competes
with, or is intended to compete with, replace, or duplicate in the market any
product that was sold or under development by McDonald’s during the five years
(or shorter period of the Executive’s employment with the Company) preceding the
date of execution of this Agreement or with respect to which the Executive has
had specific knowledge and involvement.

 

Confidential Information and Trade Secrets: all valuable and unique tangible and
intangible information and techniques acquired, developed or used by McDonald’s
relating to its business, operations, employees and customers, which gives
McDonald’s a competitive advantage in the businesses in which McDonald’s is
engaged, including without limitation processes, methods, techniques, systems,
computer data, formulae, patents, models, devices, compilations, customer lists,
supplier lists or any information of whatever nature that gives McDonald’s an
opportunity to obtain an advantage over competitors who do not know or use such
data or information.

 

Executive: defined in the first paragraph above.

 

HR Official: the Company’s Senior Executive Vice President of Human Resources
(or any successor position).

 

McDonald’s: the Company and its subsidiaries, divisions, affiliates and related
companies.

 

McDonald’s-Related Person: any director, officer, employee or franchisee of the
Company or any of its subsidiaries, divisions, affiliates and related companies.

 

Other Separation Benefits: defined in Section 9(c) below.

 

Person: a person, firm, corporation, partnership, venture or other entity of any
kind.

 

Plan: defined in the first paragraph above.

 

Recovery Period: defined in Section 10(c)(iii) below.

 

Release Date: the Executive’s Date of Termination.

 

Released Persons: defined in Section 9(a) below.

--------------------------------------------------------------------------------

(1) Include bracketed phrase in Agreements signed after the Continued Employment
Period begins.

(2) Include bracketed paragraph in Agreements signed after Change-in-Status
Date.

 

McDonald’s Corporation    95

--------------------------------------------------------------------------------

Specified Competitors: the entities listed on Exhibit B hereto and their
respective subsidiaries and affiliates, as required by Section 1.02(b) of the
Plan.

 

Stock Option Gains: defined in Section 10(c)(iv) below.

 

Violation: defined in Section 8(a) below.

 

2. Relationship of Agreement to Plan. The provisions of the Plan, including
without limitation the provision regarding administration in Article 2 of the
Plan, are applicable to this Agreement and to the obligations of the Company and
the Executive hereunder, and are hereby incorporated by reference into this
Agreement. However, any amendments made to the Plan after the date of this
Agreement will not apply to the Executive.

 

3. Circumstances Requiring Agreement. The Executive’s employment [has
terminated] [will terminate] as a result of [insert the appropriate clause from
the following:]

 

[the expiration of his/her Continued Employment Period]

 

[termination by the Company during the Executive’s Retention Period, other than
for Cause]

 

[termination by the Executive for Good Reason during his/her [Retention Period]
[Transition Period]](3)

 

The Executive’s Date of Termination is                     ,     . This
Agreement constitutes the Executive’s Termination Agreement.

 

4. Termination Benefits. [For a Termination Agreement entered into at the end of
the Continued Employment Period] The Executive’s eligibility for retiree status
and retiree benefits for purposes of Compensation Plans and Employee Plans shall
be determined by giving the Executive credit for employment from the
Change-in-Status Date through the Date of Termination, provided that the
Executive properly executes this Agreement, does not revoke this Agreement, and
complies with all Agreements that he or she is required under the Plan to
execute.

 

[For a Termination Agreement entered into in connection with a termination
covered by Section 7.01 of the Plan] The Executive shall be entitled to receive
Termination Benefits in accordance with Section 7.01 of the Plan, provided that
the Executive properly executes this Agreement, does not revoke this Agreement,
and complies with all Agreements that he or she is required under the Plan to
execute. These Termination Benefits are outlined on Exhibit C hereto.

 

5. Company Property and Confidentiality.

 

  (a) Acknowledgements. The Executive acknowledges that (i) it is the policy of
McDonald’s to maintain as secret and confidential all Confidential Information
and Trade Secrets; (ii) all Confidential Information and Trade Secrets are the
sole and exclusive property of McDonald’s; and (iii) disclosure of Confidential
Information and Trade Secrets would cause significant damage to McDonald’s.

 

  (b) Company Property. The Executive agrees to turn all Company Property over
to the CEO or the CEO’s designee, at or as promptly as practicable following the
execution of this Agreement.

 

  (c) Confidentiality. The Executive shall not, without obtaining the Company’s
consent pursuant to Section 7 below, use, disclose, furnish or make accessible
to any Person any Confidential Information and Trade Secrets obtained during the
Executive’s employment with the Company at any time (including, without
limitation, during or after the Retention Period, the Transition Period or the
Continued Employment Period) for so long as such information remains
confidential or secret.

 

6. Other Covenants.

 

  (a) Acknowledgements. The Executive acknowledges that McDonald’s is engaged in
a highly competitive, global business that requires the preservation of
Confidential Information and Trade Secrets. The Executive further acknowledges
that McDonald’s has near-permanent relationships with vendors, affiliates,
customers, suppliers, manufacturers, alliance partners, employees and service
organizations, which McDonald’s has a legitimate interest in protecting.
Finally, the Executive acknowledges that the covenants set forth in this Section
6 are reasonable under the circumstances, that he or she has the skill and
ability to find alternative commensurate work not in violation of such covenants
and the Executive has the wherewithal to support himself/herself and his/her
family without violating such covenants, including without limitation the
covenant not to compete provided for in Section 6(b) below.

 

  (b) Noncompetition. The Executive agrees to not work for or provide services
to a Competing Business or to the Specified Competitors at any time on or before
                    ,          [insert second anniversary of Date of
Termination].

--------------------------------------------------------------------------------

(3) Applies only to Tier I Executives.

 

96    McDonald’s Corporation

--------------------------------------------------------------------------------

  (c) Exceptions. It shall not be considered a violation of this Section 6 for
the Executive to engage in any of the following:

 

  (i) The performance of services for and on behalf of an investment banking or
commercial banking, auditing or consulting firm during the Continued Employment
Period or at any time after the termination of the Executive’s employment, so
long as the Executive is not personally engaged in rendering services to or
soliciting business of a Competing Business or any of the Specified Competitors;
and

 

  (ii) Being the record or beneficial owner of up to one (1) percent of the
outstanding voting securities of any publicly traded entity, provided that such
investment does not create a conflict of interest between the Executive’s duties
hereunder and the Executive’s interest in such investment or otherwise violate
the Company’s rules and policies (including without limitation the Standards of
Business Conduct);

 

  (iii) The performance of services for a Competing Business or for a Specified
Competitor at any time after the termination of the Executive’s employment, so
long as the Executive does not perform services for or work on a competitive
product or a substantially similar product of the Company and has obtained the
Company’s consent pursuant to Section 7 below.

 

  (d) No Solicitation or Hiring of Employees. The Executive shall not, at any
time on or before                     ,          [insert second anniversary of
Date of Termination], solicit or attempt to solicit any employee (other than the
Executive’s administrative assistant), consultant, franchisee, supplier or
independent contractor of McDonald’s to terminate, alter, or lessen that party’s
affiliation with McDonald’s or to interfere with or violate the terms of any
agreement or understanding between such entity, employee or person and
McDonald’s.

 

  (e) No Disparagement. The Executive shall not, at any time on or before
                    ,          [insert third anniversary of Date of
Termination], (i) make any public disclosures or publish any articles or books
about McDonald’s, its business or any McDonald’s-Related Person, or grant an
interview to any representative of the public media, without the prior written
consent of the CEO, or (ii) intentionally publish any statement or make any
disclosure about McDonald’s, its business or any McDonald’s-Related Person that
is disparaging, derogatory or otherwise casts a bad light on McDonald’s, its
business or any McDonald’s-Related Person.

 

7. Consent Procedure.

 

  (a) Seeking Consent. The Executive may seek the Company’s consent to engage in
any of the activities prohibited by Section 6 above, by providing written notice
thereof to the Company addressed to the HR Official [or to the CEO],(4)
including a full and complete disclosure in writing to the Company of all the
relevant facts, including without limitation the services to be rendered or
activities to be engaged in, places of employment, performance of services or
activities, compensation to be paid, expertise to be provided, amount to be
invested, stock or debt to be received, and business plan or plans to be
executed by such entity or person. The Company thereafter shall have fourteen
(14) calendar days to consider the Executive’s contemplated activities as
disclosed and shall in writing, either consent or object to such activities. It
is agreed that consent shall not be unreasonably withheld.

 

  (b) Specific Activities. Without limiting the generality of the foregoing,
such consent shall not be withheld in any case in which an Executive seeks
consent to engage in conduct described in Section 6(d)(iii) above and provides
the Company with representations in form and substance reasonably satisfactory
to the Company that he or she shall not work on or perform services for a
competitive product or substantially similar product as described in Section
6(d)(iii) above.

 

  (c) Binding Decisions. All decisions of the Company under this Section 7 shall
be final and binding upon the Executive, and the Executive shall not engage in
any such activities if the Company shall object.

 

8. Legal Compulsion.

 

  (a) Notice. If the Executive reasonably and in good faith believes that he or
she is or may be compelled by law or by a court or governmental agency by a
proper proceeding to disclose Confidential Information and Trade Secrets, or to
make a statement or take other action that would, absent this Section 8, violate
Section 6(f) above (each such disclosure, statement or action, a “Violation”),
then the Executive shall give the Company written notice thereof as far in
advance of such Violation as is lawful and practicable, shall cooperate (at the
Company’s sole expense) with the Company in its efforts to prevent such
Violation from being compelled, and shall limit his or her Violation to the
minimum compelled by law or court order, except to the extent the Company agrees
otherwise in writing.

--------------------------------------------------------------------------------

(4) Do not include in an Agreement signed by the CEO.

 

McDonald’s Corporation    97

--------------------------------------------------------------------------------

  (b) No Violation. If the Executive complies with the foregoing procedure to
the greatest extent possible without violating applicable law, then the
Executive shall not be deemed to have breached Section 5(c) or 6(f) above, as
applicable, as a result of the Violation.

 

9. Release Provisions. For the entire period of the Executive’s employment by
the Company, including his Retention Period, up to the Release Date:

 

  (a) Release. The Executive understands, intends and agrees that this Section 9
constitutes full, complete and final satisfaction of all claims, demands,
lawsuits or actions of any kind, whether known or unknown, against McDonald’s
and/or their respective directors, officers or employees (with McDonald’s,
collectively, the “Released Persons”), arising at any time up to and including
the Release Date, and the Executive hereby forever releases each Released Person
from all such matters. This includes, but is not limited to, a release of
claims, demands, lawsuits and actions of any kind relating to any employment or
application for employment or franchise, claims relating to resignation and/or
cessation of employment, claims alleging breach of contract of any tort, claims
for wrongful termination, defamation, intentional infliction of emotional
distress, personal injury, violation of public policy and/or negligence related
to employment or resignation, claims under Title VII of the Civil Rights Act of
1964, as amended, Section 1981 of the Civil Rights Act of 1866, as amended, the
Age Discrimination in Employment Act of 1967, as amended, the Rehabilitation Act
of 1973, the Americans with Disabilities Act of 1990, the Employee Retirement
Income Security Act of 1974, as amended, the Worker Adjustment and Retraining
Notification Act, the Family and Medical Leave Act of 1993, the Illinois Human
Rights Act, or any other state, Federal or local law prohibiting discrimination,
and claims based on any other law, regulation, or common law, whether before any
Federal, state or local agency, in any court of law or before any other forum.
Notwithstanding the foregoing, the Executive’s release shall not extend to any
claims (i) for benefits under Employee Plans that are qualified under Section
401(a) of the Internal Revenue Code, (ii) for Termination Benefits to which the
Executive is entitled under the Plan as provided in Section 4 above, (iii) for
compensation or benefits under any Employee Plan or Compensation Plan to which
the Executive is entitled by the terms thereof, except as provided otherwise in
Section 9(c) below and except to the extent such entitlements are specifically
amended or eliminated by the Plan, or (iv) for indemnification under the
Company’s policy on indemnification of officers and directors and coverage under
any related insurance policies.

 

  (b) Advice, Time to Consider and Revocation. [The Executive is hereby advised
to consult with an attorney prior to executing this Agreement. The Executive is
further advised that he/she has a period of 21 days within which to consider the
terms of this Agreement and whether or not to execute it. In addition, for a
period of 7 days following the Executive’s execution of this Agreement, he/she
has the right to revoke this Agreement, and no portion of this Agreement shall
become effective or enforceable until such revocation period has expired.](5)

 

  (c) Other Benefits. The Executive acknowledges and agrees that the payments
and benefits provided to the Executive under the Plan are in lieu of any
payments, benefits or arrangements to which the Executive might otherwise be
entitled to under any Employee Plan or other plan or arrangement which provides
for severance or separation (“Other Separation Benefits”), and the Executive
hereby waives any and all rights and claims that he or she may now or hereafter
have to any Other Separation Benefits; provided, that the foregoing waiver shall
not apply to any right the Executive may have to any gross-up payments related
to the excise tax on excess parachute payments imposed by Section 4999 of the
Internal Revenue Code under any change of control employment agreement with the
Company. The foregoing shall not be construed as affecting in any manner the
Executive’s benefits and entitlements (if any) under any Employee Plan that
provides pension or retiree medical or life insurance benefits.

 

  (d) Acknowledgements. The Executive acknowledges having read and understood
the provisions of this Section 9 as well as the other provisions of this
Agreement, and represents that his/her execution of this Agreement constitutes
his/her knowing and voluntary act, made without coercion or intimidation. The
Executive acknowledges and agrees that the release set forth in this Section 9
is being given only in exchange for consideration in addition to anything of
value to which the Executive already is entitled. The Executive finally agrees
not to file any lawsuits against the Company or any of the released entities or
persons with respect to claims covered by the release given in this Section 9.

--------------------------------------------------------------------------------

(5) This language may be deleted or modified by the Company, depending upon
individual circumstances and/or changes in law relating to age discrimination or
otherwise.

 

98    McDonald’s Corporation

--------------------------------------------------------------------------------

10. Remedies.

 

  (a) Acknowledgements. In recognition of the confidential nature of the
Confidential Information and Trade Secrets, and in recognition of the necessity
of the limited restrictions imposed by the Agreement, the Executive acknowledges
it would be impossible to measure solely in money the damages which McDonald’s
would suffer if the Executive were to breach any of his/her obligations under
Sections 5 and 6 above. The Executive also acknowledges that his/her breach of
any such obligations would irreparably injure the Company.

 

  (b) Entitlement to Injunctive Relief. If the Executive breaches any of his/her
obligations under Sections 5 and 6 above, McDonald’s shall be entitled, in
addition to any other remedies to which McDonald’s may be entitled under the
Agreement or otherwise, to an injunction issued by a court of competent
jurisdiction, to restrain any breach or threatened breach, of such provisions,
and the Executive waives any right to assert any claim or defense that
McDonald’s has an adequate remedy at law for any such breach and any right to
require, or request a court to require, that McDonald’s post a bond in
connection therewith.

 

  (c) Effect on Other Benefits. In the event of a breach by the Executive of any
of his/her obligations under this Agreement, excluding for this purpose an
isolated, insubstantial and inadvertent action, the Company shall be entitled
to:

 

  (i) discontinue any and all payments and other benefits to which the Executive
or his/her beneficiaries would otherwise be entitled pursuant to this Agreement
and/or the Plan;

 

  (ii) terminate any and all unexercised stock options then held by the
Executive or by any transferee of the Executive;

 

  (iii) in the case of any such breach occurring after the Executive’s
Change-in-Status Date, require the Executive to repay to the Company the
aggregate amount of cash payments received by the Executive from the Company
pursuant to this Agreement and/or the Plan during the period commencing on the
Executive’s Change-in-Status Date and ending on the date on which the Company
requests such repayment (the “Recovery Period”); and

 

  (iv) in the case of any such breach occurring after the Executive’s
Change-in-Status Date, require the Executive to pay to the Company any Stock
Option Gains (as defined in the next two sentences). “Stock Option Gains” with
respect to the Executive’s stock options that were not vested as of his or her
Change-in-Status Date means the aggregate amount of any gain recognized upon
exercise of such stock options during the Recovery Period. “Stock Option Gains”
with respect to the Executive’s stock options that were vested as of his or her
Change-in-Status Date means the excess, if any, of (A) the aggregate amount of
any gain recognized upon exercise of such stock options during the Recovery
Period, over (B) the amount of gain that would have been recognized, had such
exercises instead occurred on the Executive’s Change-in-Status Date.

 

11. Successors. This Agreement shall be binding upon and inure to the benefit of
the Company and the Executive and their respective heirs, representatives and
successors.

 

12. Jurisdiction and Venue. Any action arising under this Agreement or between
the Company and the Executive shall be instituted and brought exclusively under
the jurisdiction and venue of the appropriate state or federal courts for the
City of Oak Brook, Illinois, County of DuPage. The Executive hereby consents to
the exclusive jurisdiction of said courts regardless of where the Executive may
be domiciled at the time such suit is brought. It is further agreed that in the
event the Company shall be required to institute any proceedings to enforce the
terms of this Agreement, then the Company shall be entitled to recover its
attorney fees and attendant expenses as part of any recovery.

 

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

 

14. Entire Agreement. This Agreement, together with the Plan, contain the entire
agreement between the parties, and supersede any and all previous agreements,
written or oral, between the Executive and the Company relating to the subject
matter hereof. No amendment or modification of the terms of this Agreement shall
be binding upon the parties hereto unless reduced to writing and signed by each
of the parties hereto.

 

McDonald’s Corporation    99

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15. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original.

 

16. Severability. If any one or more 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
Section or other portion not so declared to be unlawful or invalid. Any Section
or other portion so declared to be unlawful or invalid shall be construed so as
to effectuate the terms of such Section or other portion to the fullest extent
possible while remaining lawful and valid.

 

17. Governing Law. To the extent not preempted by federal law, this Agreement
shall be interpreted and construed in accordance with the laws of the State of
Illinois, without regard to any otherwise applicable conflicts of law or choice
of law principles.

 

IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

 

McDonald’s Corporation

 

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By

 

--------------------------------------------------------------------------------

Title

 

--------------------------------------------------------------------------------

Name

 

100    McDonald’s Corporation

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Exhibit A. Executive Retention Plan

 

[Attach]

 

McDonald’s Corporation    101

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Exhibit B. Specified Competitors

 

[List of 25 to be inserted upon preparation of specific Agreement]

 

102    McDonald’s Corporation

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Exhibit C. Termination Benefits

 

[To be completed upon preparation of specific Agreement]

 

Termination Benefits paid in a lump sum as per Section 7.01(a) of the Plan:

 

Accrued Obligations:

   $                     

Earned Bonus:

   $                     

Severance Benefit:

   $                     

Welfare Benefit:

   $                     

 

Stock Options that vest and remain exercisable in accordance with Section
7.01(b) of the Plan:

[List]

 

McDonald’s Corporation    103