Document:

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                                                                    EXHIBIT 10.8
                            HOUSEHOLD INTERNATIONAL

                   DEFERRED PHANTOM STOCK PLAN FOR DIRECTORS

     Section 1.  Purpose.  The purpose of the Household International Deferred
Phantom Stock Plan for Directors (the "Plan") is to provide non-management
directors (the "Directors") of Household International, Inc. (the "Company")
with the opportunity to defer receipt of phantom Company Common Stock units paid
by the Company to Directors.  The Plan is designed to aid the Company in
attracting and retaining as members of its Board of Directors persons whose
abilities, experience and judgment can contribute to the well-being of the
Company.

     Section 2.  Effective Date.  The effective date of this Plan is July 11,
1995. The Plan was subsequently amended on January 9, 1996, July 9, 1996,
January 14, 1997, September 8, 1997, and September 1, 1999.

     Section 3.  Eligibility.  Any Director of the Company serving on the Board
as of January 14, 1997, who is not deemed to be an employee of the Company or
any subsidiary thereof will participate in the Plan.

     Section 4.  Deferred Compensation Account.  An unfunded deferred
compensation account (the "Account") has been established for each Director.

     Section 5.  Time of Election of Deferral.  Except as set forth herein, a
Designation of Beneficiary and Account Distribution Form (the "Forms"), must be
filed with the Secretary of the Company.

     Section 6.  Hypothetical Investment.  During the deferred period, the
phantom Company Common Stock units will be credited on each dividend payment
date for the Company's Common Stock with additional phantom Company Common Stock
units determined by dividing the aggregate cash dividend which would have been
paid if the existing phantom Common Stock units were actual shares of the
Company's Common Stock by the fair market value of the Company's Common Stock as
of the dividend payment date, computed to four decimal places. For purposes of
the Plan, the "fair market value" of one share or unit of the Company's Common
Stock shall be the average of the high and low sale prices for a share of such
Common Stock as published in The Wall Street Journal for the respective
determination date.

     Section 7.  Value of Deferred Compensation Accounts.  The value of each
participant's Account shall include deferred phantom Company Common Stock units
and dividends credited thereon, pursuant to Section 6 of the Plan. All deferred
amounts

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to be paid to a participant pursuant to the Plan are to be paid in shares of
Company Common Stock, $1.00 par value, with the value of the phantom Company
Common Stock units being the fair market value of an equal number of shares of
the Company's Common Stock on the date of payment.

     Section 8.  Payment of Deferred Compensation.  All such payments
accumulated under this Plan will be made as soon as practicable following the
date on which a Director leaves the Board of Directors. A participant may elect
to receive the value of his or her deferred compensation at a later date, but
such date may not be prior to the date on which a Director leaves the Board of
Directors. Deferred phantom Company Common Stock units and dividends (including
appreciation or loss) thereon will be payable in shares of Company Common Stock,
$1.00 par value, either in a lump sum or in such number of quarterly or annual
installments as the participant chooses up to a maximum ten-year period, subject
to the participant's right to change such method of distribution no later than
twelve months prior to the first date deferred phantom Company Common Stock
units are to be paid. If a participant elects to receive payment from his or her
Account in installments, the participant's Account will continue to accrue
dividends (and appreciation or loss) during the installment period. Dividends
credited to a participant's Account during the installment period will be paid
on the next installment payment date.

     Section 9.  Change in Control. A `Change in Control' shall be deemed to
occur when and if:

     (a)  Any "person" (as defined in Section 13(d) and 14(d) of the Securities
          Exchange Act of 1934, as amended (the "Exchange Act")), excluding for
          this purpose the Company and any subsidiary of the Company, or any
          employee benefit plan of the Company or any subsidiary of the Company,
          or any person or entity organized, appointed or established by the
          Company for or pursuant to the terms of such plan which acquires
          beneficial ownership of voting securities of the Company, is or
          becomes the "beneficial owner" (as defined in Rule 13d-3 under the
          Exchange Act) directly or indirectly of securities of the Company
          representing twenty percent (20%) or more of the combined voting power
          of the Company's then outstanding securities; provided, however, that
          no Change in Control shall be deemed to have occurred as the result of
          an acquisition of securities of the Company by the Company which, by
          reducing the number of voting securities outstanding, increases the
          direct or indirect beneficial ownership interest of any person to
          twenty percent (20%) or more of the combined voting power of the
          Company's then outstanding securities, but any subsequent increase in
          the direct or indirect beneficial ownership interest of

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          such a person in the Company shall be deemed a Change in Control; and
          provided further that if the Board of Directors of the Company
          determines in good faith that a person who has become the beneficial
          owner directly or indirectly of securities of the Company representing
          twenty percent (20%) or more of the combined voting power of the
          Company's then outstanding securities has inadvertently reached that
          level of ownership interest, and if such person divests as promptly as
          practicable a sufficient amount of securities of the Company so that
          the person no longer has a direct or indirect beneficial ownership
          interest in twenty percent (20%) or more of the combined voting power
          of the Company's then outstanding securities, then no Change in
          Control shall be deemed to have occurred; or

     (b)  During any period of two (2) consecutive years (not including any
          period prior to September 1, 1999), individuals who at the beginning
          of such two-year period constitute the Board of Directors of the
          Company and any new director or directors (except for any director
          designated by a person who has entered into an agreement with the
          Company to effect a transaction described in subparagraph (a), above,
          or subparagraph (c), below) whose election by the Board or nomination
          for election by the Company's shareholders was approved by a vote of
          at least two-thirds of the directors then still in office who either
          were directors at the beginning of the period or whose election or
          nomination for election was previously so approved, cease for any
          reason to constitute at least a majority of the Board (such
          individuals and any such new directors being referred to as the
          "Incumbent Board"); or

     (c)  Consummation of (1) an agreement for the sale or disposition of the
          Company or all or substantially all of the Company's assets, (2) a
          plan of merger or consolidation of the Company with any other
          corporation, or (3) a similar transaction or series of transactions
          involving the Company (any transaction described in parts (1) through
          (3) of this subparagraph (c) being referred to as a "Business
          Combination"), in each case unless after such a Business Combination
          (x) the shareholders of the Company immediately prior to the Business
          Combination continue to own, directly or indirectly, more than sixty
          percent (60%) of the combined voting power of the then outstanding
          voting securities entitled to vote generally in the election of
          directors of the new (or continued) entity (including, but not by way
          of limitation, an entity which as a result of such transaction owns
          the Company or all or substantially all of the Company's former assets
          either directly or through one or more subsidiaries) immediately after
          such Business

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          Combination, in substantially the same proportion as their ownership
          of the Company immediately prior to such Business Combination, (y) no
          person (excluding any entity resulting from such Business Combination
          or any employee benefit plan (or related trust) of the Company or of
          such entity resulting from such Business Combination) beneficially
          owns, directly or indirectly, twenty percent (20%) or more of the then
          combined voting power of the then outstanding voting securities of
          such entity, except to the extent that such ownership existed prior to
          the Business Combination, and (z) at least a majority of the members
          of the board of directors of the entity resulting from such Business
          Combination were members of the Incumbent Board at the time of the
          execution of the initial agreement, or of the action of the Board,
          providing for such Business Combination; or

     (d)  A tender offer is made for thirty percent (30%) of more of the
          Company's Common Stock, which tender offer has not been approved by
          the Board of Directors of the Company; or

     (e)  Approval by the shareholders of the Company of a complete liquidation
          or dissolution of the Company.

     Notwithstanding any other provision of the Plan, if a Change of Control
occurs, then the Company shall create a trust or take such other actions as are
appropriate to protect each participant's Account.

     Section 10.  Designation of Beneficiary.  A participant may designate a
beneficiary or beneficiaries which shall be effective upon filing written notice
with the Secretary of the Company on the form provided for that purpose. If no
beneficiary is designated, the beneficiary will be the participant's estate. If
more than one beneficiary statement has been filed, the beneficiary or
beneficiaries designated in the statement bearing the most recent date will be
deemed the valid beneficiary or beneficiaries.

     Section 11.  Death of Participant or Beneficiary.  In the event of a
participant's death before he or she has received the full value of his or her
Account, the then current value of the participant's Account shall be determined
as of the day immediately following death and such amount shall be paid to the
beneficiary or beneficiaries of the deceased participant as soon as practicable
thereafter in cash in a lump sum. If no designated beneficiary has been named or
survives the participant, the beneficiary will be the participant's estate.

     Section 12.  Participant's Rights Unsecured.  The right of any participant
or beneficiary to receive payment under the

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provisions of the Plan shall be an unsecured claim against the general assets of
the Company, and no provisions contained in the Plan shall be construed to give
any participant or beneficiary at any time a security interest in the Account or
any other assets of the Company.

     Section 13.  Statement of Account.  Statements will be sent to participants
quarterly as to the value of their Accounts as of the 15th day of January,
April, July and October for each year in which their is Account activity.

     Section 14.  Assignability.  No right to receive payments hereunder shall
be transferable or assignable by a participant or a beneficiary, except by will
or by the laws of descent and distribution.

     Section 15.  Administration of the Plan. The Plan shall be administered by
the Compensation Committee of the Board of Directors of the Company. The
Committee shall conclusively interpret the provisions of the Plan and shall make
all determinations under the Plan. The Committee shall act by vote or written
consent of a majority of its members.

     Section 16.  Amendment or Termination of Plan.  This Plan may at anytime or
from time to time be amended, modified or terminated by the Board of Directors
of the Company. No amendment, modification or termination shall, without the
consent of a participant, adversely affect such participant's accruals.

     Section 17.  Governing Law.  This Plan shall be governed by and construed
in accordance with the laws of the State of Illinois.

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                            McDONALD'S CORPORATION

                            PROFIT SHARING PROGRAM

                            As amended and restated
                                   effective
                               November 1, 1998
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                 McDONALD'S CORPORATION PROFIT SHARING PROGRAM

                              Summary of Contents
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                                                                                                                       Page

                                                    Table of Contents
<S>                                                                                                                    <C>
McDONALD'S CORPORATION................................................................................................   1

PROFIT SHARING PROGRAM................................................................................................   1

MCDONALD'S CORPORATION PROFIT SHARING PROGRAM.........................................................................   1

ARTICLE I DEFINITIONS.................................................................................................   3

     1.1    "Account".................................................................................................   3
     1.2    "Active Participant"......................................................................................   6
     1.3    "Affiliated Service Group"................................................................................   7
     1.4    "Authorized Leave of Absence".............................................................................   8
     1.5    "Auxiliary ESOP"..........................................................................................   8
     1.6    "Beneficiary".............................................................................................   8
     1.7    "Board of Directors"......................................................................................   8
     1.8    "Break in Service"........................................................................................   8
     1.9    "Committee"...............................................................................................   9
     1.10   "Commonly Controlled Corporation".........................................................................   9
     1.11   "Commonly Controlled Entity"..............................................................................   9
     1.12   "Company".................................................................................................   9
     1.13   "Company Stock"...........................................................................................   9
     1.14   "Considered Compensation".................................................................................   9
     1.15   "Credited Service"........................................................................................  11
     1.16   "Disability"..............................................................................................  12
     1.17   "Disqualified Person".....................................................................................  12
     1.18   "Domestic Affiliate"......................................................................................  12
     1.19   "Effective Date"..........................................................................................  12
     1.20   "Eligibility Computation Period"..........................................................................  12
     1.21   "Eligibility Service".....................................................................................  13
     1.22   "Employee"................................................................................................  13
     1.23   "Employer"................................................................................................  13
     1.24   "Employer Contributions"..................................................................................  14
     1.25   "Entry Date"..............................................................................................  14
     1.26   "ERISA"...................................................................................................  14
     1.27   "Five Percent Owner"......................................................................................  14
     1.28   "Foreign Affiliate".......................................................................................  14
     1.29   "Forfeiture"..............................................................................................  14
     1.30   "Highly Compensated Employee".............................................................................  15
     1.31   "Hour of Service".........................................................................................  15
</TABLE>

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<TABLE>
<S>                                                                                                                       <C>
     1.32   "Internal Revenue Code".....................................................................................  19
     1.33   "Investment Fund"...........................................................................................  19
     1.34   "Leased Employee"...........................................................................................  19
     1.35   "LESOP".....................................................................................................  20
     1.36   "LESOP Employer Matching Allocations".......................................................................  20
     1.37   "LESOP Suspense Account"....................................................................................  20
     1.38   "Licensee"..................................................................................................  20
     1.39   "McDESOP"...................................................................................................  20
     1.40   "Non-highly Compensated Employee"...........................................................................  20
     1.41   "Parental Leave"............................................................................................  20
     1.42   "Participant"...............................................................................................  21
     1.43   "Participant Contributions".................................................................................  21
     1.44   "Participant Elected Contributions".........................................................................  21
     1.45   "Party in Interest".........................................................................................  21
     1.46   "Program"...................................................................................................  21
     1.47   "Plan Administrator"........................................................................................  21
     1.48   "Plan Year".................................................................................................  21
     1.49   "Profit Sharing Plan".......................................................................................  21
     1.50   "Qualified Preretirement Survivor Annuity"..................................................................  22
     1.51   "Related Plan"..............................................................................................  22
     1.52   "Required Beginning Date"...................................................................................  22
     1.53   "Rollover"..................................................................................................  22
     1.54   "STIF Fund".................................................................................................  22
     1.55   "Stock Sharing".............................................................................................  22
     1.56   "Subsidiary"................................................................................................  22
     1.57   "Termination of Employment".................................................................................  23
     1.58   "Trust".....................................................................................................  23
     1.59   "Trust Agreement"...........................................................................................  23
     1.60   "Trustee"...................................................................................................  23
     1.61   "Trust Fund"................................................................................................  23
     1.62   "Valuation Date"............................................................................................  23
     1.63   "Vesting Retirement Date"...................................................................................  23
     1.64   "Year of Credited Service"..................................................................................  23
     1.65   "Year of Eligibility Service"...............................................................................  24

ARTICLE II PARTICIPATION................................................................................................  25

     2.1    Participation...............................................................................................  25
     2.2    Certification of Participation and Compensation to Committee................................................  25
     2.3    Termination of Employment, Break in Service, Reemployment and Change in Employment Status...................  25
     2.4    Employees of Foreign or Domestic Affiliates.................................................................  26
     2.5    Leased Employee.............................................................................................  26
</TABLE>

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<TABLE>
<S>                                                                                                                        <C>
ARTICLE III PROFIT SHARING PLAN EMPLOYER CONTRIBUTIONS....................................................................  27

     3.1    Profit Sharing Contributions..................................................................................  27
     3.2    Payment of Contributions Made Pursuant to Article III.........................................................  27

ARTICLE IV McDESOP and LESOP EMPLOYER CONTRIBUTIONS.......................................................................  29

     4.1    Amount of Employer Matching Contributions and LESOP Employer Matching Contributions...........................  29
     4.2    LESOP Contributions...........................................................................................  33
     4.3    Annual Employer Contribution Elections........................................................................  35
     4.4    Additional Employer Contributions.............................................................................  37
     4.5    Payment of Contributions Made Pursuant to Article IV..........................................................  37
     4.6    Form of Contributions.........................................................................................  37
     4.7    Reemployed Members of the Uniformed Services..................................................................  37

ARTICLE V PARTICIPANT ELECTED CONTRIBUTIONS...............................................................................  41

     5.1    Participant Elected Contributions.............................................................................  41
     5.2    Restrictions on Participant Elected Contributions.............................................................  41
     5.3    Allocation of Income to Certain Distributed and Forfeited Amounts.............................................  47
     5.4    Multiple Use of Alternative Limitations.......................................................................  47
     5.5    Excess Compensation Reduction Elections.......................................................................  50
     5.6    Deadline for Participant Elected Contributions................................................................  52
     5.7    Application of the Limitations of Sections 4.1(d), 5.2(c), 5.2(e), 5.4 and 9.1................................  52

ARTICLE VI LESOP LOAN PROVISIONS                                                                                            53

     6.1    Power to Borrow...............................................................................................  53
     6.2    Accounting for Loan Proceeds and LESOP Contributions..........................................................  54
     6.3    Release from LESOP Suspense Account...........................................................................  54
     6.4    Installment Payments on Exempt Loan...........................................................................  56
     6.5    Non-Terminable Rights and Protections.........................................................................  57
     6.6    Independent Appraisals Required...............................................................................  58

ARTICLE VII ALLOCATIONS OF CONTRIBUTIONS..................................................................................  59

     7.1    Profit Sharing Contribution Allocation Formula................................................................  59
     7.2    Employer Matching Contributions, LESOP Employer Matching Allocations,
            LESOP Employer Matching Contributions Additional Employer Contributions
            and Special Section 401(k) Employer Contributions.............................................................  60
     7.3    LESOP Contributions...........................................................................................  61
     7.4    Participant Elected Contributions.............................................................................  63
     7.5    Timing of Allocations.........................................................................................  63
</TABLE>

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<TABLE>
<S>                                                                                                                         <C>
ARTICLE VIII ROLLOVERS AND TRUSTEE TRANSFERS..............................................................................  64

     8.1    Participant Rollovers.........................................................................................  64
     8.2    Limited Participation.........................................................................................  64
     8.3    Withdrawal of Rollovers.......................................................................................  64
     8.4    Rollover Not Forfeitable......................................................................................  64

ARTICLE IX LIMITATIONS ON CONTRIBUTIONS BECAUSE OF FEDERAL LEGISLATION....................................................  65

     9.1    Limitations on Contributions..................................................................................  65
     9.2    Employer Contribution Reductions..............................................................................  69

ARTICLE X TRUSTEE AND TRUST FUNDS.........................................................................................  70

     10.1   Trust Agreements..............................................................................................  70
     10.2   Trustee's Duties..............................................................................................  70
     10.3   Trust Expenses................................................................................................  70
     10.4   Trust Entity..................................................................................................  70
     10.5   Right of the Employers to Trust Assets........................................................................  70
     10.6   Trust Investment Funds........................................................................................  71
     10.7   Investment of Participant's Employer Profit Sharing Contributions.............................................  74
     10.8   Investment Election with Regard to a Participant's Profit Sharing, Diversification,
            Investment Savings and Rollover Accounts......................................................................  74
     10.9   Failure to Make an Investment Election........................................................................  76
     10.10  Diversification of McDESOP and LESOP Contributions and Accounts...............................................  76
     10.11  Effective Date of Participant's Investment and Diversification Elections......................................  81
     10.12  Trust Income..................................................................................................  82
     10.13  Adjustment of Participant's Account Balances and the LESOP Suspense Accounts..................................  82
     10.14  Allocation of Income of Holding Funds.........................................................................  83
     10.15  Separate Accounting in the Trust Fund.........................................................................  84
     10.16  Trust Investment..............................................................................................  84
     10.17  Separate Accounting for LESOP Suspense Account................................................................  84
     10.18  Correction of Error...........................................................................................  84
     10.19  Statement of Accounts.........................................................................................  85
     10.20  Purchase or Sale of Company Stock.............................................................................  85
     10.21  Shareholder Rights in Company Stock...........................................................................  85
     10.22  Cash Distributions with Respect to Company Stock..............................................................  87
     10.23  Holding Funds.................................................................................................  88
     10.24  Restrictions Applicable to Participants Subject to Section 16.................................................  89
</TABLE>

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<TABLE>
<S>                                                                                                                             <C>
ARTICLE XI DISTRIBUTION OF BENEFITS..........................................................................................   90

     11.1      Distributions, General........................................................................................   90
     11.2      Payment of Net Balance Account on Disability, or on Retirement or Other Termination of Employment.............   90
     11.3      Payment of Net Balance Account on Death of Participant........................................................   98
     11.4      Vesting and Forfeitures.......................................................................................  102
     11.5      Payment of Employer Profit Sharing Contribution for Year of Termination of Employment.........................  104
     11.6      Designation of Beneficiary and Form of Beneficiary Benefit....................................................  104
     11.7      Incompetency, Distribution of Benefits........................................................................  106
     11.8      Deduction of Taxes from Accounts Payable......................................................................  106
     11.9      Deadline for Payment of Benefits..............................................................................  106
     11.10     Spousal Consent to a Beneficiary or a Waiver..................................................................  107
     11.11     Single Sum Payment without Election...........................................................................  107
     11.12     Installment Payments..........................................................................................  108
     11.13     Required Minimum Distributions to Employed Participants.......................................................  109
     11.14     Transitional Rules............................................................................................  110
     11.15     Sale of Restaurant - Special Vesting Rules....................................................................  111
     11.16     In-Service Withdrawals........................................................................................  111
     11.17     Direct Rollovers..............................................................................................  112
     11.18     Waiver of 30 Day Period.......................................................................................  113

ARTICLE XII..................................................................................................................  115

     12.1      Adoption of Program and Trust.................................................................................  115
     12.2      Withdrawal from Program by Participating Employer.............................................................  115

ARTICLE XIII ADMINISTRATION OF THE PROGRAM...................................................................................  117

     13.1      Appointment and Removal of, and Resignation by, Trustee.......................................................  117
     13.2      Appointment of Committee; Tenure in Office....................................................................  117
     13.3      Named Fiduciaries.............................................................................................  117
     13.4      Delegation of Responsibilities................................................................................  118
     13.5      Committee Duties..............................................................................................  118
     13.6      Committee Action by Majority -- Authorization of Members to Execute Documents.................................  119
     13.7      Secretary.....................................................................................................  120
     13.8      Member as Participant.........................................................................................  120
     13.9      Rules and Decisions...........................................................................................  120
     13.10     Electronic Elections..........................................................................................  120
     13.11     Agents and Counsel............................................................................................  120
     13.12     Authorization of Benefit Distribution.........................................................................  120
     13.13     Claims Procedure..............................................................................................  120
</TABLE>

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<TABLE>
<S>                                                                                                                          <C>
     13.14     Information to be Furnished to Committee....................................................................  121
     13.15     Plan Administrator..........................................................................................  122
     13.16     Fiduciary as Participant....................................................................................  122
     13.17     Fiduciary Responsibility....................................................................................  122
     13.18     Year 2000 Problem...........................................................................................  122

ARTICLE XIV AMENDMENT, TERMINATION, MERGER AND CONSOLIDATION OF PLAN.......................................................  124

     14.1      Amendment...................................................................................................  124
     14.2      Termination of Program By the Company.......................................................................  124
     14.3      Merger, Consolidation, or Transfer of Assets................................................................  125
     14.4      Transfer of Assets from Plans of Subsidiaries...............................................................  125

ARTICLE XV TOP HEAVY PROVISIONS............................................................................................  127

     15.1      Application.................................................................................................  127
     15.2      Special Top Heavy Definitions...............................................................................  127
     15.3      Special Top Heavy Provisions................................................................................  134

ARTICLE XVI MISCELLANEOUS PROVISIONS.......................................................................................  137

     16.1      Headings....................................................................................................  137
     16.2      Indemnification.............................................................................................  137
     16.3      Employees' Trust............................................................................................  137
     16.4      Nonalienation of Benefits...................................................................................  137
     16.5      Qualified Domestic Relations Order..........................................................................  138
     16.6      Unclaimed Amounts...........................................................................................  139
     16.7      Maximum Age Condition.......................................................................................  141
     16.8      Invalidity of Certain Provisions............................................................................  141
     16.9      Gender and Number...........................................................................................  141
     16.10     Law Governing...............................................................................................  141
</TABLE>

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                 MCDONALD'S CORPORATION PROFIT SHARING PROGRAM

     History.  The McDonald's Corporation Savings and Profit Sharing Plan, as
     -------
amended and restated effective January 1, 1987 ("Profit Sharing Plan") and
subsequently amended from time to time and the McDonald's Matching and Deferred
Stock Ownership Plan, as amended and restated effective January 1, 1984
("McDESOP Plan") and subsequently amended from time to time, were merged,
effective December 31, 1988, amended and restated effective January 1, 1989, and
renamed the "McDonald's Corporation Profit Sharing Program" (the "Program").
The Program was subsequently amended from time to time and was amended and
restated effective July 1, 1992.  The McDonald's Stock Sharing Plan ("Stock
Sharing Plan") was amended and restated effective January 1, 1989.

     The Stock Sharing Plan was merged into the Program effective after the
close of business on December 28, 1995.  After the merger, the Stock Sharing
portion of the Program continued to be controlled by the McDonald's Stock
Sharing Plan, as amended and restated effective January 1, 1989 and the Profit
Sharing portion of the Program continued to be controlled by the McDonald's
Corporation Profit Sharing Program, as amended and restated effective January 1,
1992 until January 1, 1996.  The assets of the McDonald's Stock Sharing Trust
were transferred to the McDonald's Matching and Deferred Stock Ownership Trust
on or after December 29, 1995 until such time as there were no remaining assets
and the Trust ceased to exist.

     The Program was amended and restated in one document effective January 1,
1996, except as otherwise specifically provided in the Program document as
amended and restated effective January 1, 1996 and subsequently amended from
time to time.

     The Program is hereby amended and restated January 1, 1997, except as
otherwise specifically provided herein.

     Structure and Purpose.  The Program has four component portions, (1) the
     ---------------------
Profit Sharing Plan portion which is intended to be a profit sharing plan and to
meet the requirements of Sections 401(a) of the Internal Revenue Code, (2) the
McDESOP portion which is intended to meet the requirements for a stock bonus
plan, a cash or deferred arrangement and a leveraged employee stock ownership
plan under Sections 401(a), 401(k), 401(m) and 4975(e)(7) of the Internal
Revenue Code, (3) the LESOP portion which is intended to meet the requirements
of a stock bonus plan and a leveraged employee stock ownership plan under
Sections 401(a), 4975(e)(7) and 401(m) of the Internal Revenue Code and which
provides LESOP Employer Matching Contributions effective November 1, 1998, and
(4) the Stock Sharing portion which is intended to meet the requirements of a
stock bonus plan and a tax credit employee stock ownership plan in accordance
with Sections 401(a) and 409 of the Internal Revenue Code and Section 41 of the
Internal Revenue Code before its repeal with respect to compensation paid or
accrued after December 31, 1986.  Each portion of the Program shall be
interpreted in a manner consistent with it meeting the requirements of the
respective Internal Revenue Code Sections applicable thereto.  The assets of the
McDESOP, LESOP and the Stock Sharing portions of the Program shall be invested
primarily in qualifying employer securities as defined in Section 409(l) of the
Internal Revenue Code and Section 407(d)(6) of ERISA.
<PAGE>

     Application of Provisions.  The purposes of the McDonald's Corporation
     -------------------------
Profit Sharing Program are to permit Participants (1) to share in the success of
the Company by receiving a portion of its profits, (2) to provide employees a
convenient means to save for their own future retirement security through their
participation in this Program and (3) to provide Participants, individually and
as a group, with a substantial ownership interest in the Company.

     Except as otherwise specifically provided herein, the Program as amended
and restated herein applies to persons who are Employees on and after January 1,
1997. Eligibility, benefits, payment of benefits and the amount of benefits, if
any, of a person whose employment with an Employer terminated before January 1,
1997, and who is not rehired by an Employer on or after January 1, 1997, shall,
except as otherwise specifically provided herein, be determined in accordance
with the provisions of the Program, the Stock Sharing Plan, the McDESOP Plan,
and the Profit Sharing Plan as in effect on the date the person ceased to be an
Employee of an Employer.

                                      -2-
<PAGE>

                                   ARTICLE I

                                  DEFINITIONS

     The following words and phrases, when used herein, unless their context
clearly indicates otherwise, shall have the following respective meanings:

1.1       "Account" means a Participant's share of contributions and Forfeitures
           -------
arising under the Program, and the income, profits and increments thereon less
all losses, expenses and distributions chargeable thereto.

          (a)  Each Participant may have one or more of the following Accounts
     in the Profit Sharing portion of the Program ("Profit Sharing Accounts")
     which shall be held in the Trust Fund:

               (1)  "Investment Savings Account," to which shall be credited the
                     --------------------------
          Participant's after tax Participant Contributions to the Profit
          Sharing Plan which were made before January 1, 1987.

               (2)  "Profit Sharing Account," to which shall be credited each
                     ----------------------
          Participant's share of Employer Profit Sharing Contributions with
          respect to the Profit Sharing Plan allocated in accordance with
          Section 7.1. A Participant's Profit Sharing Account shall include his
          "Pre-Break Profit Sharing Account" and his "Post-Break Profit Sharing
          Account" pursuant to Section 11.4(e), if applicable.

               (3)  "Profit Sharing Holding Account," to which shall be credited
                     ------------------------------
          the Participant's share of Employer Profit Sharing Contributions until
          such contributions shall be removed and invested in accordance with
          Sections 10.7 and 10.8 as of each February 1.

               (4)  "Rollover Account," to which shall be credited the balance
                     ----------------
          of the Participant's Rollover Holding Account as of each Valuation
          Date.

               (5)  "Rollover Holding Account," to which shall be credited the
                     ------------------------
          Participant's Rollover pursuant to Section 8.1 until such
          contributions are removed and credited to the Participant's Rollover
          Account at the next Valuation Date occurring at the end of a calendar
          month in which such contributions were made.

          (b)  Each Participant may have one or more of the following Accounts
in the McDESOP portion of the Program ("McDESOP Accounts") which shall be held
in the McDESOP Trust except to the extent transferred to the Profit Sharing
Trust in accordance with Participant's diversification elections made in
accordance with Section 10.10:

                                      -3-
<PAGE>

               (1)  A "Participant Elected Contribution Account", to which shall
                       ----------------------------------------
          be credited Participant Elected Contributions made to the Program on
          behalf of the Participant in accordance with Section 7.4;

               (2)  An "Employer Matching Contribution Account" to which shall
                        --------------------------------------
          be credited Employer Matching Contributions made to the Program with
          respect to periods before November 1, 1998 (including any Employer Per
          Capita Matching Contributions under the provisions of the Program
          before January 1, 1996), LESOP Employer Matching Contributions, LESOP
          Employer Matching Allocations (as defined in Section 6.3(c)),
          Additional Employer Contributions, Special Section 401(k) Employer
          Contributions and any Forfeitures allocated to the Participant with
          respect to the foregoing in accordance with Section 7.2.

               (3)  The "McDESOP Holding Account" to which shall be credited the
                    ----------------------------
          Participants' Participant Elected Contributions to the Program until
          such contributions are credited to the Participants' Participant
          Elected Contribution Account.

               (4)  The "Matching Contribution Holding Account" to which shall
                         -------------------------------------
          be credited the Participants' Employer Matching Contributions to the
          Program until such contributions are credited to the Participants'
          Employer Matching Contribution Account.

          (c)  Each Participant may have one or more of the following accounts
in the LESOP portion of the Program ("LESOP Accounts") which shall be held in
the McDESOP Trust except to the extent transferred to the Profit Sharing Trust
in accordance with a Participant's diversification elections pursuant to Section
10.10.

               (1)  A "Per Capita LESOP Account," to which were credited Company
                       ------------------------
          Stock and associated dividends attributable to Employer Contributions
          made on a Per Capita Basis under the terms of the Program before
          January 1996.

               (2)  A "Compensation Based LESOP Account," to which shall be
                       --------------------------------
          credited Company Stock released from the LESOP Suspense Account in
          accordance with Section 6.3(a), allocated in accordance with Section
          7.3(a)(3), any Special Dividend Replacement Contributions credited to
          such account in accordance with Section 7.3(c) and any dividend,
          replacement allocations in accordance with Section 6.3(b) allocated in
          accordance with Section 7.3(a)(1).

               (3)  An "Additional LESOP Account," to which shall be credited,
                        ------------------------
          in accordance with Section 7.3(b) a Participant's Per Capita
          Additional LESOP Contributions and Forfeitures therefrom and his
          Compensation Based Additional LESOP Contributions and Forfeitures
          therefrom, if any.

                                      -4-
<PAGE>

          (d)  Each Participant who has an account in the Stock Sharing Plan may
have the following Accounts in the Stock Sharing portion of the Program ("Stock
Sharing Accounts") which shall be held in the McDESOP Trust:

               (1)  A "Participant Contribution Stock Sharing Account," to which
                       ----------------------------------------------
          shall be credited Participant Matched Contributions made under the
          Stock Sharing Plan with respect to Plan Years ending on or before
          December 31, 1982.

               (2)  An "Unmatched Employer Contribution Stock Sharing
                    -------------------------------------------------
          Contribution Account," to which shall be credited Unmatched Employer
          --------------------
          Contributions contributed to the Stock Sharing Plan with respect to
          Plan Years ending on or before December 31, 1982.

               (3)  A "PAYSOP Stock Sharing Contribution Account," to which
                       -----------------------------------------
          shall be credited Employer Contributions contributed to the Stock
          Sharing Plan with respect to Plan Years beginning on or after January
          1, 1983 and before January 1, 1987.

               (4)  An "Employer Matching Stock Sharing Contribution Account,"
                        ----------------------------------------------------
          to which shall be credited Employer Matching Contributions made by an
          Employer to the Stock Sharing Plan for Plan Years ending on or before
          December 31, 1982.

               (5)  An "Additional Employer Stock Sharing Contribution Account,"
                        ------------------------------------------------------
          to which shall be credited (A) contributions which have been allocated
          to a Participant's Additional Company Contribution Account with
          respect to Plan Years ending on or before December 31, 1982, and (B)
          with respect to contributions for Plan Years ending after December 31,
          1982, contributions to the Stock Sharing Plan in excess of the amount
          which qualified for tax credit under Section 41(a)(2) of the Internal
          Revenue Code.

          (e)  Each Participant shall have the following accounts
("Diversification Accounts"), to which shall be credited the respective portions
of a Participant's LESOP Accounts, and McDESOP Accounts, transferred to his
Diversification Account pursuant to a Diversification Election made in
accordance with Section 10.10. A Participant's Diversification Account shall be
part of the McDESOP and LESOP portion of the Program, but is held in the Profit
Sharing Trust in order to implement Participant's diversification elections made
in accordance with Section 10.10. The Diversification Account shall consist of
two sub-accounts as follows:

               (1)  "LESOP Diversification Account," to which shall be credited
                     -----------------------------
          the portions of a Participant's LESOP Account transferred to his LESOP
          Diversification Account pursuant to a Diversification Election made in
          accordance with Section 10.10(a); and

                                      -5-
<PAGE>

               (2)  "McDESOP Diversification Account," to which shall be
                     -------------------------------
          credited the portions of a Participant's Participant Elected
          Contribution Account and Employer Matching Contribution Account,
          transferred to his McDESOP Diversification Account pursuant to a
          Diversification Election made in accordance with Sections 10.10(b) and
          10.10(c).

          (f)  "Net Balance Account," means a Participant's interest in the
                -------------------
     Trust composed of all of the Participant's Accounts. A Participant's
     accrued benefit at any time during any Plan Year (except on a Valuation
     Date) shall be the value of the number of full and fractional shares of
     Company Stock and any other value held in such Participant's Accounts as
     adjusted on the immediately preceding Valuation Date, and on a Valuation
     Date it shall be the number of full and fractional shares of Company Stock
     and other value held in such Participant's Accounts as adjusted to that
     Valuation Date.

1.2       "Active Participant" means
          ------------------

          (a)  for purposes of receiving an allocation of the Profit Sharing
     Contributions pursuant to Section 7.1 for a Plan Year, a Participant who is
     not an Employee of McG Restaurant Operations, Inc.;

               (1)  who (A) has accumulated one thousand (1,000) Hours of
          Service during the Plan Year; (B) has Considered Compensation during
          such Plan Year; and (C) is employed by an Employer on the last day of
          the Plan Year; or

               (2)  who (A) is transferred during the Plan Year to a Domestic
          Affiliate or Foreign Affiliate; (B) has accumulated one thousand
          (1,000) Hours of Service during a Plan Year; (C) has Considered
          Compensation during such Plan Year; and (D) is employed on the last
          day of the Plan Year by an Employer, a Domestic Affiliate or a Foreign
          Affiliate; or

               (3)  who (A) was a Participant on any day of a Plan Year; (B) has
          Considered Compensation during such Plan Year; and (C) prior to the
          last day of such Plan Year, died, retired on or after attaining age 55
          or suffered a Disability, terminated his employment because of the
          sale or lease of a McDonald's restaurant operation and became an
          employee of the purchasing Licensee, or terminated his employment when
          he had at least 10 years of Credited Service under the Program; and

          (b)  for the purpose of being eligible to share in allocations of
     Company Stock released from a LESOP Suspense Account for a Plan Year, in
     accordance with Section 6.3(a), and of Additional LESOP Contributions for a
     Plan Year, a Participant who is a staff or an executive employee or a store
     manager and who is not an Employee of McG Restaurant Operations, Inc.; and

                                      -6-
<PAGE>

               (1)  who (A) has accumulated one thousand (1,000) Hours of
          Service during the Plan Year; (B) has Considered Compensation during
          such Plan Year; and (C) is employed by an Employer on the last day of
          the Plan Year; or

               (2)  who (A) is transferred during the Plan Year to a Domestic
          Affiliate or Foreign Affiliate; (B) has accumulated one thousand
          (1,000) Hours of Service during a Plan Year; (C) has Considered
          Compensation during such Plan Year; and (D) is employed on the last
          day of the Plan Year by an Employer, a Domestic Affiliate or a Foreign
          Affiliate; or

               (3)  who (A) was a Participant on any day of a Plan Year; (B) has
          Considered Compensation during such Plan Year; and (C) prior to the
          last day of such Plan Year, died, retired on or after attaining age 55
          or suffering a Disability, terminated his employment because of the
          sale or lease of a McDonald's restaurant operation and became an
          employee of the purchasing Licensee, or terminated his employment when
          he had at least 10 years of Credited Service under the Program; and

          (c)  for purposes of the McDESOP portion of the Program and, effective
     with respect to periods on or after November 1, 1998, for the purpose of
     being eligible to share in releases from the LESOP Suspense Accounts
     pursuant to Section 6.3(c) and in allocations in accordance with Section
     7.3(d) of LESOP Employer Matching Contributions made pursuant to Section
     4.1(b), a Participant who is an Employee on any day of the Plan Year.

1.3       "Affiliated Service Group" means a group including an Employer which:
           ------------------------

          (a)  consists of an organization the principal business of which is
     the performance of services ("first service organization") and one or more
     of the organizations described in (1) or (2):

               (1)  any service organization which

                    (A)  is a shareholder or partner in the first service
               organization (as determined in accordance with applicable
               Treasury Regulations), and

                    (B)  regularly performs services for the first service
               organization or is regularly associated with the first service
               organization in performing services for third persons, or

               (2)  any other organization if

                    (A)  a significant portion of the business of such
               organization is the performance of services for the first service
               organization or for one or more organizations identified in
               Section 1.3(a)(1) or for both, and the

                                      -7-
<PAGE>

               services are of a type historically performed in such service
               field by employees, and

                    (B)  10 percent or more of the interests in such
               organization are held by persons who are highly compensated
               employees (within the meaning of section 414(q) of the Internal
               Revenue Code) of the first service organization or an
               organization described in Section 1.3(a)(1); or

          (b)  consists of

               (1)  an organization the principal business of which is
          performing on a regular and continuing basis management functions for
          one organization identified in Section 1.3(b)(2); and

               (2)  the organization for which such management functions are
          performed and organizations aggregated with such organization in
          accordance with Code Sections 414(b), 414(c), 414(m) or 414(o) with
          the organization identified in Section 1.3(b)(1); or

          (c)  is required to be aggregated pursuant to regulations issued under
     Section 414(o) of the Internal Revenue Code.

     1.4  "Authorized Leave of Absence" means any absence authorized by an
           ---------------------------
Employer under such Employer's standard personnel practices. An absence due to
service in the Armed Forces of the United States shall be considered an
Authorized Leave of Absence provided that the Employee returns to employment
with the Employer with reemployment rights provided by law.

     1.5  "Auxiliary ESOP" means the LESOP portion of the Program and the
           --------------
provisions applicable thereto.

     1.6  "Beneficiary" means one or more persons or entities designated by a
           -----------
Participant or the Program, as applicable, in accordance with the provisions of
Section 11.3 or 11.6 to receive any benefit which shall be distributable under
the Program on account of the Participant's death.  Such a Beneficiary shall be
deemed to be the Participant's "designated beneficiary" for purposes of Section
401(a)(9) of the Internal Revenue Code to the extent permitted therein.

     1.7  "Board of Directors" means the board of directors of the Company and
           ------------------
any person or committee authorized to act on behalf of the Board of Directors.

     1.8  "Break in Service" means, for purpose of determining Eligibility
           ----------------
Service and Participant status, an Eligibility Computation Period, and for all
other purposes, a Plan Year, within which an Employee has not completed more
than five hundred (500) Hours of Service.

                                      -8-
<PAGE>

     1.9  "Committee" means the Administrative Committee appointed pursuant to
           ---------
Section 13.2.

     1.10 "Commonly Controlled Corporation" means the Company and any other
           -------------------------------
corporation if it and the Company are members of a controlled group of
corporations as defined in Section 409(l)(4) of the Internal Revenue Code.

     1.11 "Commonly Controlled Entity" means a corporation, trade or business if
           --------------------------
it and an Employer are members of a controlled group of corporations as defined
in Section 414(b) of the Internal Revenue Code, under common control as defined
in Section 414(c) of the Internal Revenue Code or required to be aggregated with
one or more Employers pursuant to Section 414(m); provided, however, that solely
for purposes of Article IX including the definition of Related Plan when used in
Article IX, the standard of control under Sections 414(b) and 414(c) of the
Internal Revenue Code shall be deemed to be "more than 50%" rather than "at
least 80%."

     1.12 "Company" means McDonald's Corporation or any successor corporation by
           -------
merger, consolidation, purchase or otherwise which elects to adopt the Program
and the Trust.

     1.13 "Company Stock" means common or preferred stock of the Company which
           -------------
is a qualifying employer security as defined in (a) Section 4975(e)(8) of the
Internal Revenue Code (for purposes of McDESOP and LESOP), (b) Section 409(l) of
the Internal Revenue Code (for purposes of the Stock Sharing portion of the
Program) and (c) Section 407(d)(5) of ERISA (for the purpose of all portions of
the Program).

     1.14 "Considered Compensation" of a Participant for a Plan Year means:
           -----------------------

          (a) except as otherwise specified below, the Participant's total
     compensation paid during the Plan Year to such Participant by an Employer
     while an Active Participant in the Program as reported in Box 1 of Form W-
     2, for 1997, or the equivalent box on any comparable form for subsequent
     Plan Years, increased by (i) any amounts by which the Participant's
     compensation is reduced by Participant Elected Contributions under the
     McDESOP portion of the Program or any other portion of the Program, and
     under any portion of any Related Plan which meets the requirements of
     Section 401(k) of the Internal Revenue Code; and (ii) compensation
     reduction contributions for medical, dental or dependent care or other
     benefits under a cafeteria plan meeting the requirements of Section 125 of
     the Internal Revenue Code; and excluding (I) provisions for life insurance;
     (II) reimbursement for or other payment for expenses related to, moving
     expenses (including the relocation bonuses); (III) any benefits under the
     Program or any other qualified plan described in Section 401(a) of the
     Internal Revenue Code; (IV) distributions under McDonald's Profit Sharing
     Program Equalization Plan ("McEqual"), McDonald's 1989 Executive
     Equalization Plan ("McCAP I"), the McDonald's Supplemental Employee Benefit
     Equalization Plan ("McCAP II") or the McDonald's Corporation Deferred
     Income Plan; (V) income earned from stock options granted under the
     McDonald's 1975 Stock Ownership Option Plan; Stock Exchange Rights or
     Performance Units granted under the McDonald's Corporation 1978 Incentive
     Plan;

                                      -9-
<PAGE>

     options, restricted stock, stock appreciation rights, performance units and
     stock bonuses awarded under the McDonald's 1992 Stock Ownership Incentive
     Plan; (VI) payments to a Participant for foreign service in the form of tax
     gross-up benefits; (VII) allowances for cost of living, housing and
     education, and other similar payments; (VIII) any income attributable to
     personal use of an employer-provided vehicle, an allowance paid in lieu of
     an employer-provided vehicle, use of a company condo, participation in
     group trips, gift stock, any payments for referrals of new employees,
     spouse's travel and perquisites whether in cash or in kind and other
     similar items; and (IX) any special termination bonus paid pursuant to a
     termination agreement and any severance pay;

          (b) for purposes of top heavy rules in Article XV (except for
     determining whether a Participant is a Key Employee pursuant to Section
     15.2(d)) and for determining the limitations under Section 415 of the
     Internal Revenue Code in Article IX, Considered Compensation means total
     compensation paid to the Participant by an Employer, a Commonly Controlled
     Entity or a member of an Affiliated Service Group for the Plan Year,
     including distributions from any nonqualified deferred compensation plans
     maintained by an Employer, Commonly Controlled Entity or member of an
     Affiliated Service Group and amounts paid or reimbursed by the employer for
     moving expenses incurred by the Participant to the extent it is reasonable
     to believe that such amounts are not deductible by the Participant under
     Section 217 of the Internal Revenue Code and excluding (i) with respect to
     Plan Years commencing before January 1, 1998, any salary reduction
     contributions to a plan sponsored by an Employer meeting the requirements
     of Section 125 or Section 401(k) of the Internal Revenue Code, (ii) any
     salary reduction amounts credited to the Participant's accounts under the
     McDonald's Supplemental Employee Benefit Equalization Plan ("McCAP II"),
     the McDonald's Profit Sharing Program Equalization Plan ("McEqual"), the
     McDonald's 1989 Executive Equalization Plan ("McCAP I"), the McDonald's
     Corporation Deferred Income Plan, or any other non-qualified deferred
     compensation plans from time to time maintained by an Employer, (iii)
     income from stock options, and (iv) any other amounts which receive special
     tax benefits and (v) for Plan Years beginning on and after January 1, 1998,
     Considered Compensation under this Section 1.14(b) shall not exclude salary
     reduction contributions to a plan sponsored by an Employer which meets the
     requirements of Section 125 or Section 401(k) of the Internal Revenue Code;

          (c) effective before January 1, 1988, for the purpose of determining
     whether a Participant is (1) a Highly Compensated Employee or (2) a Key
     Employee pursuant to Section 15.2(d), Considered Compensation shall be the
     Participant's Considered Compensation as defined in Section 1.14(b)
     increased by the amount by which the Participant's compensation is reduced
     pursuant to a compensation reduction election under Section 5.1 or any
     other Related Plan which meets the requirements of Section 401(k) of the
     Internal Revenue Code or pursuant to other compensation reduction
     contributions for medical, dental or dependent care or other benefits under
     a cafeteria plan meeting the requirements of Section 125 of the Internal
     Revenue Code; and effective January 1, 1998 and thereafter, for the purpose
     of determining whether a Participant is (1) a Highly Compensated Employee
     or (2) a Key Employee pursuant to Section 15.2(d),

                                      -10-
<PAGE>

     Considered Compensation shall be the Participant's Considered Compensation
     as defined in Section 1.14(b).

          (d) for the purpose of calculating (1) the actual contribution
     percentage in accordance with Section 4.1, (2) the actual deferral
     percentage in accordance with Section 5.2 or (3) the multiple use test in
     accordance with Section 5.4, Considered Compensation shall be the
     Participant's compensation for the portion of the Plan Year during which he
     or she was an Active Participant, as defined in Section 1.2(c), (i) as
     reported in Box 1 of Form W-2, or the equivalent box on any comparable form
     for subsequent years plus (ii) any amounts by which the Participant's
     compensation is reduced by Participant Elected Contributions under the
     McDESOP portion of the Program or any other portion of the Program or any
     Related Defined Contribution Plan which meets the requirements of Section
     401(k) of the Internal Revenue Code or compensation reduction contributions
     for medical, dental or dependent care or other benefits under a cafeteria
     plan meeting the requirements of Section 125 of the Internal Revenue Code.

          (e) for the purposes of determining the amount of Participant Elected
     Contributions pursuant to Section 5.1, Considered Compensation means a
     Participant's Considered Compensation while an Active Participant, as
     defined in Section 1.14(a), increased by expatriate equalization
     differentials and reduced by all compensation not paid in cash, by cash
     perquisites, and officers discretionary bonuses to the extent included in
     Considered Compensation as defined in Section 1.14(a).

     For purposes of this Section 1.14 except for purposes of determining the
limitations under Section 415 of the Internal Revenue Code in Article IX,
Considered Compensation taken into account under the Program shall not exceed
$160,000 (for 1997) and as adjusted in subsequent years as provided by the
Secretary of the Treasury (the "dollar limit").

     Anything to the contrary herein notwithstanding, Considered Compensation
for a Plan Year shall not be reduced by the pay for a period of short term
disability which is repaid to an Employer in a subsequent Plan Year by a
Participant who fails to complete the requirements to be eligible to retain such
pay.

     1.15 "Credited Service" shall mean an Employee's total Years of Credited
           ----------------
Service excluding the following:

          (a)  Years of Credited Service before January 1, 1964;

          (b)  Years of Credited Service before January 1, 1976, which would
     have been disregarded under the McDonald's Corporation Savings and Profit
     Sharing Plan before January 1, 1976, with regard to the then existing rules
     on reemployment;

          (c) Years of Credited Service prior to a Break in Service, if the
     Participant had no vested interest in his Profit Sharing Account prior to
     such Break in Service and (1) effective with respect to a Break in Service
     which occurred before January 1, 1985, if

                                      -11-
<PAGE>

     the Participant had no more than one year of Credited Service prior to such
     Break in Service and (2) effective with respect to one or more consecutive
     Breaks in Service none of which occurred before January 1, 1985, if the
     number of consecutive Breaks in Service equals or exceeds five consecutive
     Breaks in Service;

          (d)  For purposes of determining a Participant's vested interest in
     his Profit Sharing Account or his LESOP Account (called "Leveraged ESOP
     Account" before January 1, 1997) accrued before (1) a Break in Service
     which occurred before January 1, 1985 or (2) five consecutive Breaks in
     Service if none of the Breaks in Service occurred before January 1, 1985,
     Years of Credited Service after such Break in Service.

     1.16 "Disability" means a mental or physical condition which renders a
           ----------
Participant permanently unable or incompetent to carry out the job
responsibilities he held or tasks to which he was assigned at the time the
disability was incurred.  Such determination shall be made by the Committee on
the basis of such medical and other competent evidence as the Committee shall
deem relevant.

     1.17 "Disqualified Person" means a person defined in Section 4975(e)(2) of
           -------------------
the Internal Revenue Code.

     1.18 "Domestic Affiliate" means any domestic corporation, partnership or
           ------------------
joint venture of which, in the case of a corporation, the Company owns, directly
or indirectly, either twenty-five percent or more of the voting power of all
classes of stock or twenty-five percent or more of the value of all stock, or of
which, in the case of a partnership or joint venture, the Company owns, directly
or indirectly, a twenty-five percent or more interest in both the capital and
profits.

     1.19 "Effective Date" means November 1, 1998.
           --------------

     1.20 "Eligibility Computation Period" means the twelve-month period
           ------------------------------
commencing with the first day of the pay period in which an Employee first
performs an Hour of Service following hire (or rehire after a Break in Service)
and each subsequent twelve-month period commencing on an anniversary of that
date. In addition, with respect to Hours of Service which are credited to an
Employee pursuant to Section 1.31(b)(2) for service with a Licensee whose
restaurant(s) are acquired by an Employer (the "Acquisition"), Eligibility
Computation Period means (a) each full calendar year such individual was
employed by the Licensee before the calendar year of such Acquisition commencing
with the calendar year in which such Employee first performed an hour of service
for the Licensee and continuing through the calendar year ending immediately
before the date of such Acquisition and (b) if such Employee was employed by the
Licensee on January 1 of the calendar year of the Acquisition, the calendar year
of such Acquisition; provided that for the calendar year in which the
Acquisition occurs both Hours of Service credited pursuant to Section 1.31(b)(2)
and those credited pursuant to the remainder of Section 1.31 for service after
the Acquisition shall both be counted in the Eligibility Computation Period in
which the Acquisition occurred.

                                      -12-
<PAGE>

     1.21 "Eligibility Service" means the number of Eligibility Computation
           -------------------
Periods during which an Employee has completed not less than 1000 Hours of
Service excluding any Eligibility Service earned before a Break in Service until
the Employee has completed one Year of Eligibility Service following the Break
in Service.

     1.22 "Employee" means any person who is employed by the Company or another
           --------
Employer (as that entity is defined for the Profit Sharing Plan portion, the
McDESOP portion or the LESOP portion of the Program or as defined for any
designated types of contributions, with respect to contributions to such
portions of the Program with respect to which the term Employee is being used)
including a person on an Authorized Leave of Absence.  Such term does not
include an individual who performs services for an Employer as an employee of a
contractor, a consultant, an independent contractor or a Leased Employee whether
or not such person is a common law employee of McDonald's or another Employer.
An individual who performs services for an Employer as an employee of a
contractor, a consultant, an independent contractor or a Leased Employee shall
not become an Employee because of being reclassified as a common law employee of
McDonald's or another Employer by the Internal Revenue Service or another
government agency, except prospectively from the date on which such
reclassification occurs and is accepted by the Employer.

     1.23 "Employer" means,
           --------

          (a) for purposes of Article III, concerning contributions to the
     Profit Sharing Plan portion of the Program and other provisions of the
     Program as they relate to the Profit Sharing Plan portion of the Program
     and for purposes of Section 4.1(a), 4.3 and Article V, concerning Employer
     Matching Contributions and Forfeitures and Participant Elected
     Contributions, the Company and any Subsidiary, Commonly Controlled Entity,
     Domestic or Foreign Affiliate, or any other business in which the Company
     owns an interest which, pursuant to Section 12.1, elects to adopt the
     Profit Sharing Plan and/or the McDESOP portions of the Program (including
     LESOP Employer Matching Allocations and Contributions); and

          (b) for purposes of the LESOP portion of the Program, the Company and
     any Commonly Controlled Corporation which, pursuant to Section 12.1, elects
     to adopt the LESOP portion of the Program on or after January 1, 1989; and

          (c) for purposes of the Stock Sharing portions of the Program, the
     Company and any Commonly Controlled Corporation which had adopted the
     McDonald's Stock Sharing Plan before January 1, 1989.

     Notwithstanding the foregoing, McG Restaurant Operations, Inc. shall be an
Employer solely for the purpose of permitting its Employees who are Active
Participants to make Participant Elected Contributions pursuant to Sections
4.3(a) and 5.1 of the Program and to receive LESOP Employer Matching
Contributions as provided in Section 4.1(b), LESOP Employer Matching Allocations
as provided in Section 7.3(a)(2) and Special Section 401(k) Contributions as
provided in Section 4.3(b).

                                      -13-
<PAGE>

     1.24 "Employer Contributions" means the following payments made from time
           ----------------------
to time by an Employer to the Trustee:

          (a)  "Employer Profit Sharing Contributions" made pursuant to Sections
     3.1 or 15.3(a);

          (b)  "Employer Matching Contributions" made pursuant to Section
     4.1(a);

          (c)  "Special Section 401(k) Employer Contributions" made pursuant to
     Section 4.3(b);

          (d) "LESOP Contributions" made pursuant to Section 4.2;

          (e)  "LESOP Employer Matching Contributions made pursuant to Section
     4.1(b);

          (f)  "Additional Employer Contributions" made pursuant to Section 4.4;

          (g)  "Special Dividend Replacement Contributions" made pursuant to
     Section 4.2(d);

          (h)  "Unmatched Employer Stock Sharing Contributions," "Employer
     Contributions", "Employer Matching Stock Sharing Contributions,"
     "Additional Employer Stock Sharing Contributions," and "PAYSOP Stock
     Sharing Contributions" made to the Stock Sharing Plan at various dates with
     respect to periods before January 1, 1987 as provided in Section 1.1(d).

     1.25 "Entry Date" means January 1 and July 1 of each Plan Year.
           ----------

     1.26 "ERISA" means the Employee Retirement Income Security Act of 1974, as
           -----
amended from time to time.

     1.27 "Five Percent Owner" means a Participant who owns (or is considered as
           ------------------
owning within the meaning of Section 318 of the Internal Revenue Code) more than
five percent of an Employer, Commonly Controlled Entity or member of an
Affiliated Service Group as provided in Section 416(i)(1)(B)(i) of the Internal
Revenue Code.

     1.28 "Foreign Affiliate" means any foreign corporation, partnership or
           -----------------
joint venture of which, in the case of a corporation, the Company owns, directly
or indirectly, either twenty-five percent or more of the voting power of all
classes of stock or twenty-five percent or more of the value of all stock, or,
of which, in the case of a partnership or a joint venture, the Company owns,
directly or indirectly, a twenty-five or more percent interest in both the
capital and profits.

     1.29 "Forfeiture" means the portion of a Participant's Profit Sharing
           ----------
Account which is forfeited as provided in Section 11.4, his LESOP Account which
is forfeited as provided in Section 11.4 and unclaimed amounts which are
forfeited under Section 16.6.

                                      -14-
<PAGE>

     1.30 "Highly Compensated Employee" means, for a Plan Year, any Participant
           ---------------------------
who performs services as an employee for an Employer, Commonly Controlled Entity
or member of an Affiliated Service Group during such Plan Year:

          (a)  and who

               (1)  at any time during the Plan Year or the preceding Plan Year
          ("Preceding Plan Year"), was a Five Percent Owner; or

               (2)  received Considered Compensation in excess of $80,000 (for
          1996, adjusted in subsequent years as provided by the Secretary of the
          Treasury) during the Preceding Plan Year.

         (b)  For purposes of this Section 1.30, employees who are nonresident
     aliens and who receive no earned income (within the meaning of Section
     911(d)(2) of the Internal Revenue Code) from an Employer, a Commonly
     Controlled Entity or member of an Affiliated Service Group which
     constitutes income from sources within the United States (within the
     meaning of Section 861(a)(3) of the Internal Revenue Code) shall not be
     treated as employees.

          (c)  A former employee shall also be treated as a Highly Compensated
     Employee for a Plan Year if such former employee had a Termination of
     Employment prior to such Plan Year and was a Highly Compensated Employee
     (without regard to this Section 1.30(c)) for either the Plan Year in which
     he had a Termination of Employment or any Plan Year ending on or after his
     55th birthday.

     1.31 "Hour of Service" means:
           ---------------

          (a)  Each hour for which an employee or a Leased Employee (determined
     without regard to Section 1.34(b)) is paid directly or indirectly, or
     entitled to payment, by an Employer, Commonly Controlled Entity or member
     of an Affiliated Service Group,

               (1)  for performance of duties;

               (2)  on account of a period of time during which no duties were
          performed, provided that, except as herein otherwise expressly
          provided, no more than 501 Hours of Service shall be credited for any
          single continuous period during which an Employee performs no duty,
          and provided that no Hours of Service shall be credited for payments
          made or due under a plan maintained solely for the purpose of
          complying with applicable worker's compensation, unemployment
          compensation or disability insurance laws, or for reimbursement of
          medical expenses; and

               (3)  for which back pay, irrespective of mitigation of damages,
          is awarded or agreed to by the Employer, provided that no more than
          501 Hours of

                                     -15-
<PAGE>

     Service shall be credited for any single continuous period of time during
     which the Employee did not or would not have performed duties.

     (b)  (1)  Credit for Hours of Service shall be given for the following:

               (A) For Plan Years beginning before January 1, 1994, an
               Employee's prior or subsequent employment by a Foreign Affiliate
               or Domestic Affiliate;

               (B) For Plan Years beginning after December 31, 1993, an
               Employee's prior or subsequent employment by a Domestic or
               Foreign Affiliate if the employee is transferred to or from such
               Domestic or Foreign Affiliate from or to, respectively, the
               employment of an Employer at the initiative of an Employer (a
               "Company Initiated Transfer"). For the purposes of this Section
               1.31(b)(1)(B), a sale of assets or stock to a Domestic or Foreign
               Affiliate that is not an Employer under the Program shall not be
               considered a Company Initiated Transfer with respect to employees
               employed solely with respect to such assets or stock who become
               employees of such purchasing Domestic or Foreign Affiliate
               immediately after such sale, provided that the decisions
               concerning such employment are made by an entity which is not
               more than 50 percent owned by an Employer.

     In determining the number of such Hours of Service to be credited, the Plan
     Administrator shall make good faith estimates based upon the available
     information and records including the use of reasonable equivalencies
     similar to those permitted under DOL Reg. Section 2530.200b-3 or estimated
     average number of hours per week for employees in a given job category.

               (2)  If a McDonald's Restaurant or a group of restaurants
          operated by a Licensee is acquired by the Company or another Employer
          in the first six months of a calendar year and if such restaurant or
          group of restaurants is designated as a permanent acquisition by the
          Company, the store managers who are employed by such Licensee either
          in a restaurant or in connection with the operation of one or more
          restaurants as of the date of such acquisition and who continue to be
          employed by the Company or other Employer until June 30 of the Plan
          Year in which the acquisition occurred shall be credited by the
          Employer with his Hours of Service with such Licensee. If a McDonald's
          Restaurant or group of restaurants operated by a Licensee is acquired
          by the Company or another Employer, during the Plan Year, each store
          manager who is employed by such Licensee either in a restaurant or in
          connection with the operation of one or more restaurants as of the
          date of acquisition and continues to be employed by the Company or
          other Employer until the last day of the Plan Year in which such
          acquisition occurred who has not already received credit for service
          with the

                                      -16-
<PAGE>

          Licensee under the preceding sentence shall as of the last day of such
          Plan Year be credited by the Company or other Employer with his Hours
          of Service with such Licensee. In determining the number of such Hours
          of Service to be credited, the Plan Administrator shall make good
          faith estimates based upon the available information and records
          including the estimated average number of hours per week for employees
          in a given job category.

               (3) To the extent an Employee is not otherwise credited with
          Hours of Service for each payroll period while on an Authorized Leave
          of Absence, an Employee shall be credited with the number of Hours of
          Service equal to the average number of Hours of Service per payroll
          period (not to exceed forty Hours of Service per week) of such
          Employee for the six calendar week period, or pertinent payroll period
          if such period is longer, ending immediately prior to the commencement
          of the Authorized Leave of Absence notwithstanding the limitations of
          Section 1.31(a)(2). If a Participant is on an Authorized Leave of
          Absence on the last day of a Plan Year, the Hours of Service credited
          pursuant to the preceding sentence shall be counted for the purpose of
          determining whether he is an Active Participant under Sections 1.2(a)
          and (b) for such Plan Year. Notwithstanding the foregoing, an Employee
          who fails either (A) to return to his employment within ninety (90)
          days after the expiration of an Authorized Leave of Absence, or (B) to
          remain in the employ of an Employer after the expiration of an
          Authorized Leave of Absence for the lesser of (i) a period equal to
          the period of his Authorized Leave of Absence or (ii) one year
          following his return to employment, unless such failure shall be due
          to death, Disability, illness, retirement on or after age 55 or the
          sale by the Company, one of its Subsidiaries or Affiliates of the
          McDonald's Restaurant in which such Employee is employed, shall be
          considered to have voluntarily terminated his employment as of the
          date the Leave of Absence commenced for purposes of determining Hours
          of Service for Eligibility Service and Credited Service.

               (4) A person who became an Employee on September 16, 1994, as a
          result of the acquisition of the Special Operations Division of
          Corporate Systems, Inc. and who immediately prior to that date was an
          employee of the Special Operations Division of Corporate Systems, Inc.
          shall be credited with Hours of Service pursuant to the foregoing
          provisions of this Section 1.31 as if service with Corporate Systems,
          Inc. were service with the Company.  Such Hours of Service shall be
          credited using actual hours of service for hourly paid employees and
          using the service equivalencies provided in Section 1.31(e) for
          salaried employees.

               (5) Each restaurant management and staff employee who became an
          employee of Restaurant Acquisition Corp., McDonald's Corporation or
          another Employer on or after February 14, 1997 as a result of an
          acquisition of a Roy Rogers' or Hardee's restaurant ("Acquisition
          Employees") shall be credited with Hours of Service for each calendar
          year during which he was employed by

                                      -17-
<PAGE>

          Hardee's Food Systems, Inc. ("Hardee's Systems") or a member of a
          controlled group with Hardee's. In determining the Hours of Service to
          be credited to Acquisition Employees, the Plan Administrator shall
          rely on available information and, as necessary, shall make good faith
          estimates based upon available information and records. Such service
          shall be credited to each Acquisition Employee effective July 1, 1997
          or, if later, the next Entry Date following date he became an Employee
          of an Employer. An Employee shall not receive Hours of Service credit
          for service with Hardee's System's if such Employee did not become an
          Employee of an Employer as a result of an acquisition of a Roy Rogers
          or Hardee's restaurant on or after February 14, 1997.

               (6)  Each individual who became an Employee of McG Restaurant
          Operations, Inc., McDonald's Corporation or a Commonly Controlled
          Entity on July 31, 1999, as a result of the acquisition of Donoto's,
          Inc. shall be credited under the Program on September 1, 1999, with
          their service with Donoto's since January 1, 1998. An Employee shall
          receive Hours of Service credit for service with Donoto's for periods
          after December 31, 1997 and before July 31, 1999. In determining the
          Hours of Service to be credited to employees who receive credit for
          Hours of Service as a result of the acquisition of Donoto's, the Plan
          Administrator shall rely on available information and, as necessary,
          shall make good faith estimates based upon available information and
          records.

          (c)  To the extent not otherwise credited in Section 1.31, solely for
     purposes of avoiding a Break in Service, for periods of absence from work
     on account of Parental Leave, an Employee shall be credited with Hours of
     Service as defined below:

               (1)  the Hours of Service which normally would have been credited
          to such individual but for the Parental Leave, or

               (2) eight (8) Hours of Service per day of such absence if the
          Program is unable to determine the Hours of Service which would have
          been credited to such individual but for the Parental Leave.

          An Employee's Hours of Service for absence on account of Parental
     Leave shall not exceed the lesser of 501 Hours of Service or the number of
     Hours of Service needed to prevent a Break in Service and shall be credited
     to the Eligibility Computation Period (for purposes of crediting
     Eligibility Service) or the Plan Year (for purposes of crediting service
     other than Eligibility Service) in which absence because of a Parental
     Leave commenced; except that if such Hours of Service are not needed to
     prevent a Break in Service in the Eligibility Computation Period or Plan
     Year in which absence because of a Parental Leave commenced, and the
     Parental Leave continues into the next following Eligibility Computation
     Period or Plan Year then, if needed to prevent a Break in Service, such
     Hours of Service shall be credited to the Eligibility Computation Period or
     Plan Year following the year in which such absence commenced.

                                      -18-
<PAGE>

               (d)  Hours of Service for reasons other than the performance of
          duties shall, except as provided in Section 1.31(b)(2), be determined
          in accordance with the provisions of Department of Labor Regulations
          Section 2530.200b-2(b), and Hours of Service shall be credited to
          computation periods in accordance with the provisions of Department of
          Labor Regulations Section 2530.200b-2(c).

               (e)  Except as provided in Sections 1.31(b)(2) through 1.31(b)(5)
          and 1.31(c) each Employee who is paid on a salaried basis shall be
          credited with (1) 95 Hours of Service if paid on a semimonthly payroll
          period or (2) 90 Hours of Service if paid on a bi-weekly payroll
          period during which such Employee has any Hours of Service.

     1.32 "Internal Revenue Code" means the Internal Revenue Code of 1986, as
           ---------------------
from time to time amended and any subsequent Internal Revenue Code. References
to any section of the Internal Revenue Code shall be deemed to include similar
sections of the Internal Revenue Code as renumbered or amended.

     1.33 "Investment Fund" As provided in Section 10.6 and excluding those
           ---------------
assets held in the Profit Sharing Holding Fund pursuant to Section 10.23, (a)
assets of the Profit Sharing Plan portion of the Trust Fund shall be held in the
following Investment Funds: (1) the Diversified Stock Fund, (2) the Profit
Sharing McDonald's Common Stock Fund, (3) the Money Market Fund, (4) the Stable
Value Fund, (5) the Blended Stock Bond Fund and (6) effective September 1, 1999,
the S&P 500 Fund, and (b) assets of the McDESOP and Leveraged ESOP portions of
the Trust Fund shall be held in the McDESOP McDonald's Common Stock Fund;
provided, however, that separate subaccounts shall be maintained of the amount
of Company Stock held in the McDESOP McDonald's Common Stock Fund and allocated
to Participants' Stock Sharing Accounts, Participant Elected Contribution
Accounts, Employer Matching Contribution Accounts and LESOP Accounts, in the
latter case accounting separately for the Company Stock purchased with each Loan
(or Company Stock into which the Company Stock purchased with the Loan has been
converted).

     1.34 "Leased Employee" means any person who is not an employee of a
           ---------------
Commonly Controlled Entity or a member of an Affiliated Service Group and who
provides services to a Commonly Controlled Entity or a member of an Affiliated
Service Group ("Recipient") if:

          (a)  such services are performed pursuant to an agreement between the
     Recipient and any other person;

          (b)  such person has performed such services for the Employer (or for
     the Employer, any Commonly Controlled Entity or member of an Affiliated
     Service Group) on a substantially full time basis for a period of at least
     1 year; and

          (c)  such individual's services are performed under the primary
     direction or control of the Recipient.

                                      -19-
<PAGE>

     1.35  "LESOP" means the portion of the Program consisting of Participants'
            -----
LESOP Accounts and any LESOP Employer Matching Contributions and LESOP Employer
Matching Allocations credited to a Participant's Employer Matching Contribution
Account and any Net Earnings, Gains and losses with respect thereto

     1.36  "LESOP Employer Matching Allocations" means LESOP Employer Matching
            -----------------------------------
Contributions as provided in Section 6.3(c).

     1.37  "LESOP Suspense Account" means the separate accounts maintained by
            ----------------------
the Committee pursuant to Section 6.2. All Employer Per Capita LESOP
Contributions, Compensation Based LESOP Contributions and LESOP Employer
Matching Contributions made with respect to a Loan and the dividends with
respect to Company Stock purchased with such Loan (and the Company Stock into
which such stock has been converted) including dividends which have been
replaced in Participant's LESOP Accounts by Dividend Replacement Contributions
shall be held and accounted for within the separate LESOP Suspense Account.

     1.38  "Licensee" means any person, other than the Company or a Commonly
            --------
Controlled Entity which operates a McDonald's Restaurant pursuant to lease and
license agreements (or so-called "Business Facilities Lease") with the Company
or affiliated companies.

     1.39  "McDESOP" means the portion of the Program consisting of
            -------
Participants' Participant Elected Contribution Accounts and Employer Matching
Contribution Accounts, McDESOP Holding Accounts, Matching Contribution Holding
Account and McDESOP Diversification Accounts.

     1.40  "Non-highly Compensated Employee" means, for a Plan Year, any
            -------------------------------
Participant who performs services for an Employer, Commonly Controlled Entity or
Affiliated Service Group during such Plan Year and who was not a Highly
Compensated Employee for such Plan Year.

     1.41  "Parental Leave" means a period during which an individual is absent
            --------------
from work for any period:

          (a)  by reason of the pregnancy of the individual,

          (b)  by reason of the birth of a child of the individual,

          (c) by reason of the placement of a child with the individual in
     connection with the adoption of such child by such individual, or

          (d) for purposes of caring for such child for a period beginning
     immediately following such birth or placement.

     An absence from work shall not be a Parental Leave unless the individual
furnishes the Committee such timely information as may reasonably be required to
establish that the absence from work was for one of the reasons specified above
and the number of days for

                                      -20-
<PAGE>

which there was such an absence. Nothing contained herein shall be construed to
establish an Employer policy of treating a Parental Leave as an Authorized Leave
of Absence or to otherwise establish a parental leave policy for any Employer,
except for the purpose of avoiding a Break in Service.

  1.42    "Participant" means a person participating in the Program in
           -----------
accordance with the provisions of Article II.

  1.43    "Participant Contributions" means (a) the voluntary contributions made
           -------------------------
by a Participant to the Trustee with respect to Plan Years commencing before
January 1, 1987, and credited to his Investment Savings Account and (b)
Participant Matched Contributions made under the Stock Sharing Plan with respect
to Plan Years ending on or before December 31, 1983 and credited to his
Participant Contribution Stock Sharing Account.

  1.44    "Participant Elected Contributions" means the contributions made by an
           ---------------------------------
Employer on behalf of an Active Participant attributable to reductions of the
Participant's Considered Compensation determined under Section 5.1, including:

          (a)  "Participant Elected Matched Contributions", which means the
                -----------------------------------------
     amount of Participant Elected Contributions for an Active Participant for a
     Plan Year up to the percentage of such Active Participant's Considered
     Compensation specified in Sections 4.3(a)(1), 4.3(a)(2) or 4.3(a)(3), as
     applicable to such Active Participant; and

          (b)  "Participant Elected Unmatched Contributions", which means the
                -------------------------------------------
     amount of Participant Elected Contributions for an Active Participant for a
     Plan Year above the percentage of a Participant's Considered Compensation
     specified under Sections 4.3(a)(1), 4.3(a)(2) or 4.3(a)(3), as applicable
     to such Active Participant.

  1.45    "Party in Interest" means a person defined in Section 3(14) of ERISA.
           -----------------

  1.46    "Program" means the McDonald's Corporation Profit Sharing Program as
           -------
herein set forth, and as hereafter amended from time to time, including its four
components: (i) Profit Sharing, (ii) McDESOP, (iii) LESOP and (iv) Stock
Sharing.

  1.47    "Plan Administrator" means the Plan Administrator appointed under or
           ------------------
by the provisions of Section 13.15.

  1.48    "Plan Year" means the 12-month period commencing on January 1 and
           ---------
ending on December 31.

  1.49    "Profit Sharing Plan" means the portion of the Program consisting of
           -------------------
Participants' Profit Sharing Accounts, Rollover Accounts, Rollover Holding
Accounts, Investment Savings Accounts and the Profit Sharing Holding Fund.

                                      -21-
<PAGE>

  1.50    "Qualified Preretirement Survivor Annuity" means an immediate monthly
           ----------------------------------------
pension payable in accordance with Section 11.2(e)(2) to the surviving spouse of
a Participant who has elected to receive benefits in the form of a life annuity
in an amount equal to an annuity for the life of the surviving spouse which can
be purchased with fifty percent of the portion of the Participant's vested Net
Balance Account which the Participant had elected to be paid in the form of a
life annuity pursuant to Section 11.2(a).

  1.51    "Related Plan" means any other qualified defined contribution plan or
           ------------
qualified defined benefit plan (as defined in Section 415(k) of the Internal
Revenue Code) maintained by an Employer, a Commonly Controlled Entity or member
of an Affiliated Service Group, respectively called a "Related Defined
Contribution Plan" and "Related Defined Benefit Plan."

  1.52    "Required Beginning Date" means April 1 of the calendar year following
           -----------------------
the later of:

          (a)  the calendar year in which a Participant attains age 70-1/2; or

          (b)  if the Participant is not a Five Percent Owner of the Employer or
     a Commonly Controlled Entity at any time during the Plan Year ending with
     or within the calendar year in which he attains age 70-1/2, the calendar
     year in which he has a Termination of Employment.

Notwithstanding the foregoing, the Required Beginning Date shall not be any date
earlier than any date to which the Required Beginning Date can be delayed in
accordance with Section 11.14 and any applicable law, regulations, or rulings.

  1.53    "Rollover" means a Participant's rollover contribution as described in
           --------
Section 402(a)(5) (effective before January 1, 1993), Section 402(c) (effective
on or after January 1, 1993), Section 403(a)(4) or Section 408(d)(3)(A)(ii) of
the Internal Revenue Code and credited to his Rollover Holding Fund Account, in
accordance with Section 8.1. Rollovers made in accordance with Section 402(c) or
403(a)(4) may be transfers of (a) distributions made to a Participant in
accordance with one of the above referenced sections of the Internal Revenue
Code or (b) direct Rollovers made in compliance with Section 401(a)(31) of the
Internal Revenue Code.

  1.54    "STIF Fund" means the Northern Trust Company Collective Trust-Short
           ---------
Term Investment Fund and such other common or collective trust funds or
investment companies registered under the Investment Company Act of 1940, which
have similar investment and administrative characteristics, as the Committee may
from time to time designate.

  1.55    "Stock Sharing" means the portion of the Program consisting of
           -------------
Participants' Stock Sharing Accounts as identified in Section 1.1(d).

  1.56    "Subsidiary" shall mean any corporation that is a member of an
           ----------
affiliated group with the Company within the meaning of Section 1504 of the
Internal Revenue Code.

                                      -22-
<PAGE>

  1.57    "Termination of Employment" means (a) a resignation by an Employee for
           -------------------------
any reason, (b) a dismissal of an Employee for any reason, or (c) any other
termination of the employee-employer relationship. Transfers of an Employee from
an Employer, Commonly Controlled Entity, member of an Affiliated Service Group,
Domestic Affiliate or Foreign Affiliate to another Employer, Commonly Controlled
Entity, member of an Affiliated Service Group, Domestic Affiliate or Foreign
Affiliate shall not be treated as a Termination of Employment.

  1.58    "Trust" means the legal entity or entities resulting from the Trust
           -----
Agreement between the Company and the Trustee, and any amendments thereto, by
which Employer Contributions, Participant Contributions, Rollovers, Participant
Elected Contributions, the proceeds of any loan made pursuant to Article VI,
Employer LESOP Contributions, the LESOP Suspense Account, any Company Stock
purchased therewith, amounts held in Participants' Stock Sharing Accounts and
any net income and profits thereon shall be received, held, invested and
distributed to or for the benefit of the Participants and Beneficiaries.

  1.59    "Trust Agreement" means any agreement between the Company and a
           ---------------
Trustee, establishing the McDonald's Corporation Savings and Profit Sharing
Master Trust (the "Profit Sharing Trust") and the McDonald's Matching and
Deferred Stock Ownership Trust (the "McDESOP Trust"), as amended from time to
time and such additional trust agreements as the Company and the Trustee shall
establish under the Program.

  1.60    "Trustee" means any corporation, individual or individuals who shall
           -------
accept the appointment to execute the duties of Trustee as set forth in a Trust
Agreement.

  1.61    "Trust Fund" means all property received and held by a Trustee
           ----------
pursuant to a Trust Agreement for the Program.

  1.62    "Valuation Date" means the last business day of each calendar month
           --------------
and such additional dates as the Committee may from time to time specify except
that solely for the purpose of valuing a Participant's Accounts for the purpose
of making distributions pursuant to Article XI, "Valuation Date" means the
fifteenth day of each calendar month (or if the fifteenth day of the month is
not a business day, the next previous business day) and the last business day of
each calendar month and such additional dates as the Committee may from time to
time specify. The Committee may designate additional Valuation Dates
prospectively or retroactively.

  1.63    "Vesting Retirement Date" means the date on which a Participant
           -----------------------
attains age 55.

  1.64    "Year of Credited Service" means a Plan Year during which an Employee
           ------------------------
has not less than one thousand (1,000) Hours of Service, including, once the
individual has become an Employee, Hours of Service credited while he was a
Leased Employee.

                                      -23-
<PAGE>

  1.65    "Year of Eligibility Service" means an Eligibility Computation Period
           ---------------------------
during which an Employee has not less than one thousand (1,000) Hours of
Service, including, once the individual has become an employee, Hours of Service
credited while he was a Leased Employee.

                                      -24-
<PAGE>

                                  ARTICLE II

                                 PARTICIPATION

  2.1     Participation. Each person who was a Participant under the provisions
          -------------
of the McDonald's Corporation Profit Sharing Program on the day before the
Effective Date, shall continue to be a Participant hereunder. Each other
Employee shall become a Participant in the Program on the first Entry Date
coinciding with or next following the date he completes one Year of Eligibility
Service and attains age 21; provided that (a) each Participant who is not an
employee of McG Restaurant Operations, Inc. and who is a certified swing
manager, primary maintenance employee, crew member or other store hourly
employee shall become a Participant solely for purposes of the Profit Sharing
and the McDESOP portions of the Program and for the purposes of (1) making
Participant Elected Contributions or (2) receiving allocations of LESOP Employer
Matching Allocations pursuant to Section 6.3(c) and LESOP Employer Matching
Contributions made pursuant to Section 4.1(b) and (b) each Participant who is an
employee of McG Restaurant Operations, Inc. shall be an Active Participant
solely for purposes of (1) making Participant Elected Contributions or (2)
receiving LESOP Employer Matching Allocations made pursuant to Section 6.3(c) or
LESOP Employer Matching Contributions pursuant to Section 4.1(b) and making
Rollover Contributions to the Program.

     Admission to participation in the Program shall only be made when an
Employee is not on an Authorized Leave of Absence or serving with the Armed
Forces of the United States.

     Each Participant shall continue to be a Participant for purposes other than
being an Active Participant as provided in Sections 1.2(a), 1.2(b) and 1.2(c)
until the later of (a) the date he incurs a Termination of Employment or has a
Break in Service and (b) the date his entire vested Net Balance Account has been
paid from the Trust.

     Notwithstanding the foregoing, each Participant is a participant only with
respect to the portions of the Program and the types of contributions which have
been adopted by his Employer and no additional Participants shall enter the
Stock Sharing portion of the Plan.

  2.2     Certification of Participation and Compensation to Committee.  Each
          ------------------------------------------------------------
Employer shall certify to the Committee, within a reasonable time before each
Entry Date, the names of all new Participants.  Each Employer, within a
reasonable time after the last day of each Plan Year, shall certify to the
Committee with respect to its Employees each Participant's number of Hours of
Service and Considered Compensation during such Plan Year and such other
information as the Committee may request.

  2.3     Termination of Employment, Break in Service, Reemployment and Change
          --------------------------------------------------------------------
in Employment Status. Upon resuming employment following a Break in Service, an
--------------------
Employee who is at least age 21, who had at least one Year of Eligibility
Service prior to such Break in Service ("Rehired Employee"), and who completes
one Year of Eligibility Service following such Break in Service shall become a
Participant retroactively to the day of such Rehired Employee's Retroactive
Participation Date (as defined in the following sentence) provided that

                                      -25-
<PAGE>

such Rehired Employee shall not be an Active Participant until the first day of
the calendar month in which occurs the date of his completion of one Year of
Eligibility Service following the Break in Service (the "Active Participation
Date") and his Considered Compensation shall be deemed to be first earned
commencing with his Active Participation Date; and further provided that
Participant Elected Contributions and Employer Matching Contributions or
allocations with respect to LESOP Employer Matching Contributions for periods on
or after November 1, 1998, shall commence on the first day of the pay period in
which the Participant completes One Year of Eligibility Service or as soon as
administratively feasible thereafter. An Employee's "Retroactive Participation
Date" is the date such Employee resumes employment.

     Upon a change in his employment status or resuming employment following a
Termination of Employment which did not constitute a Break in Service, an
Employee who was a Participant prior to a Termination of Employment shall be
treated as an Active Participant from the day of his change in status or
resumption of employment.

     Notwithstanding the foregoing provisions of this Section 2.3, a Rehired
Employee who has a Participant Elected Contribution Account shall have his
Participant Elected Contributions reinstated at the same level as was in effect
at the time of his Termination of Employment subject to any change in the amount
of the Specified Participant Elected Matched Contributions or a new election
made by such Participant pursuant to Section 5.1.

  2.4     Employees of Foreign or Domestic Affiliates. An employee of a Foreign
          -------------------------------------------
or Domestic Affiliate who becomes an Employee shall become an Active Participant
on the later of the first day of the month after the month in which such
individual becomes an Employee or the next Entry Date following the date such
Employee attains age 21 and completes one Year of Eligibility Service.

  2.5     Leased Employee.  A person who has been a Leased Employee (determined
          ---------------
without regard to Section 1.34(b)) who becomes an Employee shall become a
Participant on the later of (a) the first day of the month following the month
in which such person becomes an Employee or (b) the next Entry Date following
the date such person attains age 21 and completes one Year of Eligibility
Service; provided that such Employee's entry into the Plan on account of service
as a Leased Employee shall not occur before the next Entry Date following the
date the Employee first reports his service as a Leased Employee to the Plan
Administrator.

                                      -26-
<PAGE>

                                  ARTICLE III

                  PROFIT SHARING PLAN EMPLOYER CONTRIBUTIONS

  3.1     Profit Sharing Contributions. Profit Sharing Contributions shall be
          ----------------------------
made by Employers, as follows:

          (a)  Determination of Contribution. The Board of Directors shall
               -----------------------------
     determine and certify to the Committee the amount, if any, of Employer
     Profit Sharing Contributions to be made to the Program by the Employers
     which have adopted the Profit Sharing portion of the Program hereunder
     separately for (1) staff and executive employees or store managers and (2)
     Certified Swing Managers, primary maintenance employees, crew members and
     other hourly restaurant employees. In its discretion, the Board of
     Directors may determine different amounts of contributions or contributions
     of different percentages of Considered Compensation for the groups
     identified in (1) and (2) of the preceding sentence. Such determination
     shall be binding on all Participants, the Committee, the Company and the
     Other Employers.

          (b)  Employer's Shares of Profit Sharing Contributions. Subject to
               -------------------------------------------------
     Section 12.2, each Employer including the Company shall contribute for each
     Plan Year an amount equal to the sum of the Staff Contribution and the Crew
     Contribution as determined for such Employer below:

               (1)  Staff Contribution. The amount of an Employer's Staff
                    ------------------
          Contribution shall equal the product of (A) the total Profit Sharing
          Contributions for the Plan Year for the Participants identified in
          Section 3.1(a)(1), as determined by the Board of Directors in
          accordance with Section 3.1(a), multiplied by (B) a fraction the
          numerator of which is the total Considered Compensation for such Plan
          Year of such Participants who are (i) Active Participants and (ii)
          Employees of such Employer and the denominator of which is the total
          Considered Compensation for the Plan Year of all Active Participants
          who are Employees, described in Section 3.1(a)(1), of all Employers;
          and

               (2)  Crew Contribution. The amount of an Employer's Crew
                    -----------------
          Contribution shall equal the product of (A) the total Profit Sharing
          Contributions for the Plan Year for the Participants identified in
          Section 3.1(a)(2), as determined by the Board of Directors in
          accordance with Section 3.1(a), multiplied by (B) a fraction the
          numerator of which is the total Considered Compensation for such Plan
          Year of such Participants who are (i) Active Participants and (ii)
          Employees of such Employer and the denominator of which is the total
          Considered Compensation for the Plan Year of all Active Participants
          who are Employees, described in Section 3.1(a)(2), of all Employers.

  3.2     Payment of Contributions Made Pursuant to Article III.  The Employer
          -----------------------------------------------------
Profit Sharing Contributions for each Plan Year shall be paid in cash or in
securities of McDonald's

                                      -27-
<PAGE>

Corporation, which are qualifying employer securities as defined in ERISA
Section 407(d)(5) (which includes but is not limited to Company Stock), in full
not later than the due date for filing the federal income tax return of the
Employer for the tax year during which the last day of such Plan Year falls.

     Employer Profit Sharing Contributions, if any, for each Plan Year shall be
held in the Profit Sharing Holding Fund and, if contributed in cash, invested in
the STIF Fund or, if contributed as qualifying employer securities, remain
invested in qualifying employer securities until February 1 following the Plan
Year or, if not administratively feasible, as soon thereafter as administrative
requirements may warrant, at which time the Committee shall allocate such
amounts to Participants' Profit Sharing Accounts and invest them in accordance
with Section 10.7, 10.8 or 10.9(a), as applicable.

                                      -28-
<PAGE>

                                  ARTICLE IV

                   McDESOP and LESOP EMPLOYER CONTRIBUTIONS

  4.1     Amount of Employer Matching Contributions and LESOP Employer Matching
          ----------------------------------------- ---------------------------
Contributions.  Employer Matching Contributions and LESOP Employer Matching
-------------
Contributions shall be made by Employers as specified in (a) or (b), subject to
the limitations specified in (c) below:

          (a)  Employer Matching Contributions. For periods before November 1,
               -------------------------------
     1998, each Employer shall contribute to the McDESOP Trust as Employer
     Matching Contributions for each Plan Year an amount as defined below:

               (1)  The amount of Employer Matching Contributions plus the
          Forfeiture Amount shall equal fifty percent (or such greater
          percentage as the Board of Directors from time to time determines) of
          the sum of all Participant Elected Matched Contributions for the Plan
          Year or portion of a Plan Year made for Active Participants who are
          employed by that Employer.

               (2)  The Forfeiture Amount shall equal (A) the amount of
          Forfeitures which occur during a Plan Year pursuant to Sections
          11.4(c) and 16.6 after any charges to Forfeitures provided hereunder,
          (B) multiplied by a fraction the numerator of which is the amount of
          Participant Elected Matched Contributions made for Active Participants
          who are Employees of such Employer and the denominator of which is the
          total amount of Participant Elected Matched Contributions made for
          Active Participants for the Plan Year.

          (b)  LESOP Employer Matching Contributions. For periods beginning on
               -------------------------------------
     or after November 1, 1998, each Employer shall make LESOP Employer Matching
     Contributions in an amount which when added to the value of the shares
     released from a leveraged ESOP Suspense Account pursuant to Section 6.3(c)
     and any Forfeitures allocated to Participants' Employer Matching
     Contribution Account equal fifty percent (or such greater percentage as the
     Board of Directors from time to time determines) of the Participant Elected
     Matched Contributions made to the Plan for the Plan Year for Active
     Participants who are Employees of such Employer. Any LESOP Employer
     Matching Contributions shall be allocated to the Employer Matching
     Contribution Accounts of Active Participants.

          (c)  Average Actual Contribution Percentage. The average actual
               --------------------------------------
     contribution percentage ("Average ACP") for a specified group of Active
     Participants for a Plan Year shall be the average of the actual
     contribution percentages of the persons in such group. A Participant's
     actual contribution percentage is equal to the product of (1) 100
     multiplied by (2) the quotient of (A) the Employer Matching Contributions
     or the sum of the LESOP Employer Matching Allocations and LESOP Employer
     Matching Contributions (all including any Forfeitures allocated therewith)
     and such amount of

                                      -29-
<PAGE>

     Special Section 401(k) Employer Contributions as the Company shall
     determine to allocate with Employer Matching Contributions or with LESOP
     Employer Matching Allocations and Participant Elected Contributions as the
     Committee determines to include with Employer Matching Contributions in the
     calculation of the Average ACP for each such Employee for such Plan Year
     divided by (B) the Employee's Considered Compensation for the Plan Year
     ("Actual Contribution Percentage"). As soon as practicable after the end of
     the Plan Year, the Committee shall calculate the Average ACP for the Plan
     Year separately for Employer Matching Contributions and for LESOP Employer
     Matching Allocations and LESOP Employer Matching Contributions for the
     group of Employees eligible to be Active Participants who are Highly
     Compensated Employees and for the group of such Employees who are Non-
     highly Compensated Employees.

          Notwithstanding the foregoing provisions of Section 4.1, solely for
     purposes of the Average ACP test the Committee shall have the discretion to
     determine the portion of a Participant's (or selected group of
     Participants') Employer Matching Contributions or LESOP Employer Matching
     Allocations, LESOP Employer Matching Contributions, and Special Section
     401(k) Employer Contributions allocated by the Company with Employer
     Matching Contributions or LESOP Employer Matching Allocations or
     Participant Elected Contributions (all including any Forfeiture allocated
     therewith) to be counted in calculating the Participant's average
     contribution percentage and in making such determination shall be under no
     obligation to treat similarly situated Participants in a like manner so
     long as the following requirements (to the extent applicable) are
     satisfied:

               (1)  The Special Section 401(k) Employer Contributions are non-
          discriminatory under Code Section 401(a)(4);

               (2)  All contributions to the Program other than Participant
          Elected Contributions, Employer Matching Contributions, LESOP Employer
          Matching Allocations, LESOP Employer Matching Contributions and
          Special Section 401(k) Employer Contributions which are treated as
          matching contributions for purposes of the Required ACP Test satisfy
          the requirements of Code Section 401(a)(4); and

               (3)  The Participant Elected Contributions, including those
          treated as matching contributions for purposes of the Required ACP
          Test satisfy the requirements of the ADP test.

               (4)  The Special Section 401(k) Contributions are allocated to
          the Participant as of a date within the Plan Year and the Participant
          Elective Contributions satisfy the requirements of Treas. Reg. Section
          1.401(k)-1(b)(4)(i) for the Plan Year.

          A Participant's Employer Matching Contributions, LESOP Employer
     Matching Allocations, LESOP Employer Matching Contributions, Special
     Section 401(k)

                                      -30-
<PAGE>

Contributions which are counted for purposes of the Required ADP Test pursuant
to Section 5.2(e) shall not be counted for purposes of calculating such
Participant's Average Contribution Percentage.

     (d)  Required Actual Contribution Percentage Test and Adjustment. The
          -----------------------------------------------------------
Average ACP for the group of Highly Compensated Employees for a Plan Year
beginning on or after January 1, 1997 shall bear a relationship to the Average
ACP for all Non-highly Compensated Employees for the preceding Plan Year which
meets at least one of the following tests ("Required ACP Test"):

          (1)  The Average ACP for the preceding Plan Year for the group of
     Active Participants who were Non-highly Compensated Employees in that year
     multiplied by 1.25 is greater than or equal to the Average ACP for the Plan
     Year for the Active Participants who were Highly Compensated Employees; or

          (2)  The excess of the Average ACP for the Plan Year for the group of
     Highly Compensated Employees who are Active Participants over the Average
     ACP for the preceding Plan Year for Non-highly Compensated Employees who
     were Active Participants in that year is not more than 2 percentage points,
     and the Average ACP for the Plan Year for the group of Highly Compensated
     Employees who are Active Participants is not more than the Average ACP for
     the preceding Plan Year of all Non-highly Compensated Employees who are
     Active Participants multiplied by 2.

     If the Required ACP Test for a Plan Year is not met and, if the Company
does not elect to make Special Section 401(k) Employer Contributions or to count
Participant Elected Contributions for purposes of the Required ACP test with
respect to the Plan Year sufficient to result in the Required ACP test being
passed, then the Committee shall reduce Employer Matching Contributions and
Forfeitures (which for this purpose shall include any Participant Elected
Contributions counted in the Required ACP Test) or the LESOP Employer Matching
Allocations and LESOP Employer Matching Contributions that Active Participants
who are Highly Compensated Employees for the Plan Year (or a portion of such
Active Participants) may defer in the following steps:

     Step 1.  The Committee shall first determine the dollar amount of the
     ------
reductions which would have to be made to the Employer Matching Contributions
and Forfeitures allocated therewith or LESOP Employer Matching Allocations and
LESOP Employer Matching Contributions of Highly Compensated Employees who are
Active Participants for the Plan Year in order that the Average ACP of the
Highly Compensated Employees would not exceed both the amounts permitted in
Sections 4.1(d)(1) and (d)(2). Such amount shall be calculated by first
determining the dollar amount by which the Employer Matching Contributions and
any Forfeitures allocated therewith or LESOP Employer Matching Allocations and
LESOP Employer Matching Contributions and any Forfeitures allocated therewith of
the Highly Compensated Employees who have the highest Actual Contribution
Percentage would have to be reduced until the first to occur of: (i) such

                                      -31-
<PAGE>

Highly Compensated Employees' Actual Contribution Percentage, after the
reductions made on account of any reductions made under Section 5.2, would
become tied with the Actual Contribution Percentage of one or more other Highly
Compensated Employees or (ii) the Average ACP of all of the Highly Compensated
Employees, as recalculated after the reductions made under this Step 1, no
longer would exceed the amounts permitted in both Sections 4.1(d)(1) and (d)(2).
Then, unless the Average ACP of the Highly Compensated Employees, as
recalculated after the reductions made under this Step 1, would no longer exceed
the amounts permitted in both Sections 4.1(d)(1) and (d)(2) if the total amount
of such reductions were made, the reduction process shall be repeated by
determining the dollar amount of reductions which would have to be made to the
Employer Matching Contributions and Forfeitures allocated therewith or LESOP
Employer Matching Allocations and LESOP Employer Matching Contributions and any
Forfeitures allocated therewith of the group of Active Participants who are
Highly Compensated Employees who after all prior reductions made in this Step 1
would have the highest Actual Contribution Percentage until the first to occur
of: (iii) the Actual Contribution Percentage, including the prior reductions
made in this Step 1, of each person in such group becomes tied with that of one
or more other Active Participants who are Highly Compensated Employees or (iv)
the Average ACP of all of the Active Participants who are Highly Compensated
Employees, after the prior reductions were made, no longer would exceed both the
amounts permitted in Sections 4.1(d)(1) and (d)(2). This process is repeated
until the Average ACP of all of the Active Participants who are Highly
Compensated Employees, after all reductions, would no longer exceed the amounts
described in both Sections 4.1(d)(1) and (d)(2).

     Step 2.  Next, the Committee shall determine the total dollar amount of
     ------
reductions to the Employer Matching Contributions and Forfeitures or LESOP
Employer Matching Allocations and LESOP Employer Matching Contributions
calculated under Step 1 ("Total Excess Contributions").

     Step 3.  Finally, the Committee shall reduce the Employer Matching
     ------
Contributions and Forfeitures or LESOP Employer Matching Allocations and LESOP
Employer Matching Contributions of the Active Participants who are Highly
Compensated Employees with the highest total dollar amount of such contributions
by the lesser of the amount which either: (i) causes such Highly Compensated
Employees' Employer Matching Contributions and Forfeitures or LESOP Employer
Matching Allocations and LESOP Employer Matching Contributions to equal the
total dollar amount of the Employer Matching Contributions and Forfeitures or
LESOP Employer Matching Allocations and LESOP Employer Matching Contributions of
the Highly Compensated Employees with the next highest dollar amount of Employer
Matching Allocations and LESOP Employer Matching Contributions and Forfeitures
or LESOP Employer Matching Allocations and LESOP Employer Matching Contributions
or (ii) reduces the total of the Highly Compensated Employee's Employer Matching
Contributions or LESOP Employer Matching Allocations and LESOP Employer Matching
Contributions (and any Forfeitures allocated therewith) by the Total Excess
Contributions. Then, unless the total amount of reductions made to Highly
Compensated

                                      -32-
<PAGE>

     Employees' Employer Matching Contributions or LESOP Employer Matching
     Allocations and LESOP Employer Matching Contributions (and any forfeitures
     allocated therewith) under this Step 3 equals the amount of Total Excess
     Contributions, the reduction process shall be repeated by reducing the
     Employer Matching Contributions or LESOP Employer Matching Allocations and
     LESOP Employer Matching Contributions (and any Forfeitures allocated
     therewith) of the group of Highly Compensated Employees with the highest
     dollar amount of Employer Matching Contributions or LESOP Employer Matching
     Allocations and LESOP Employer Matching Contributions, after the prior
     reductions made in this Step 3, by the lesser of the amount which either:
     (iii) causes such Highly Compensated Employees' Employer Matching
     Contributions or LESOP Employer Matching Allocations and LESOP Employer
     Matching Contributions (and any Forfeitures allocated with such
     contributions) made in this Step 3 to equal the dollar amount of the
     Employer Matching Contributions or LESOP Employer Matching Allocations and
     LESOP Employer Matching Contributions (and any Forfeitures allocated with
     such contributions) of other Highly Compensated Employees with the next
     highest dollar amount of Employer Matching Contributions or LESOP Employer
     Matching Allocations and LESOP Employer Matching Contributions (and any
     Forfeitures allocated with such contributions) or (iv) causes total
     reductions to equal the Total Excess Contributions. This process is
     repeated with each successive group of Highly Compensated Employees with
     the highest dollar amount, after the prior reductions of the Employer
     Matching Contributions or LESOP Employer Matching Allocations and LESOP
     Employer Matching Contributions (and any Forfeitures allocated with such
     contributions) made under this Step 3 until the total reductions equal the
     Total Excess Contributions.

          The Committee shall reduce and distribute Employer Matching
     Contributions or LESOP Employer Matching Allocations and LESOP Employer
     Matching Contributions (and any Forfeitures allocated with such
     contributions) equal to the Total Excess Contributions for the Plan Year
     and any income, gains or losses attributable thereto, as determined in
     accordance with Section 5.3, to Highly Compensated Employees as determined
     in Step 3 after the end of the Plan Year with respect to which such reduced
     Employer Matching Contributions, LESOP Employer Matching Allocations and
     LESOP Employer Matching Allocations and LESOP Employer Matching
     Contributions (and any forfeitures allocated with such contributions) were
     made.

4.2       LESOP Contributions.  LESOP Contributions shall be made by Employers,
          -------------------
 as follows:

          (a)  Company LESOP Contributions.  For each Plan Year that a loan
               ---------------------------
     authorized under Section 6.1 remains unpaid, the Company shall contribute
     in cash to the Trust, as LESOP Contributions, such amounts (if any) as
     shall be determined by the Board of Directors, provided, however, the
     Company's LESOP Contribution in cash for any Plan Year shall not be less
     than the product of:

                                      -33-
<PAGE>

          (1)  the installments (if any) payable on such loan reduced by the
     sum of the (A) dividends on unallocated shares of Company Stock (including
     Company Stock into which such shares have been converted) held in the
     suspense account associated with such loan (or any loan refinanced with
     such loan) and on LESOP Contributions made to repay such loan and (B)
     dividends on allocated shares of Company Stock (including Company Stock
     into which such shares have been converted) held in Participants' LESOP
     Accounts acquired with the proceeds of such loan (or any Loan refinanced
     with such loan) and earnings attributable to such dividends; multiplied by

          (2)  a fraction, the numerator of which is the Considered Compensation
     paid by the Company to Employees for the Plan Year while they were Active
     Participants and the denominator of which is the Considered Compensation
     for the Plan Year paid to all Employees while they were Active
     Participants.

If no installment (as drawn or renegotiated) is payable on a loan for the Plan
Year, no LESOP Contribution shall be required with respect to such loan for the
Plan Year, except as otherwise determined by the Board of Directors. The
dividends on allocated shares of Company Stock held in Participants' LESOP
Accounts which were acquired with the proceeds of a loan or any loan refinanced
with such loan (or shares into which such Company Stock has been converted)
shall be included in Section 4.2(a)(1)(B) for a Plan Year only to the extent
that Employer Contributions and the dividends and other income attributable to
unallocated shares held in the suspense account associated with such loan are
less than the installments payable or to be payable with respect to such loan.

     (b)  LESOP Contributions by Other Employers.  Each Employer that has
          --------------------------------------
adopted the LESOP portion of the Plan (other than the Company) shall contribute
to the Trust an amount equal to the product of:

          (1)  the total Considered Compensation for the Plan Year paid by such
     Employer to Employees while they were Active Participants; multiplied by

          (2)  a fraction the numerator of which is the LESOP Contribution of
     the Company for the Plan Year and the denominator of which is the
     Considered Compensation paid by the Company to Employees while they were
     Active Participants.

     (c)  Additional LESOP Contributions.  The Board of Directors may, in its
          ------------------------------
discretion, determine that Additional LESOP Contributions shall be made for a
Plan Year in Company Stock and designate such contributions as Per Capita
Additional LESOP Contributions or Compensation Based Additional LESOP
Contributions (collectively called "Additional LESOP Contributions"). The
Company shall make such Additional LESOP Contributions in an amount equal to the
total Additional LESOP Contribution multiplied by a fraction the numerator of
which is the Considered Compensation paid by the Company to Employees for the
Plan Year paid while they were Active Participants

                                      -34-
<PAGE>

and the denominator of which is the Considered Compensation for the Plan Year
paid to all Employees while they were Active Participants.

          Each Employer that has adopted the LESOP (other than the Company)
     shall contribute to the Trust as Additional LESOP Contributions an amount
     equal to the product of the total Considered Compensation for the Plan Year
     paid by such Employer to Employees while they were Active Participants
     multiplied by a fraction the numerator of which is the Company's Additional
     LESOP Contribution and the denominator of which is the Compensation paid by
     the Company to Employees while they were Active Participants.

          (d)  Special Dividend Replacement Contributions.  The Employers shall
                --------------------------
     make Special Dividend Replacement Contributions as of any Valuation Date in
     an amount not to exceed the dividends with respect to Company Stock which
     has been allocated to Participant's LESOP Accounts (other than Employer
     Matching Contribution Accounts) and are placed in the LESOP Suspense
     Account to be used pursuant to Section 6.3(b) to repay an Exempt Loan (or
     other loan authorized under Section 6.1) to the extent that the allocations
     pursuant to Section 6.3(c) as limited by 6.3(a) are not sufficient to
     replace such dividends. Each Employer shall make any such Special Dividend
     Replacement Contributions in an amount equal to the total amount of such
     contributions to be made as of a Valuation Date multiplied by a fraction
     the numerator of which is the Considered Compensation paid to Active
     Participants who are Employees of the Employer for the calendar quarter
     ending on the Valuation Date and the denominator of which is the Considered
     Compensation paid to all Active Participants during the calendar quarter
     ending on the Valuation Date.

          (e)  LESOP Employer Matching Contributions.  Any LESOP Employer
               -------------------------------------
     Matching Contributions made pursuant to Section 4.1(b) shall be considered
     LESOP Contributions under the Program.

4.3       Annual Employer Contribution Elections.
          --------------------------------------

          (a)  Minimum and Maximum Amount of Participant Elected Matched
               ---------------------------------------------------------
     Contributions. If Participant Elected Matched Contributions are to be
     -------------
     permitted for all or any portion of a Plan Year, the Company by action of
     its Board of Directors shall specify for the Plan Year or portion of the
     Plan Year, the amount (as a percentage of each Active Participant's
     Considered Compensation) of such Participant Elected Matched Contributions
     ("Specified Participant Elected Matched Contributions") which shall be made
     on behalf of an Active Participant in the absence of a contrary election by
     the Participant and may also specify, the minimum and maximum amounts of
     Participant Elected Matched Contributions which a Participant may elect in
     lieu of Specified Participant Elected Matched Contributions (as a
     percentage of each Participant's Considered Compensation) for the Plan Year
     or portion of the Plan Year as permitted by procedures established by the
     Plan Administrator, provided that such minimum and maximum amounts shall be
     not greater for any Plan Year than:

                                      -35-
<PAGE>

          (1)  six percent (6%) of the Participant's Considered Compensation if
     the Participant is a staff or an executive employee or a store manager,

          (2)  ten percent (10%) of the Participant's Considered Compensation if
     the Participant is a Certified Swing Manager or primary maintenance
     employee, and

          (3)  eight percent (8%) of the Participant's Considered Compensation
     if the Participant is a crew member or other hourly restaurant employee.

     Notwithstanding the foregoing provisions of Section 4.3(a), all Active
Participants who are Employees of McG Restaurant Operations, Inc. shall be
permitted to make Participant Elected Matched Contributions in the amount
provided in paragraph (3).

     If  an Active Participant's maximum permitted Participant Elected Matched
Contribution limit under this Section 4.3(a) changes, subject to the Active
Participant making a new election effective after the limit change, the new
limit shall be applied to the Participant's existing Participant Elected
Contribution election as in effect before the change effective for the pay
period following the pay period in which the Participant's limit changed so that
the Participant's Participant Elected Matched Contributions are maximized but do
not exceed either his total Participant Elected Contributions or the applicable
Section 4.2(a) limit. The total Participant Elected Contributions made by such a
Participant, as a percentage of Considered Compensation, shall not exceed the
sum of the percentage under Section 4.3(a) which is applicable to such
Participant plus seven percent (7%) of his Considered Compensation as provided
under Section 5.1. Such an Active Participant's Participant Elected Unmatched
Contributions shall equal the difference between the amount of such
Participant's Participant Elected Contributions as a percentage of his
Considered Compensation and the amount of his Participant Elected Matched
Contributions as a percentage of his Considered Compensation subject to the
applicable limit under Section 4.3(a).

     (b)  Special Section 401(k) Employer Contributions.  For each Plan Year,
          ---------------------------------------------
the Company may elect to have the Company and the other Employers make a Special
Section 401(k) Employer Contribution to the Program in such amount (if any) as
the Board of Directors may determine, which shall be allocated pursuant to
Section 7.2(b) to the Employer Matching Contribution Accounts of those Active
Participants who for the Plan Year are Non-highly Compensated Employees who have
Compensation reduction elections in effect. In any Plan Year in which the
Company elects to have such a Special Section 401(k) Employer Contribution made,
each Employer, including the Company, shall contribute a fractional portion of
the Special Section 401(k) Employer Contribution, in an amount equal to the
Special Section 401(k) Employer Contribution multiplied by a fraction, the
numerator of which is the amount of Participant Elected Contributions for such
Plan Year of those Active Participants who are employed by the Employer and who
are Non-highly Compensated Employees, and the denominator of which is the amount
of

                                      -36-
<PAGE>

     Participant Elected Contributions for the Plan Year of all Active
     Participants who are Non-highly Compensated Employees.

   4.4    Additional Employer Contributions.  For such Plan Years, if any, as
          ---------------------------------
the Board of Directors shall direct, the Employers shall make Additional
Employer Contributions in an amount to be determined by the Board of Directors.
Each such Employer shall contribute Additional Employer Contributions to the
Trust for a Plan Year in an amount equal to the total Additional Employer
Contributions for such Plan Year multiplied by a fraction the numerator of which
is the number of Active Participants eligible to receive Additional Employer
Contributions who are Employees of the Employer and the denominator of which is
the total number of Active Participants eligible to receive Additional Employer
Contributions.

   4.5    Payment of Contributions Made Pursuant to Article IV.  Employer
          ----------------------------------------------------
Contributions for each Plan Year made in accordance with Article IV, except for
Special Section 401(k) Employer Contributions as provided in Section 4.3(b),
shall be delivered to the Trustee on or before the due date for the filing of
the federal income tax return (including any extensions) of the Employer for the
tax year during which the last day of such Plan Year occurs.  Special Section
401(k) Employer Contributions for a Plan Year may be made during the Plan Year
or at any time on or before the last day of the following Plan Year.

     Employer Matching Contributions and any Forfeitures allocated therewith,
Special Section 401(k) Employer Contributions and Additional Employer
Contributions shall be invested in the McDESOP McDonald's Common Stock Fund and
held in the McDESOP Holding Fund until allocated to Participant's Accounts as
provided in Sections 7.2(a), 7.2(b) and 7.2(c), respectively.  Participant
Elected Contributions shall be invested in the McDESOP McDonald's Common Stock
Fund and held in the McDESOP Holding Fund until credited to Participant's
Accounts as provided in Section 7.4.

   4.6    Form of Contributions.  Except as otherwise provided, Employer
          ---------------------
Contributions to the McDESOP Trust shall be made either in cash or in Company
Stock, as each Employer shall determine in its discretion.

   4.7    Reemployed Members of the Uniformed Services.  The provisions of this
          --------------------------------------------
Section 4.7 shall apply to each person reemployed by an Employer after a period
of uniformed service with reemployment rights under Chapter 43 of Title 38,
United States Code ("Qualified Uniformed Service"); provided that any Employee
seeking benefits under this Section 4.7 shall notify the Benefits Accounting
Department of his eligibility and provide such information and proof, including
but not limited to his certificate of service, as shall reasonably be required
to confirm the Employee's eligibility.

          (a)  Contributions.  The Accounts of each such reemployed veteran
               -------------
     ("Reemployed Veteran") shall be credited with contributions (but not
     earnings or Forfeitures except as he becomes entitled to them under the
     Plan after the date of reemployment) as follows:

                                      -37-
<PAGE>

               (i)    Employer Profit Sharing Contributions.  As of the
                      -------------------------------------
          Valuation Date next following such reemployment, each Reemployed
          Veteran's Employer Profit Sharing Account shall be credited with the
          Employer Profit Sharing Contributions which he would have been
          allocated under Section 7.1 if he had been an Employee of his Employer
          immediately before his period of Qualified Uniformed Service during
          the period of Qualified Uniformed Service with Considered Compensation
          determined as described in Section 4.7(d).  Such amounts shall be
          credited from Forfeitures or, if the Employer so elects, from special
          contributions made for the purpose by the Employer.

               (ii)    LESOP Allocations.  As of the Valuation Date next
                       -----------------
          following the date of such reemployment, each Reemployed Veteran's
          LESOP Accounts shall be credited with the allocations of Company Stock
          from the LESOP Suspense Account in the amount he would have received
          under Section 7.3 if he had been an Employee of his Employer
          immediately before his period of Qualified Uniformed Service with
          Considered Compensation determined as described in Section 4.7(d)
          during the period of Qualified Uniformed Service.  Such allocations
          shall be made from amounts released from the LESOP Suspense Account
          under Section 6.3 in the Plan Year in which the allocation is made
          before the allocations in Section 6.3(a) are made and, if there are no
          such releases or if they are insufficient, from Forfeitures under the
          LESOP or special contributions made for the purpose by the Employer.

               (iii)   Participant Elected Contributions.  At any time during
                       ---------------------------------
          the period beginning on the date of reemployment and ending on the
          earlier of the end of a period which is (A) three times the length of
          the period of the person's Qualified Uniformed Service or (B) five
          years, the Reemployed Veteran may make elective deferrals from his
          Considered Compensation with respect to his period of Qualified
          Uniformed Service provided that the amount of such contributions shall
          not exceed the amount the person would have been permitted to elect to
          contribute had the person remained continuously employed and been an
          Employee of his Employer immediately before his period of Qualified
          Uniformed Service throughout the period of Qualified Uniformed Service
          ("Additional Elective Deferrals").

               (iv)  Employer Matching Contributions.  Each Employer shall make
                     -------------------------------
          Employer Matching Contributions or LESOP Employer Matching
          Contributions to the Program to be credited to such Reemployed
          Veteran's Employer Matching Contribution Account with respect to any
          Additional Elective Deferrals in the amount which such Employer would
          have contributed under the Program had the Additional Elective
          Deferrals been made during the period of Qualified Uniformed Service.
          Such amounts shall be made from Forfeitures under the Profit Sharing
          Portion of the Program unless the Employer determines to make a
          special contribution for the purpose.  In addition, LESOP Employer
          Matching

                                      -38-
<PAGE>

          Allocations shall be credited to the Employer Matching Contribution
          Account of each Reemployed Veteran in the amount that such
          contribution would have been made had the Participant's Additional
          Elective Deferrals been made during the period of Qualified Uniformed
          Service. Notwithstanding the foregoing, with respect to Additional
          Elective Deferrals for periods on or after November 1, 1998, LESOP
          Employer Matching Allocations shall be made from the LESOP Suspense
          Account under Section 6.3(c) in the Plan Year in which the allocation
          is made and before allocations in Section 6.3(a) are made and if there
          are no such releases or if they are insufficient, from Forfeitures
          under the LESOP or special contributions made for the purpose by his
          Employer immediately before his period of Qualified Uniformed Service.

          (b)  Service and Position with the Employer.  In determining the
               --------------------------------------
     contributions to which each such Reemployed Veteran is entitled under
     Section 4.7(a), he shall be credited with Hours of Service hereunder during
     his period of Qualified Uniformed Service both with respect to Eligibility
     Service and Vesting Service. In determining the amount of such Hours of
     Service to be credited, the Plan Administrator shall make good faith
     estimates of the Hours of Service the person would have received had he
     been continuously employed by the Employer during the period of Qualified
     Uniformed Service.

               In addition, each Reemployed Veteran shall be deemed to have been
          employed (1) in the same position he would have been in had he not had
          the period of Qualified Uniformed Service and (2) by the Employer
          which employed him immediately before his period of Qualified
          Uniformed Service.

          (c)  Break in Service.  After reemployment, a Reemployed Veteran
               ----------------
     shall not be treated as having incurred a Break in Service by reason of his
     period(s) of Qualified Uniformed Service.

          (d)  Considered Compensation.  For purposes of determining the amount
               -----------------------
     of a Reemployed Veteran's contributions under Section 4.7(a), each person
     shall be treated as receiving Considered Compensation during the period of
     Qualified Uniformed Service equal to (i) the Considered Compensation he
     would have received during such period if he were not in Qualified
     Uniformed Service, determined based on the rate of pay the Reemployed
     Veteran would have received from his Employer immediately before his period
     of Qualified Uniformed Service but for the absence during the period of
     Qualified Uniformed Service, or (ii) if the Considered Compensation the
     Reemployed Veteran would have received during such period was not
     reasonably certain, the Reemployed Veteran's average compensation from the
     Employer during the 12-month period immediately preceding the Qualified
     Uniformed Service (or, if shorter, the period of employment immediately
     preceding the Qualified Uniformed Service).

          (e)  Limits.  The contributions made pursuant to Section 4.7(a) above
               ------
     shall be taken into account with respect to the limits contained in Section
     5.2(c)(1) or Article IX,

                                      -39-
<PAGE>

     as applicable in the Plan Year for which such contributions are made but
     shall not be taken into account in applying such limits with respect to the
     Plan Year in which the contributions are made. Assuming that the Reemployed
     Veteran had compensation as described in Section 4.7(d) during the period
     of Qualified Uniformed Service. The ADP test and non-discrimination tests
     for a prior Plan Year shall not be recalculated to take into account
     contributions made under this Section 4.7.

          (f)  References.  All references to Sections of the Program in this
               ----------
     existence during Section 4.7 shall refer to the analogous sections of the
     Program as in the period of Qualified Uniformed Service with respect to
     which contributions are being made.

                                      -40-
<PAGE>

                                   ARTICLE V

                       PARTICIPANT ELECTED CONTRIBUTIONS

  5.1    Participant Elected Contributions.  Each Active Participant, who is
         ---------------------------------
employed by an Employer, shall have his Considered Compensation reduced for each
Plan Year or designated portion of a Plan Year by an amount equal to the
Specified Participant Elected Matched Contribution percentage for the Plan Year
or designated portion of a Plan Year, as provided in Section 4.3(a), which
amount his Employer shall contribute to the McDESOP Trust on the Participant's
behalf as a Participant Elected Matched Contribution, unless the Participant
shall elect, on such form, at such time and in such manner as the Committee
shall specify, not to have his Considered Compensation so reduced or (subject to
the minimum and maximum amounts of reduction specified for the Plan Year
pursuant to Section 4.3(a)) reduced by a lesser or greater amount.  In addition,
each Active Participant may elect in writing on forms approved by the Committee
to have his Employer contribute to the McDESOP Trust on the Participant's behalf
as Participant Elected Unmatched Contributions an amount equal to any additional
amount by which the Participant elects to have his Considered Compensation
reduced (which election may be a larger percentage for certain portions of
Considered Compensation during a Plan Year, e.g. bonus, and a smaller percentage
for other portions of Considered Compensation, e.g. salary, as the Committee
shall permit), provided that such amount may not exceed seven percent (7%) of
his Considered Compensation for a Plan Year and further provided that an Active
Participant may elect Participant Elected Unmatched Contributions as provided
above regardless of whether the Participant is making Participant Elected
Matched Contributions for that period.  The Committee may from time to time
establish general policies requiring Participants to elect Participant Elected
Matched Contributions up to a specified level before electing any Participant
Elected Unmatched Contributions.

     Except as otherwise specifically provided herein, a Participant may make,
change or revoke a Compensation reduction election at such times and in such
manner as the Committee may permit, provided that any such election, change or
revocation shall apply solely to Considered Compensation, which is not currently
available to the Participant as of the date of such election, change or
revocation.  The Compensation reduction election by the Active Participant which
is in accordance with the Program shall continue in effect, notwithstanding any
change in Considered Compensation, until he shall change such Compensation
reduction election or until he shall cease to be an Active Participant.  If a
Participant has an election pursuant to the McDonald's 1989 Executive
Equalization Plan ("McCap I") or the McDonald's Supplemental Employee Benefit
Equalization Plan ("McCap II") in effect for a calendar year, the Participant's
Compensation reduction election hereunder may not be changed for such year but
may only be changed before the beginning of the following Plan Year for such
Plan Year.  Each Employer shall make Participant Elected Contributions to the
Trustee on behalf of each Active Participant employed by the Employer in the
amount by which the Participant's Considered Compensation was reduced pursuant
to this Section 5.1.

  5.2    Restrictions on Participant Elected Contributions.  Notwithstanding the
         -------------------------------------------------
provisions of Section 5.1, the following restrictions shall apply to Participant
Elected Contributions:

                                      -41-
<PAGE>

         (a) No Participant Compensation reduction election shall be solicited
     or accepted from any Participant and no Participant Elected Contributions
     shall be made on behalf of any Participant unless and until a registration
     statement under the Securities Act of 1933 has become effective with
     respect to securities offered in connection with the Program, unless in the
     opinion of counsel for the Company such registration statement is not
     required;

         (b) No Compensation reduction election shall be solicited or accepted
     from any Participant who resides or works in any state and no Participant
     Elected Contributions shall be made on behalf of any Participant who
     resides or works in any state unless and until the Program shall have
     complied with applicable securities and blue sky laws of the state or in
     the opinion of counsel of the Company is exempt from such law; and

         (c) (1) The sum of Participant Elected Contributions and of elected
         deferrals under any Related Defined Contribution Plan for any
         Participant shall in no event exceed a maximum of $9,500 (in 1997 as
         adjusted from time to time, in accordance with Section 402(g)(5) of the
         Internal Revenue Code) for a calendar year ("Maximum Elective Deferral
         Amount").

             (2) If the Participant notifies the Committee in writing by March
         1 following the Plan Year or such later date not later than the April
         15 following the Plan Year as the Committee shall permit, that the sum
         of his elective contributions to a simplified employer pension, to a
         403(b) plan (as defined in Section 402(g)(3) of the Internal Revenue
         Code), or to any qualified cash or deferred arrangement (as defined in
         Section 401(k) of the Internal Revenue Code) exceeds the Maximum
         Elective Deferral Amount ("Excess Elected Deferrals"), such portion of
         the Participant's Participant Elected Contributions as the Participant
         shall elect in such notice not to exceed the amount of such Excess
         Elected Deferrals (including any income allocated thereto as determined
         in accordance with Section 5.3) shall be distributed to the Participant
         not later than the April 15 following the Plan Year. In determining
         whether a Participant has made Excess Elected Deferrals under this
         Section 5.2(c)(2), if a Participant is a participant in any plan
         described in Section 403(b) of the Internal Revenue Code under which he
         makes elective deferrals, the Maximum Elective Deferral Amount shall be
         increased in accordance with the provisions of Sections 402(g)(4) and
         402(g)(8) of the Internal Revenue Code with respect to any Participant
         who participates in a plan described in Section 403(b) of the Internal
         Revenue Code or who is a qualified employee in a plan of a qualified
         organization (as defined in Section 402(g)(8) of the Internal Revenue
         Code) for a calendar year.

             (3) Notwithstanding the foregoing, if the Participant has elected
         to participate in McCAP I or McCAP II as provided therein his
         Participant Elected Contribution elections hereunder shall be
         irrevocable as provided in Section 5.1 and any amount of such deferrals
         which shall be in excess of the Maximum

                                      -42-
<PAGE>

         Elective Deferral Amount and any Employer Matching Contributions, LESOP
         Employer Matching Contributions and LESOP Employer Matching Allocations
         and any Forfeitures allocated with each respective type of contribution
         shall not be contributed or allocated hereunder but the same amount
         shall be credited to the Participant's account under McCAP I or McCAP
         II, as applicable, to the extent provided thereunder; provided that the
         same amount shall not be credited to a Participant under more than one
         of the McDonald's Profit Sharing Program Equalization Plan ("McEqual"),
         McCAP I and McCAP II or any other non-qualified deferred compensation
         plan from time to time maintained by the Company.

             (4) If a Participant is not eligible to or has not elected to
         participate in McCAP I or McCAP II as provided therein and has
         Compensation reduction elections in excess of the Maximum Elective
         Deferral Amount hereunder, such Participant Elected Contributions shall
         not be contributed to the Program nor shall such Participant be
         credited with any Participant Elected Contributions or Employer
         Matching Contributions LESOP Employer Matching Contributions and LESOP
         Employer Matching Allocations and any Forfeitures allocated with each
         respective type of contribution under McCAP I or McCAP II, as
         applicable, for the Plan Year.

             (5) In determining whether the Maximum Elective Deferral Amount
         has been exceeded, the Plan Administrator may count Participant Elected
         Contributions toward the limit in the order contributed to the Program,
         may apply the Maximum Elective Deferral Amount on a pro rata basis to
         periods specified by the Plan Administrator or such other approach as
         the Plan Administrator shall reasonably determine.

         (d) Average Actual Deferral Percentage. The average Actual Deferral
             ----------------------------------
     Percentage ("Average ADP") for a specified group of Active Participants for
     a Plan Year shall be the average of the Actual Deferral Percentages of the
     persons in such group. The Actual Deferral Percentage of an individual is
     the amount of his Participant Elected Contributions (excluding for each
     Non-highly Compensated Employee any such contributions in excess of the
     Maximum Elective Deferral Amount as defined in Section 5.2(c)(1)) and such
     amount of Employer Matching Contributions, LESOP Employer Matching
     Contributions and Special Section 401(k) Employer Contributions, as
     provided in Section 4.3(b), as determined by the Committee paid to the
     Trust for or allocated to each such Employee for such Plan Year divided by
     the Employee's Considered Compensation for the Plan Year ("Actual Deferral
     Percentage"). As soon as practicable after the end of the Plan Year, the
     Committee shall calculate the Average ADP for the Plan Year for the group
     of Participants who are Highly Compensated Employees and for the group of
     Participants who are Non-highly Compensated Employees.

                                      -43-
<PAGE>

          Solely for purposes of calculating the Average ADP the Committee shall
     have the discretion to determine the portion of a Participant's (or
     selected group of Participants') Participant Elected Contributions,
     Employer Matching Contributions, LESOP Employer Matching Contributions,
     LESOP Employer Matching Allocations (and any Forfeitures allocated with
     each respective type of contribution) or Special Section 401(k) Employer
     Contributions to be counted in calculating the Participant's Actual
     Deferral Percentage and in making such determination shall be under no
     obligation to treat similarly situated Participants in a like manner so
     long as the following requirements (to the extent applicable) are
     satisfied:

               (1) The amount of Special Section 401(k) Employer Contributions
          to be counted for purposes of calculating Actual Deferral Percentage
          shall satisfy the requirements of Section 401(a)(4);

               (2) All contributions to the Program other than Special Section
          401(k) Employer Contributions and Participant Elected Contributions
          treated as elective contributions for purposes of the Required ADP
          Test and any Special Section 401(k) contributions treated as matching
          contributions under the Required ACP Test shall satisfy the
          requirements of Code Section 401(a)(4); and

               (3) The Employer Matching Contributions, LESOP Employer Matching
          Allocations and LESOP Employer Matching Contributions and Special
          Section 401(k) Contributions are allocated to Participant's Net
          Balance Account under the Program as of the last day of the Plan Year
          for which the ADP test is being calculated.

          (e) Required ADP Test. The Average ADP for Active Participants who are
              -----------------
     Highly Compensated Employees for the Plan Year bears a relationship to the
     Average ADP for Non-highly Compensated Employees who were Active
     Participants for the preceding Plan Year for Plan Years beginning in 1997
     and thereafter, which meets either of the following tests ("Required ADP
     Test"):

               (1) The Average ADP for the preceding Plan Year for the group of
          Active Participants who were Non-highly Compensated Employees in that
          year multiplied by 1.25 is greater than or equal to the Average ADP
          for the Plan Year for the Highly Compensated Employees; or

               (2) The excess of the Average ADP for the Plan Year for the group
          of Highly Compensated Employees who are Active Participants over the
          Average ADP for the preceding Plan Year of all Non-highly Compensated
          Employees who were Active Participants in that year is not more than 2
          percentage points, and the Average ADP for the Plan Year for the group
          of Highly Compensated Employees who are Active Participants is not
          more than the Average ADP for the preceding Plan Year of all Non-
          highly Compensated Employees who were Active Participants in that year
          multiplied by 2.

                                      -44-
<PAGE>

     For Plan Years beginning in 1998 and thereafter, the above Required ADP
Test may be applied by using the Average ADP for Non-highly Compensated
Employees for the current Plan Year if the Committee so elects; provided that
once made such an election may not be changed except as provided by the
Secretary of the Treasury.

     If the Required ADP Test for a Plan Year is not met and, if the Company
does not elect to make Special Section 401(k) Employer Contributions or elect to
count some or all of Employer Matching Contributions, LESOP Employer Matching
Allocations and LESOP Employer Matching Contributions and Forfeitures allocated
with each respective type of contribution for purposes of the ADP test with
respect to the Plan Year sufficient to result in the Required ADP Test being
passed, then the Committee shall reduce Participant Elected Contributions (which
for this purpose shall include any Employer Matching Contributions, LESOP
Employer Matching Allocations and LESOP Employer Matching Contributions and
Forfeitures allocated with each respective type of contribution counted in the
Required ADP Test) and any Employer Matching Contributions, LESOP Employer
Matching Allocations and LESOP Employer Matching Contributions and Forfeitures
allocated with each respective type of contribution allocated with respect to
reduced Participant Elected Contributions that Active Participants who are
Highly Compensated Employees for the Plan Year (or a portion of such Active
Participants) may defer in the following steps:

     Step 1.  The Committee shall first determine the dollar amount of the
     ------
reductions which would have to be made to the Participant Elected Contributions
of Highly Compensated Employees who are Active Participants for the Plan Year in
order that the Average ADP of the Highly Compensated Employees would not exceed
the amounts permitted in both Sections 5.2(e)(1) and (e)(2). Such amount shall
be calculated by first determining the dollar amount by which the Participant
Elected Contributions of Highly Compensated Employees who have the highest
Actual Deferral Percentage would have to be reduced until the first to occur of:
(i) such Employees' Actual Deferral Percentage, after the reductions under
Section 5.2(b), would become tied with the Actual Deferral Percentage of one or
more other Highly Compensated Employees or (ii) the Average ADP of all of the
Highly Compensated Employees, as recalculated after any prior reductions under
Section 5.2(b), no longer would exceed the amounts permitted in both Sections
5.2(e)(1) and (e)(2). Then, unless the recalculated Average ADP of the Highly
Compensated Employees no longer exceeds the amounts permitted in both Sections
5.2(e)(1) and (e)(2), the reduction process shall be repeated by determining the
amount of reductions which would have to be made to the Participant Elected
Contributions of Highly Compensated Employees who after all prior reductions
would have the highest Actual Deferral Percentage until the first to occur of:
(iii) the Actual Deferral Percentage, after any prior reductions under Sections
5.2(b), 4.2(c) and this Step 1, of each person in such group becomes tied with
that of one or more other Highly Compensated Employees or (iv) the Average ADP
of all of the Highly Compensated Employees, after the prior reductions, no
longer would exceed the amounts permitted in both Sections 5.2(e)(1) and (e)(2).
This process is repeated until the Average ADP of the

                                      -45-
<PAGE>

Highly Compensated Employees, after all reductions, would no longer exceed the
amounts permitted in both Sections 5.2(e)(1) and (e)(2).

     Step 2. Determine the total dollar amount of reductions to the Participant
     ------
Elected Contributions calculated under Step 1 ("Total Excess Deferrals").

     Step 3. The Participant Elected Contributions (which for this purpose
     ------
shall include any other contributions counted for purposes of calculating the
Required ADP Test) of the Highly Compensated Employees with the highest dollar
amount of Participant Elected Contributions shall be reduced by the lesser of
the dollar amount which either (i) causes such Highly Compensated Employees'
Participant Elected Contributions to equal the dollar amount of the Participant
Elected Contributions of the Highly Compensated Employees with the next highest
dollar amount of Participant Elected Contributions or (ii) reduces the total of
all Highly Compensated Employees' Participant Elected Contributions by the Total
Excess Contributions. Then, unless the total amount of reductions made to Highly
Compensated Employees' Participant Elected Contributions under this Step 3
equals the amount of the Total Excess Deferrals, the reduction process shall be
repeated by reducing the Participant Elected Contributions of the group of
Highly Compensated Employees with the highest dollar amount of Participant
Elected Contributions, after the prior reductions made in this Step 3, by the
lesser of the amount which either: (iii) causes such Highly Compensated
Employees' Participant Elected Contributions after reductions made in Section
5.2(b) and made in this Step 3 to equal the dollar amount of the Participant
Elected Contributions of the Highly Compensated Employees with the next highest
dollar amount of Participant Elected Contributions or (iv) causes total
reductions to equal the Total Excess Contributions. This process is repeated
with each successive group of Highly Compensated Employees with the highest
dollar amount, after the prior reductions, of the Participant Elected
Contributions until the total reductions made under this Step 3 equal the Total
Excess Contributions.

     The Committee shall reduce and distribute the Total Excess Deferrals for
the Plan Year and any income, gains or losses attributable thereto, as
determined in accordance with Section 5.3, to Highly Compensated Employees as
determined under Step 3 after the end of the Plan Year with respect to which
such reduced Participant Elected Contributions were made.

     If Employer Matching Contributions, LESOP Employer Matching Allocations or
LESOP Employer Matching Contributions and any Forfeitures allocated with each
respective type of contribution are included in calculating the Average ADP for
a Plan Year, any such contributions reduced hereunder shall be distributed to
Participants in the same manner as Participant Elected Contributions are
distributed (including any income allocable thereto). If Employer Matching
Contributions, LESOP Employer Matching Allocations, LESOP Employer Matching
Contributions and any Forfeitures allocated with each respective type of
contribution are not included in calculating the Average ADP for the Plan Year,
any amount of Employer Matching Contributions, LESOP

                                      -46-
<PAGE>

     Employer Matching Allocations and LESOP Employer Matching Contributions and
     any Forfeitures allocated with each respective type of contribution
     therewith which are reduced hereunder because such contributions were
     originally allocated with respect to Participant Elected Matched
     Contributions which are reduced to meet the above tests shall become a
     Forfeiture and shall be allocated with other Participants' Employer
     Matching Contribution, LESOP Employer Matching Allocations and LESOP
     Employer Matching Contributions and any Forfeitures allocated with each
     respective type of contribution, in proportion to the Employer Matching
     Contributions, LESOP Employer Matching Allocations and LESOP Employer
     Matching Contributions and Forfeitures, respectively, allocated therewith
     to such Accounts pursuant to Sections 7.2 or 7.3, as applicable.

  5.3    Allocation of Income to Certain Distributed and Forfeited Amounts.
         -----------------------------------------------------------------
Income, gains and losses equal to the sum of the amounts determined under (a)
below shall be allocated to and distributed with any amounts distributed to a
Participant pursuant to Sections 4.1(c), 5.2(e) or 5.4, as follows:

         (a)  Income for Plan Year. Income, gains and losses for a completed
              --------------------
     Plan Year with respect to contributions distributed in accordance with
     Section 4.1(c), 5.2(c), 5.2(e) or 5.4 shall equal the income, gains and
     losses for the Plan Year allocable to a Participant's Account for such
     contributions (taking the contributions allocated to each different type of
     Account, separately) multiplied by a fraction the numerator of which is the
     amount of such contributions so distributed and the denominator of which is
     the total of such Account balance as of the last day of the Plan Year
     reduced by all earnings and gains and increased by all expenses and losses
     allocable to such Account for the Plan Year.

         (b)  Allocation of Distributed Income to Accounts. Income, gains and
              --------------------------------------------
     losses distributed with any amounts distributed to a Participant pursuant
     to Sections 4.1(c), 5.2(c), 5.2(e) or 5.4 shall reduce the income, gains
     and losses allocated to a Participant's Participant Elected Contribution
     Account or Employer Matching Contribution Account or LESOP Employer
     Matching Contribution Account, respectively, in accordance with Section
     10.13, in an amount equal to the total amount of such income, gains and
     losses distributed.

  5.4    Multiple Use of Alternative Limitations. If assuming that the
         ---------------------------------------
reductions in the amount and manner provided for in Section 5.2(b) and in
Sections 4.1(d) and 5.2(e) were made, the ACP of Highly Compensated Employees
would exceed the amount in Section 4.1(d)(1) but would not exceed the lesser of
the amounts in Section 4.1(d)(2) and the Average ADP of Active Participants who
were Highly Compensated Employees exceeds the amount in Section 5.2(e)(1) but
does not exceed the lesser of the amounts in Section 5.2(e)(2), the sum of the
Average ADP and the Average ACP for a Plan Year of the Active Participants who
were Highly Compensated Employees shall not exceed the greater of (a) or (b),
where:

         (a)  equals the sum of (1) plus (2) where:

                                      -47-
<PAGE>

               (1)  is one hundred and twenty-five percent (125%) of the greater
     of (A) the Average ADP for such Plan Year of the Non-Highly Compensated
     Employees who are Active Participants, or (B) the Average ACP for such Plan
     Year of such Non-Highly Compensated Employees; and

               (2)  is two percent plus the lesser of the amount determined
     under Section 5.4(a)(1)(A) or the amount determined under Section
     5.4(a)(1)(B), but in no event shall this amount exceed two hundred percent
     (200%) of the lesser of the amounts determined under Section 5.4(a)(1)(A)
     or 5.4(a)(1)(B); and

     (b)  equals the sum of (1) plus (2) where

               (1)  is one hundred and twenty-five percent (125%) of the lesser
     of (A) the Average ADP for such Plan Year of the Non-Highly Compensated
     Employees who are Active Participants, or (B) the Average ACP for such Plan
     Year of such Non-Highly Compensated Employees; and

               (2)  is two percent plus the greater of the amount determined
     under Section 5.4(b)(1)(A) or 5.4(b)(1)(B). In no event, however, shall
     this amount exceed 200 percent of the greater of the amounts determined
     under Section 5.4(b)(1)(A) or 5.4(b)(1)(B).

  If the sum of the Average ADP and the Average ACP of Highly Compensated
Employees for a Plan Year, after any reductions provided for in Section 5.2(c)
or in Step 1 of Sections 4.1(d) and 5.2(e) if applicable, exceeds the amounts
determined under both Sections 5.4(a) and 5.4(b) and if the Company does not
elect to make Special Section 401(k) Employer Contributions so that the sum of
such Average ADP and Average ACP does not exceed both Sections 5.4(a) and
5.4(b), the Committee shall determine, in accordance with Step 1, the smallest
aggregate dollar amount of reductions to Participant Elected Contributions and
any Employer Matching Contributions or LESOP Employer Matching Allocations,
LESOP Employer Matching Contributions and any Forfeitures allocated with each
respective type of contribution of Highly Compensated Employees allocated
therewith which would make the sum of such Average ADP and Average ACP not
exceed both Sections 5.4(a) and 5.4(b). In determining whether any Employer
Matching Contributions or LESOP Employer Matching Allocations, LESOP Employer
Matching Contributions and Forfeitures allocated with each respective type of
contribution are allocated with respect to Participant Elected Contributions,
reductions shall be made first to a Participant's Unmatched Participant Elected
Contributions and then to his Matched Participant Elected Contributions.

     Step 1.  The Committee shall determine the dollar amount of the reductions
     ------
  which have to be made under this Section 5.4 so that the Multiple Use Test is
  met. Such amount shall be calculated by first determining the dollar amount by
  which the total of the Participant Elected Contributions (and the Employer
  Matching Contributions or LESOP Employer Matching Allocations, LESOP Employer
  Matching Contributions and Forfeitures allocated with each respective type of
  contribution to such Participant Elected

                                      -48-
<PAGE>

  Contributions) after any reductions made under Section 5.2(c) or Step 1 of
  Sections 4.1(d) or 5.2(e) of the Highly Compensated Employees the sum of whose
  Actual Contribution Percentage and Actual Deferral Percentage is the greatest
  of all Highly Compensated Employees would have to be reduced until the total
  of his Actual Contribution Percentage and Actual Deferral Percentage equals
  either: (i) the sum of the Actual Contribution Percentage and Actual Deferral
  Percentage of other Highly Compensated Employees or (ii) the sum of the
  Average ACP and the Average ADP of the Highly Compensated Employees, as
  calculated after such reduction, no longer exceeds the amounts determined
  under both Section 5.4(a) and (b). Then, unless the sum of the Average ACP and
  Average ADP of the Highly Compensated Employees, as recalculated after the
  reductions made under Section 5.2(b) and Step 1 of Sections 4.2(d), 5.2(e) and
  5.4, no longer exceeds the amounts determined under both Sections 5.4(a) and
  (b), the reduction process shall be repeated by determining the amount of
  reductions which would have to be made to the Participant Elected
  Contributions of Highly Compensated Employees, whose Actual Contribution
  Percentage and Actual Deferral Percentage after all prior reductions under
  Step 1 would sum to the highest amount until the first to occur of: (iii) the
  sum of the Actual Contribution Percentage and the Actual Deferral Percentage,
  after the prior reductions, of each person in such group becomes tied with
  that of one or more other Highly Compensated Employees or (iv) that the sum of
  the Average ADP and the Average ACP of all Highly Compensated Employees, after
  all prior reductions made under Sections 5.2(c) and Step 1 of Sections 4.1(d),
  5.2(e) and 5.4, would no longer exceed the amounts determined under both
  Sections 5.4(a) and (b). This process is repeated until the sum of the Average
  ACP and the Average ADP of all of the Highly Compensated Employees, after all
  reductions, would no longer exceed the amount permitted in both Sections
  5.4(a) and (b).

          Step 2.  Next the Committee shall determine the total dollar amount of
          ------
  reductions to the Participant Elected Contributions, Employer Matching
  Contributions and Forfeitures and LESOP Employer Matching Contributions and
  Forfeitures as calculated under Step 1 ("Total Reduction Amount").

          Step 3.  Once the Total Reduction Amount has been determined, the
          ------
  Participant Elected Contributions, Employer Matching Contributions or LESOP
  Employer Matching Allocations and LESOP Employer Matching Contributions and
  any Forfeitures allocated with each respective type of contribution of the
  Highly Compensated Employee for whom the sum of his Participant Elected
  Contributions, Employer Matching Contributions or LESOP Employer Matching
  Allocations and LESOP Employer Matching Contributions and any Forfeitures
  allocated with each respective type of contribution, after any reductions made
  in Section 5.2(c) or in Step 3 of Sections 4.2(d) or 5.2(e), is the highest
  dollar amount of all Highly Compensated Employees shall be reduced by the
  lesser of the amount which either: (i) causes the sum of such Highly
  Compensated Employee's Participant Elected Contributions, Employer Matching
  Contributions or LESOP Employer Matching Allocations and LESOP Employer
  Matching Contributions and any Forfeitures allocated with each respective type
  of contribution to equal the sum of the Highly Compensated Employee with the
  next highest

                                      -49-
<PAGE>

  sum of his Participant Elected Contributions, Employer Matching Contributions
  and any Forfeitures or LESOP Employer Matching Allocations and LESOP Employer
  Matching Contributions and Forfeitures allocated with each respective type of
  contribution or (ii) reduces the Highly Compensated Employee's sum of
  Participant Elected Contributions, Employer Matching Contributions or LESOP
  Employer Matching Allocations and LESOP Employer Matching Contributions and
  any Forfeitures allocated with each respective type of contribution by the
  Total Reduction Amount. Then, unless the total amount of reductions made
  equals the Total Reduction Amount, the reduction process shall be repeated by
  reducing the Participant Elected Contributions, Employer Matching
  Contributions, LESOP Employer Matching Allocations and LESOP Employer Matching
  Contributions and any Forfeitures allocated with each respective type of
  contribution allocated with respect thereto by the lesser of such amount which
  either: (iii) causes the sum of such highly Compensated Employees' Participant
  Elected Contributions, Employer Matching Contributions or LESOP Employer
  Matching Allocations and LESOP Employer Matching Contributions and any
  Forfeitures allocated with each respective type of contribution allocated with
  respect to such Participant Elected Contributions to equal the dollar amount
  of such contributions of other Highly Compensated Employees or (iv) causes
  total reductions to equal the Total Reduction Amount. This process is repeated
  with each successive group of Highly Compensated Employees with the highest
  sum of Participant Elected Contributions, Employer Matching Contributions or
  LESOP Employer Matching Allocations and LESOP Employer Matching Contributions
  and any Forfeitures allocated with each respective type of contribution
  allocated with respect thereto, after the prior reductions, until the total
  reductions made under this Step 3 is equal to the Total Reduction Amount.

     The Committee may establish, from time to time, such rules, restrictions
and limitations as it may deem appropriate to insure that the above limitations
are met.  If the Committee determines that the reduction or disallowance of
Employer Matching Contributions, LESOP Employer Matching Allocations and LESOP
Employer Matching Contributions and any Forfeitures allocated with each
respective type of contribution, Participant elections or Participant Elected
Contributions is necessary or desirable with respect to Highly Compensated
Employees, the Committee may reduce or disallow Employer Matching Contributions,
LESOP Employer Matching Allocations and LESOP Employer Matching Contributions
and any Forfeitures allocated with each respective type of contribution for such
Highly Compensated Employees, including elections for Participant Elected
Contributions or such contributions, Employer Matching Contributions, LESOP
Employer Matching Allocations and LESOP Employer Matching Contributions and any
Forfeitures allocated with each respective type of contribution, as provided in
Section 4.2(d) or 5.2(e).

  5.5     Excess Compensation Reduction Elections.  Participant Elected
          ---------------------------------------
Contributions for any Participant or group of Participants shall not exceed the
maximum amounts permitted under Sections 4.1(d), 5.2(e) and 5.4, as determined
by the Committee in its sole discretion.  If any amounts of Employer Matching
Contributions or LESOP Employer Matching Contributions and any Forfeitures
allocated with each respective type of contribution of any Participant or group
of Participants are determined by the Committee to be in excess of the amounts
permitted under

                                      -50-
<PAGE>

Section 4.1(d), 5.2(e) or 5.4 or if the Committee reasonably expects that
Employer Matching Contributions or LESOP Employer Matching Allocations, LESOP
Employer Matching Contributions and any Forfeitures allocated with each
respective type of contribution or Participant Elected Contributions will be in
excess of the amounts permitted under Section 4.1(d), 5.2(e) or 5.4, the
Committee may apply one or both of (a) and (b) below to the extent the
Committee, in its discretion, reasonably estimates to be necessary to satisfy
Section 4.1(d), 5.2(e) or 5.4.

          (a)  Restrictions on Participant Elected Contributions. The Committee
               -------------------------------------------------
     may reduce prospectively the amount of the Participant Elected
     Contributions which may be made by an Employer to the McDESOP Trust on
     behalf of an Active Participant or any specified group of Active
     Participants who are Highly Compensated Employees by reducing the future
     contributions to be made with respect to such Participants or by reducing
     such Participants' elections to the extent the Committee reasonably
     determines it is necessary to satisfy Section 4.1(c), 5.2(e) or 5.4. In
     making reductions to future Participant Elected Contributions hereunder the
     Committee, generally, shall have no obligation to treat similarly situated
     Participants who are Highly Compensated Employees in the same manner and,
     particularly, shall not be obligated to reduce Participant's future
     elections in any particular systematic manner based upon the amount of
     Participant Elected Contributions already made for the Plan Year, the
     percentage of a Participant's Considered Compensation which Participant
     Elected Contributions constitute, or the amount or percentage of Considered
     Compensation which a Participant's effective Participant Elected
     Contribution election constitutes.

          (b)  Staggered and Limited Elections for Highly Compensated Employees.
               ----------------------------------------------------------------
     The Committee may, in accordance with uniform and non-discriminatory rules
     it establishes from time to time, require that Active Participants who are
     among the Highly Compensated Employees for the Plan Year make elections
     with respect to Participant Elected Contributions following and/or
     preceding the completion of such elections by Employees who are Non-highly
     Compensated Employees and the Committee may (1) limit the amount by which
     each Participant who is among the Highly Compensated Employees may elect to
     reduce his Considered Compensation, and (2) permit each Employee who is a
     Non-highly Compensated Employee to elect to reduce his Considered
     Compensation within higher limits than those for Highly Compensated
     Employees.

          (c)  Estimated Compensation. For the purposes of Section 5.5(a) and
               ----------------------
     (b), Employers are permitted to determine Participants' Considered
     Compensation for the immediately preceding Plan Year or estimated
     Considered Compensation for the current Plan Year, as applicable, whenever
     information regarding actual Considered Compensation for such Plan Year is
     not reasonably available at the time the amount of a contribution hereunder
     is determined or limited.

                                      -51-
<PAGE>

     5.6  Deadline for Participant Elected Contributions.  Each Employer shall
          ----------------------------------------------
contribute on behalf of each Active Participant the Participant Elected
Contributions for each Plan Year to the Trustee as soon as administratively
possible as of the earliest date on which such contributions can reasonably be
segregated from the Employer's general assets but not later than the earlier of
(1) 90 days from the date on which such amounts would otherwise have been
payable to the Active Participant in cash or (2) the end of the twelve-month
period immediately following the last day of such Plan Year or by such later
date as may be permitted under applicable law, Treasury Regulations and Rulings
of the Internal Revenue Service.

     5.7  Application of the Limitations of Sections 4.1(d), 5.2(c), 5.2(e), 5.4
          ----------------------------------------------------------------------
and 9.1.  Section 9.1 shall be first applied to contributions under the Program;
-------
secondly, Section 5.2(c) shall be applied to contributions under the Program;
thirdly, Section 5.2(e) shall be applied to contributions under the Program; and
fourthly, Section 4.1(d) shall be applied to contributions under the Program;
and lastly, 5.4 shall be applied to contributions under the Program.  Amounts
contributed to the Plan in excess of the amounts permitted under Section 9.1
which are reduced under Sections 5.2(c), 5.2(e), 4.1(d) or 5.4 shall be
disregarded for the calculation of the tests in Sections 5.2(c), 5.2(e), 4.1(d)
or 5.4.  Other than with respect to the reductions required under Section 9.1,
amounts reduced in an earlier step in the above sequence shall reduce the
reductions of contributions of the same type required to be made in subsequent
steps.

                                      -52-
<PAGE>

                                  ARTICLE VI

                             LESOP LOAN PROVISIONS

     6.1  Power to Borrow.  The Board of Directors in its discretion may
          ---------------
authorize the Trustee of the Trust to borrow funds on behalf of the Program for
the purpose of purchasing Company Stock and for making repayment of outstanding
loans, the proceeds of which have been used to purchase Company Stock and for
which the Program is liable. In the event the Trustee's borrowing shall cause a
lending of money or other extension of credit to be made between the Program and
a Disqualified Person or a Party in Interest or, if in connection with such
borrowing, a Disqualified Person or Party in Interest shall guarantee a loan or
other extension of credit to the Program, such loan or other extension of credit
to the Program shall, as an "Exempt Loan," meet the requirements of Section
4975(d)(3) of the Internal Revenue Code and Section 408(b)(3) of ERISA and
regulations thereunder, which include the following:

          (a)  The loan shall be for a specific term and not payable upon demand
     except in the event of default;

          (b)  The loan is primarily for the benefit of Participants and
     Beneficiaries, at a reasonable rate of interest, and under terms at the
     time the loan is made which are at least as favorable to the Program as the
     terms of a comparable loan resulting from arms-length negotiations between
     independent parties;

          (c)  The proceeds of the loan must be used within a reasonable time
     after their receipt to acquire Company Stock or for making repayment of an
     outstanding Exempt Loan;

          (d)  The loan shall be without recourse against the Program and
     collateral for the loan shall be limited to the shares of Company Stock
     acquired with the proceeds of the loan (or Company Stock into which such
     shares have been converted) or used as collateral on an outstanding Exempt
     Loan which is being repaid with the proceeds of the loan. No person
     entitled to payment under the loan shall have any right to any assets of
     the Program other than the collateral, LESOP Contributions (excluding
     contributions of Company Stock), earnings on such collateral and
     contributions (including but not limited to dividends paid on unallocated
     Company Stock or Company Stock into which such shares have been converted
     held in the LESOP Suspense Account) and dividends paid on Company Stock (or
     Company Stock into which such shares have been converted) acquired with the
     loan proceeds and held in Participants' Accounts;

          (e)  In the event of a default upon the loan, the value of the Program
     assets transferred in satisfaction of the loan shall not exceed the amount
     of the default and, if the lender is a Party in Interest or Disqualified
     Person, shall not exceed an amount of Plan assets equal to the amount of
     the payment schedule with respect to which there is a failure to pay; and

                                      -53-
<PAGE>

          (f)  The loan may provide that there shall be no required payments of
     principal and/or interest for one or more years and the Company may from
     time to time request the Trustee to renegotiate any such loan to change the
     payment terms with respect to payments not then due and payable, to extend
     the period of payment, or to reduce or eliminate the amount of any payment
     or payments of principal and/or interest not then due and payable.

     These rules shall be changed by amendment to the Program to the extent
changes in applicable law require or permit.

     6.2  Accounting for Loan Proceeds and LESOP Contributions.  The Committee
          ----------------------------------------------------
shall establish with respect to each loan a separate LESOP Suspense Account to
record and separately account for:  (a) the proceeds of each loan or other
extension of credit authorized under Section 6.1 and any unallocated Company
Stock purchased with proceeds of such a loan or any loan refinanced with such
loan (and any Company Stock into which such purchased shares have been
converted), (b) LESOP Contributions with respect to such loan, (c) any income,
gains or losses allocated to the LESOP Suspense Account with respect to such
loan and (d) any dividends from shares of Company Stock purchased (and Company
Stock into which such purchased shares have been converted) with the proceeds of
the loan (or any loan refinanced with such loan) which have been allocated to
Participants' Accounts and transferred to the Suspense Account.  Subject to the
discretion of the Trustee to reinvest proceeds from the sale of Company Stock
pursuant to Section 6.4(b), earnings of the LESOP Suspense Account with respect
to a loan shall be used to repay the loan, and to the extent not so used shall
be released and allocated under Section 6.3 hereof.  Assets shall be released
from the LESOP Suspense Account only in accordance with the provisions of
Section 6.3 or to repay a loan or for reinvestment in Company Stock pursuant to
Section 6.4(b), provided, however, proceeds of an Exempt Loan may not be used to
repay any loan which is not an Exempt Loan.

     6.3  Release from LESOP Suspense Account.
          -----------------------------------

          (a)  Loan Repayment Release. Company Stock acquired with the proceeds
               ----------------------
     of an Exempt Loan, or other loan authorized under Section 6.1 or a loan
     refinanced with such Exempt Loan or other loan (and Company Stock into
     which such purchased shares have been converted) and held in the LESOP
     Suspense Account under Section 6.2 shall be released as of the last
     Valuation Date of a Plan Year immediately following the release under
     Sections 6.3(b) and 6.3(c) for such Valuation Date for allocation to LESOP
     Accounts, of each Active Participant in accordance with the provisions of
     Section 6.3(a)(1) below unless such loan provides for the annual payment of
     principal and interest at a cumulative rate that is not less rapid at any
     time than level annual payments of such amounts for ten (10) years, and the
     interest paid on such loan is determined under standard loan amortization
     tables, in which case such Company Stock shall be released in accordance
     with Section 6.3(a)(1) or (2) below, as may be selected by the Board of
     Directors in its discretion at the time such loan is made; provided,
     however, if such loan is renewed, extended or refinanced, and if the sum of
     the expired duration of the loan, any renewal period, extension period, and
     the duration of the refinancing exceeds ten (10)

                                      -54-
<PAGE>

     years, determined as of the date of the renewal, extension or refinancing,
     Section 6.3(a)(1) shall apply:

               (1)  Each Plan Year in which any amount remains outstanding under
          an Exempt Loan (or other loan authorized under Section 6.1), the
          number of shares of Company Stock released from the LESOP Suspense
          Account shall equal the difference between (A) the product (rounded
          upward to the nearest whole number of shares) of the number of shares
          of Company Stock held and accounted for under the LESOP Suspense
          Account immediately before the release increased by the number of
          shares, if any, previously released from the LESOP Suspense Account in
          accordance with Sections 6.3(b) and 6.3(c) for the Plan Year with
          respect to such loan, multiplied by a fraction, the numerator of which
          is the amount of principal and interest paid on the Exempt Loan (or
          other loan authorized under Section 6.1) for the Plan Year and the
          denominator of which is the sum of the numerator plus the principal
          and interest to be paid for all future Plan Years (without
          consideration of possible extensions or renewal periods) reduced by
          (B) the number of shares, if any, previously released from the LESOP
          Suspense Account in accordance with Sections 6.3(b) and 6.3(c) for the
          Plan Year with respect to such loan. If the interest rate under the
          Exempt Loan (or other loan authorized under Section 6.1) is variable,
          the interest to be paid in future Plan Years shall be computed by
          using the interest rate applicable as of the end of the Plan Year of
          payment.

               (2)  For each Plan Year during the duration of an Exempt Loan (or
          other loan authorized under Section 6.1), the number of shares of
          Company Stock released from the LESOP Suspense Account shall equal the
          difference between (A) the product of the number of shares of Company
          Stock held and accounted for under the LESOP Suspense Account
          immediately before the release increased by the number of shares, if
          any, previously released from the LESOP Suspense Account in accordance
          with Sections 6.3(b) and 6.3(c) for the Plan Year with respect to such
          loan, multiplied by a fraction, the numerator of which is the amount
          of principal paid on the Exempt Loan (or other loan authorized under
          Section 6.1) for the Plan Year and the denominator of which is the sum
          of the numerator plus the principal to be paid for all future years
          reduced by (B) the number of shares, if any, previously released from
          the LESOP Suspense Account in accordance with Sections 6.3(b) and
          6.3(c) for the Plan Year with respect to such loan.

          If subsection (1) is applicable and if no amount of principal and
     interest is paid with respect to a loan for the Plan Year, or if subsection
     (2) is applicable and no amount of principal is paid for the Plan Year,
     there shall be no release of shares of Company Stock from the LESOP
     Suspense Account maintained with respect to such loan for the Plan Year in
     accordance with Section 6.3(a).  If an Exempt Loan (or other loan
     authorized under Section 6.1) is repaid as a result of a refinancing by
     another Exempt Loan (or other loan authorized under Section 6.1), such
     repayment shall not be

                                      -55-
<PAGE>

     considered a repayment of principal under Sections 6.3(a)(1) and (2) and
     the release of shares shall be determined as provided in Section 6.3(a)(1)
     and (2), by aggregating principal and interest on the loan and any
     refinancings of the loan.

          (b)  As of each Valuation Date, there shall be released from the LESOP
     Suspense Account maintained with respect to each Exempt Loan (or other loan
     authorized under Section 6.1) Company Stock in an amount equal to (1) the
     number of shares which have a fair market value as of the Valuation Date
     equal to the amount of dividends paid to the Trust with respect to shares
     of Company Stock which were purchased with the proceeds of such loan or any
     loan refinanced with such loan (and Company Stock into which such purchased
     shares have been converted) and which have been allocated to Participants'
     Accounts (excluding Employer Matching Contribution Accounts), which
     dividends were received by the Trust since the immediately preceding
     Valuation Date, credited to such Participants' Accounts and immediately
     placed in the LESOP Suspense Account to be used to repay the loan, reduced
     by (2) the number of any shares contributed or the number of shares
     purchased with any cash contributed to the Trust as Special Dividend
     Replacement Contributions in accordance with Section 4.2(d) with respect to
     the loan.

          (c)  As of each Valuation Date occurring on or after November 1, 1998,
     there shall be released from the LESOP Suspense Account maintained with
     respect to each Exempt Loan (or other loan authorized under Section 6.1)
     the number of shares of Company Stock which have a fair market value equal
     to fifty percent (or such higher percentage as the Board shall from time to
     time determine pursuant to Section 4.3(a)) of the amount of Participant
     Elected Matched Contributions contributed to the Plan since the immediately
     preceding Valuation Date. Such released amounts, called the "LESOP Employer
     Matching Allocations," shall be allocated to Participants' Matching
     Contribution Account as provided in Section 7.2(a)(2).

          (d)  The amounts released from both Sections 6.3(b) and (c) shall not
     exceed the total amount Section 6.3(a)(1)(A) or 6.3(a)(2)(A), as
     applicable.

          (e)  Any release from the LESOP Suspense Account provided for in
     Sections 6.3(b) and 6.3(c) for each Valuation Date during a Plan Year
     (including the last Valuation Date for a Plan Year) shall be made prior to
     the release from the LESOP Suspense Account provided for in Section 6.3(a).

     6.4  Installment Payments on Exempt Loan.
          -----------------------------------

          (a)  Installment Payments. The Trustee shall make payments on an
               --------------------
     Exempt Loan (or other loan authorized under Section 6.1) in the amounts and
     at such times as such payments are due under the terms of such loan and
     such additional payments on such loan as the Trustee determines in its
     discretion, provided, however, such payments shall be made solely from the
     LESOP Suspense Account, from amounts of LESOP Contributions made in cash,
     from dividends with respect to shares of Company Stock

                                      -56-
<PAGE>

     purchased with a loan or a loan refinanced by such loan (or Company Stock
     into which such shares have been converted) which shares have been released
     from a LESOP Suspense Account and allocated to Participants' Accounts
     (excluding Employer Matching Contribution Accounts) and from dividends or
     other earnings with respect to the LESOP Suspense Account maintained with
     respect to such loan.

          (b)  Sale of Company Stock Held in LESOP Suspense Account. In the
               ----------------------------------------------------
     event that any shares of Company Stock acquired with the proceeds of a loan
     or a loan refinanced with such loan (and Company Stock into which such
     purchased shares have been converted) and held in a LESOP Suspense Account
     are sold prior to release from such LESOP Suspense Account, the Trustee, in
     its sole discretion, may either (1) apply the proceeds of such sale, or any
     portion thereof, toward repayment of such loan or a loan refinanced with
     such loan or (2) reinvest the proceeds of such sale, or any portion
     thereof, in shares of Company Stock. In exercising its discretion pursuant
     to Section 6.4, the Trustee shall consider the long-term interests of both
     current and future Participants and Beneficiaries in providing benefits
     under the Program and Trust.

     6.5  Non-Terminable Rights and Protections.  Any of the provisions herein
          -------------------------------------
to the contrary notwithstanding, the following protections and rights are non-
terminable, except to the extent required or permitted under applicable law,
Treasury Regulations and Rulings of the Internal Revenue Service, with respect
to proceeds of an Exempt Loan regardless of whether the Program continues to be
maintained as a leveraged ESOP.

          (a)  Except as provided in this Section 6.5, or except as otherwise
     required by applicable law, no security acquired with the proceeds of an
     Exempt Loan may be subject to a put, call (other than a call with respect
     to Company Stock which is convertible preferred stock which provides for a
     reasonable opportunity for a conversion into common stock of the Company
     which is Company Stock after such call is exercised), or other option, or
     buy-sell or similar arrangement while held by and when distributed from the
     Program, whether or not the Program or the portion of the Program from
     which such Company Stock is distributed is then an ESOP.

          (b)  If any Company Stock acquired with the proceeds of an Exempt Loan
     (or other loan authorized under Section 6.1) or which is otherwise subject
     to this provision pursuant to Section 11.2(k) is not readily tradeable on
     an established market, or thereafter ceases to be publicly traded and if
     and only if such Company Stock should ever be distributed from the Program,
     the distributee shall be given an option exercisable only by the
     distributee (or the distributee's donees or a person, including an estate
     of a distributee, to whom the security passes by reason of the
     Participant's death), to put the security to the Company for a 60 day
     period beginning on the date of distribution ("First Put Period") and for
     another 60 day period commencing on the first anniversary of the date of
     distribution ("Second Put Period"). If such security ceases to be readily
     tradeable on an established market (or becomes subject to a trading
     limitation) before the end of the Second Put Period, the Company shall
     notify the Participant in writing on or before the 10th day after the date
     the security ceases to be readily tradeable on an established market

                                      -57-
<PAGE>

     (or becomes subject to a trading limitation) that the security is subject
     to a put option to the Company for any portion of the First Put Period and
     the Second Put Period remaining after the date the security ceases to be
     readily tradeable on an established market, and such notice shall inform
     the distributees of the terms of the put option. The Program shall have the
     right, but not the obligation, to assume the rights and obligations of the
     Company with respect to the put option at the time the put option is
     exercised. A put option hereunder shall be exercised by the holder
     notifying the Company in writing that the put option is being exercised. If
     during the First Put Period or the Second Put Period, a distributee is
     unable to exercise a put option because the Company is prohibited from
     honoring it under applicable Federal or State law ("Non-Exercise Period"),
     the put option shall be exercisable during an extended put period
     ("Extended Put Period"). The Extended Put Period shall commence on the 10th
     day after the Company can honor the put option and notice of this fact is
     given to the distributees entitled to an Extended Put Period and shall
     extend for a period equal to the number of days in the Non-Exercise Period
     but not more than 60 days.

          If the Non-Exercise Period was for more than 60 days, a second
     Extended Put Period shall occur commencing on the first anniversary of the
     first Extended Put Period and shall extend for the lesser of (1) 60 days or
     (2) number of days in the Non-Exercise Period reduced by 60 days.

          A put option shall be exercisable at a price equal to the value of the
     security determined as of the most recent Valuation Date following the
     Participant's exercise of the put option.  Payment under a put option shall
     not be restricted by the provisions of a loan or other arrangement,
     including the Company's articles of incorporation, unless so required by
     State law.  If the distributee exercises a put option with respect to
     Company Stock received by the Participant as part of an installment
     distribution, the Company shall pay for such Company Stock not later than
     thirty days after the exercise of such option.  If the distributee
     exercises a put option with respect to Company Stock received as part of a
     distribution to the Participant within one taxable year of the balance to
     the credit of the Participant's vested Net Balance Account, the Company may
     pay for such Company Stock not later than the thirtieth day after the
     exercise of such option or may elect to pay for such Company Stock with
     deferred payments.  Payments for shares of Company Stock put to the Company
     may be deferred only if adequate security and a reasonable rate of interest
     are provided and if periodic payments are made in substantially equal
     installments (at least annually) beginning within 30 days after the date
     the put option is exercised and extending for no more than 5 years after
     the put option is exercised.

     6.6  Independent Appraisals Required.  All valuations of Company Stock
          -------------------------------
which is not readily tradeable on an established securities market shall be made
as of each Valuation Date by an independent appraiser meeting requirements
similar to the requirements of the regulations prescribed under Section
170(a)(1) of the Internal Revenue Code.

                                      -58-
<PAGE>

                                  ARTICLE VII

                         ALLOCATIONS OF CONTRIBUTIONS

     7.1  Profit Sharing Contribution Allocation Formula.
          ----------------------------------------------

          (a)  As of the last Valuation Date of each Plan Year, the Profit
     Sharing Contributions made pursuant to Section 3.1(b)(1) and the net income
     gains and losses of the Profit Sharing Holding Fund as provided in Sections
     10.13 and 10.14 shall be allocated to the Profit Sharing Fund Account of
     each Active Participant who is a staff or an executive employee or a store
     manager, in an amount equal to the product of (1) multiplied by (2) where:

               (1)  is Profit Sharing Contributions made pursuant to Section
          3.1(b)(1) for the Plan Year, and

               (2)  is a fraction the numerator of which is the Active
          Participant's Considered Compensation for the Plan Year and the
          denominator of which is the total Considered Compensation of all such
          Active Participants for such Plan Year.

          (b)  As of the last Valuation Date of each Plan Year, the Profit
     Sharing Contributions made pursuant to Section 3.1(b)(2) and the net income
     gains and losses of the Profit Sharing Holding Fund as provided in Sections
     10.13 and 10.14 shall be allocated to the Profit Sharing Account of each
     Active Participant who is a certified swing manager, a primary maintenance
     employee or crew or other store hourly employee in an amount equal to the
     product of (1) multiplied by (2) where:

               (1)  is Profit Sharing Contributions made pursuant to Section
          3.1(b)(2) for the Plan Year, and

               (2)  is a fraction, the numerator of which is the Active
          Participant's Considered Compensation for the Plan Year and the
          denominator of which is the total Considered Compensation of all such
          Active Participants for such Plan Year.

          (c)  Allocations to the Profit Sharing Accounts of Active Participants
     shall be made as soon as reasonably possible after the end of a Plan Year
     after the Company has determined that its final contribution for the Plan
     Year has been made to the Profit Sharing Trust. Employer Profit Sharing
     Contributions shall be held in the Profit Sharing Holding Fund until
     allocated to the Profit Sharing Account of each eligible Active Participant
     as described in Section 7.1(a) or 7.1(b), as applicable. If notwithstanding
     its earlier determination that the final contribution for a Plan Year has
     been made, additional Employer Profit Sharing Contributions are contributed
     for a Plan Year, such contributions shall be allocated as described in
     Section 7.1(a) or 7.1(b), as applicable, no later than the last day of the
     next following Plan Year. Effective the first day of the calendar month
     next following the date amounts are allocated pursuant to this Section 7.1,
     such amounts shall be invested in accordance with the investment elections

                                      -59-
<PAGE>

     applicable to each respective Participant's Profit Sharing Account as
     provided in Sections 10.7, 10.8 or 10.9.

     7.2  Employer Matching Contributions, LESOP Employer Matching Allocations,
          --------------------------------------------------------------------
LESOP Employer Matching Contributions Additional Employer Contributions and
---------------------------------------------------------------------------
Special Section 401(k) Employer Contributions.
---------------------------------------------

          (a)  Allocation of Employer Matching Contributions, LESOP Employer
               -------------------------------------------------------------
     Matching Allocations and LESOP Employer Matching Contributions.
     --------------------------------------------------------------

               (1)  For periods before November 1, 1998, as of each Valuation
          Date, the Employer Matching Contributions and Forfeitures held in the
          McDESOP Holding Fund shall be allocated to the Employer Matching
          Contribution Account of each Active Participant in an equal percentage
          (not to exceed the Matching Percentage as defined in Section 4.1(a))
          of each Participant's Participant Elected Matched Contributions
          (excluding Special Participant Elected Matched Contributions) made for
          the period since the immediately preceding Valuation Date.  For
          purposes of this Section 7.2(a)(1), a Participant's Participant
          Elected Matched Contributions made for the period since the
          immediately preceding Valuation Date shall be the difference between
          the amount of his Participant Elected Contributions for the Plan Year
          as of the Valuation Date and the amount of his Participant Elected
          Contributions for the Plan Year as of the immediately preceding
          Valuation Date up to an amount not to exceed the percentage of his
          Considered Compensation specified for such Participant in Section
          4.3(a).  Notwithstanding the foregoing, any amount in the McDESOP
          Holding Fund as of the last Valuation Date of the Plan Year (even if
          such contributions for the Plan Year are made after such Valuation
          Date as provided in Section 10.15) after allocations are made pursuant
          to the preceding sentence, shall be allocated to Employer Matching
          Contribution Account of each Active Participant who is an Employee on
          such Valuation Date in an amount equal to such remaining amount
          multiplied by a fraction the numerator of which is the amount of
          Participant Elected Matched Contributions (excluding Special
          Participant Elected Matched Contributions) made on behalf of such
          Active Participant for the Plan Year and the denominator of which is
          the total amount of Participant Elected Matched Contributions
          (excluding Special Participant Elected Matched Contributions) made on
          behalf of all such Active Participants for the Plan Year.

               (2)  For periods beginning on or after November 1, 1998, any
          shares of Company Stock released, pursuant to Section 6.3(c), from the
          LESOP Suspense Account as of a Valuation Date as LESOP Employer
          Matching Allocations, any LESOP Employer Matching Contributions and
          any Forfeitures allocated with such respective amounts shall be
          allocated to the Employer Matching Contribution Account of each Active
          Participant in an equal percentage (not to exceed fifty percent or
          such higher percentage as the Board shall provide pursuant to Section
          4.1(b)) of each such Participant's Participant Elected Matched

                                      -60-
<PAGE>

          Contributions (excluding Special Participant Elected Matched
          Contributions) made for the period since the immediately preceding
          Valuation Date.

          (b) Allocation of Special Section 401(k) Employer Contributions.
              -----------------------------------------------------------
     Special Section 401(k) Employer Contributions to the Trust for a Plan Year,
     if any, shall be allocated, as of the last Valuation Date of the Plan Year,
     in an equal amount to the Employer Matching Contribution Account of each
     designated Active Participant as contributions to the McDESOP or to LESOP
     portions of the Program as determined by the Company. The designated Active
     Participants shall be the smallest group of Non-Highly Compensated
     Employees who made Participant Elected Contributions for the Plan Year and
     to whom the dollar amount of per individual Special Section 401(k) Employer
     Contributions could be allocated which would cause the Program to pass
     whichever of the following tests it would not otherwise pass: the ADP test
     in Section 5.2(e), the ACP test in Section 4.1(c) or the multiple use test
     in Section 5.4.

          (c) Allocation of Additional Employer Contributions. As of the last
              -----------------------------------------------
     Valuation Date of each Plan Year as the Board of Directors may direct,
     Additional Employer Contributions shall be allocated to the Employer
     Matching Contribution Account of each Active Participant in an amount equal
     to the amount of the Additional Employer Contributions for the Plan Year
     multiplied by a fraction, the numerator of which is the number of full
     calendar months during which the Participant was an Active Participant, and
     the denominator of which is the aggregate number of full calendar months
     during which all Active Participants were Active Participants.

  7.3     LESOP Contributions.
          -------------------

          (a) LESOP Contributions. Any shares of Company Stock purchased with
              -------------------
     the proceeds of a loan (or Company Stock into which such shares have been
     converted) designated by the Board of Directors to be repaid by
     Compensation Based LESOP Contributions (or a loan refinanced by such loan)
     and released from the LESOP Suspense Accounts maintained with respect to
     such loan, any income from such LESOP Suspense Accounts released pursuant
     to Sections 6.2 and 6.3, and any Forfeitures from LESOP Accounts for the
     Plan Year shall be allocated to each Active Participant's LESOP Account or
     Employer Matching Contribution Account, as follows:

              (1) as of each Valuation Date, in an amount, if any, with respect
          to each loan equal to the amount of dividends paid with respect to
          Company Stock (or Company Stock into which such shares have been
          converted) that was purchased with the proceeds of such a loan (or a
          loan refinanced by such loan) and that has been allocated to the
          Participant's Accounts (excepting his Employer Matching Contribution
          Account), that dividends, since the immediately preceding Valuation
          Date, were credited to Participants' Accounts and immediately
          transferred to the LESOP Suspense Account pursuant to Section 6.3(b)
          to be used to make payments on the loan;

                                      -61-
<PAGE>

               (2) as of each Valuation Date occurring on or after November 1,
          1998, as amount equal to fifty percent (or such greater amount as the
          Board of Directors shall determine) of each Active Participant's
          Participant Elected Matched Contributions since the immediately
          preceding Valuation Date, as released from the LESOP Contribution
          Suspense Account pursuant to Section 6.3(c) and as contributed by the
          Employers pursuant to Section 4.1(b) which shall be credited to such
          Participant's Employer Matching Contribution Account.

               (3) as of the last Valuation Date of each Plan Year, in an amount
          equal to the number of shares of Company Stock released from the LESOP
          Contribution Suspense Account in accordance with Section 6.3(a)
          multiplied by a fraction the numerator of which is the Considered
          Compensation of the Active Participant and the denominator of which is
          the total of all Considered Compensation of all Active Participants
          which shall be allocated to such Participant's LESOP Account.

          (b) Additional LESOP Contributions. Additional LESOP Contributions for
              ------------------------------
     a Plan Year which were designated in accordance with Section 4.2(c) as Per
     Capita Additional LESOP Contributions (and any Forfeitures therefrom) shall
     be allocated as of the last Valuation Date of the Plan Year to the
     Additional LESOP Account of each Active Participant in an amount equal to
     the total amount of Per Capita Additional LESOP Contributions (and any
     Forfeitures therefrom) for the Plan Year divided by the number of Active
     Participants. Additional LESOP Contributions for a Plan Year which were
     designated in accordance with Section 4.2(c) as Compensation Based
     Additional LESOP Contributions (and any Forfeitures therefrom) shall be
     allocated as of the last Valuation Date of such Plan Year to the Additional
     LESOP Account of each Active Participant in an amount equal to the total
     amount of Additional LESOP Contributions (and any Forfeitures therefrom)
     multiplied by a fraction the numerator of which is the Considered
     Compensation of such Active Participant and the denominator of which is the
     total Considered Compensation of all Active Participants for the Plan Year.
     Per Capita Additional Employer LESOP Contributions and Compensation Based
     Additional Employer LESOP Contributions shall be separately accounted for
     in Participants' Additional LESOP Accounts.

          (c) Special Dividend Replacement Contributions. Any Special Dividend
              ------------------------------------------
     Replacement Contributions made to the Program pursuant to Section 4.2(d)
     shall be credited to Participants' Accounts to replace dividends which
     pursuant to Section 6.3(b) are credited to the LESOP Suspense Account to be
     used to repay the Exempt Loan the proceeds of which purchased the shares of
     Company Stock with respect to which such dividends were paid.

          (d) LESOP Employer Matching Contributions. Any LESOP Employer Matching
              -------------------------------------
     Contributions made to the Program, on or after November 1, 1998, pursuant
     to Section 4.1(b) shall be credited to a LESOP Suspense Account. Any amount
     of LESOP Employer Matching Contributions for a Plan Year shall be allocated
     to Participant's

                                      -62-
<PAGE>

     Employer Matching Contribution Accounts pursuant to Section 7.3(a)(2) with
     any amounts released from the LESOP Suspense Accounts pursuant to Section
     6.3(c).

  7.4     Participant Elected Contributions. As of each Valuation Date, the
          ---------------------------------
Participant Elected Contributions in the McDESOP Holding Fund made since the
preceding Valuation Date shall be credited to the Participant Elected
Contribution Accounts of the Participants for whom such contributions were made.

  7.5     Timing of Allocations. Amounts allocated to or transferred to
          ---------------------
Participants' Accounts as of a Valuation Date shall be credited to the Accounts
as of such Valuation Date after the adjustments are made for Trust income as
provided in Sections 10.12, 10.13 and 10.14. Amounts contributed to the Program
shall be credited as of the date of contribution to the following Accounts and
Funds: Profit Sharing Holding Fund, McDESOP Holding Fund, and Rollover Holding
Account as provided in Section 10.23 and the LESOP Suspense Account as provided
in Section 6.2.

                                      -63-
<PAGE>

                                 ARTICLE VIII

                        ROLLOVERS AND TRUSTEE TRANSFERS

  8.1    Participant Rollovers. A Participant may elect through procedures
         ---------------------
approved by the Committee to make Rollovers to the Program. If any Rollover
includes property other than money, the Trustee may in its sole discretion
refuse to accept such Rollover or may condition its acceptance of such Rollover
on such terms and conditions as it deems reasonable. Each Participant's Rollover
shall be held in his Rollover Holding Account until the next following Valuation
Date at which time his Rollover Holding Account is transferred to the
Participant's Rollover Account and invested in accordance with his investment
elections provided for in Section 10.8.

  8.2    Limited Participation. An Employee who is not eligible to participate
         ---------------------
in the Program solely by reason of failing to meet the eligibility requirements
of Section 2.1 and who reasonably expects to become a Participant when such
requirements are met, may be a Participant in the Program solely for the limited
purpose of making a Rollover subject to the same conditions on such Rollovers as
any other Participant.

  8.3    Withdrawal of Rollovers. At the election of the Participant, amounts in
         -----------------------
his Rollover Account and Rollover Holding Account may be withdrawn as provided
in Section 11.16.

  8.4    Rollover Not Forfeitable. A Participant's Rollover Account and Rollover
         ------------------------
Holding Account shall be fully vested and non-forfeitable.

                                      -64-
<PAGE>

                                  ARTICLE IX

                         LIMITATIONS ON CONTRIBUTIONS

                        BECAUSE OF FEDERAL LEGISLATION

  9.1    Limitations on Contributions.  Any of the provisions herein to the
         ----------------------------
contrary notwithstanding, a Participant's Annual Additions (as defined in
paragraph below) for any Plan Year shall not exceed his Maximum Annual Additions
(as defined in paragraph below) for the Plan Year.  If a Participant's Annual
Additions would but for the provisions of this Section 9.1, exceed his Maximum
Annual Additions (the "Annual Excess"), the Participant's Annual Additions for
the Plan Year shall be reduced under Section 9.1(d) by the amount necessary to
eliminate such Annual Excess.  Rollovers and amounts distributed in a Plan Year
in accordance with Section 5.2(c) shall not be included as part of a
Participant's Annual Additions.

         (a)  "Annual Additions" of a Participant for a Plan Year means the sum
               ----------------
     of the following :

              (1) Employer Contributions allocated to his Profit Sharing Account
         for the Plan Year;

              (2) Participant Elected Contributions, Employer Matching
         Contributions, Additional Employer Contributions, Special Section
         401(k) Contributions and LESOP Employer Matching Contributions and any
         Forfeitures allocated therewith for the Plan Year allocated to the
         Participant;

              (3) any amount of LESOP Annual Additions, as determined under
         Section 9.1(c), allocated to the Participant;

              (4) all other employer contributions and forfeitures (excluding
         Forfeitures allocated to the Participant's LESOP Account) for such Plan
         Year allocated to the Participant's accounts for such Plan Year under
         the Program or any other Related Defined Contribution Plan not already
         included under Section 9.1(a)(1), 9.1(a)(2) or 9.1(a)(3);

              (5) the amount of nondeductible participant contributions under
         the Program or any Related Plan made by the Participant for the Plan
         Year; and

              (6) solely with respect to the limitation under Section 9.1(b)(2)
         contributions allocated to any individual medical account as provided
         in Code Section 415(l)(1).

         (b)  "Maximum Annual Additions" of a Participant for a Plan Year means
               ------------------------
     the lesser of (1) or (2) below:

              (1)  25% of the Participant's Considered Compensation, or

                                      -65-
<PAGE>

          (2)  $30,000, adjusted in subsequent years for cost of living
     adjustments determined in accordance with regulations prescribed by the
     Secretary of Treasury or his delegate pursuant to the provisions of Section
     415(d) of the Internal Revenue Code.

     (c)  "LESOP Annual Additions" means:
           ----------------------
          (1) If no more than one-third (1/3) of the total amounts of the
     employer contributions which are deductible under Section 404(a)(9) of the
     Internal Revenue Code for the Plan Year are allocated to Highly Compensated
     Employees, each Active Participant shall have LESOP Annual Additions in an
     amount for each Exempt Loan equal to the product of (A) the total amount of
     Company and Other Employer LESOP Contributions for a Plan Year as provided
     in Sections 4.2(a) and 4.2(b) used to repay each loan for the Plan Year,
     reduced, for any Plan Year for which the loan repaid is an Exempt Loan as
     defined in Section 6.1, by the amount used to pay interest on the Exempt
     Loan, multiplied by (B) a fraction, the numerator of which is the
     Participant's Considered Compensation for the Plan Year, and the
     denominator of which is the Considered Compensation of all Active
     Participants for the Plan Year; provided that, if a Participant's
     allocations to his LESOP Account are reduced in order to reduce the Annual
     Excess in accordance with the provisions of this Article IX, the
     Participant's Considered Compensation, for purposes of both the numerator
     and the denominator of this fraction shall be reduced to an amount equal to
     the Participant's Considered Compensation, multiplied by a fraction, the
     numerator of which is the Participant's allocation to his LESOP Account for
     the Plan Year after applying the Annual Excess reduction provisions
     hereunder and the denominator of which is such allocation to his LESOP
     Account for the Plan Year before applying the Annual Excess reduction
     provisions hereunder.

          (2) If Section 9.1(c)(1) does not apply, each Active Participant shall
     have LESOP Annual Additions in an amount for each loan equal to the sum of
     (A) Forfeitures (and earnings thereon) allocated to the Participant's LESOP
     Account under the LESOP portion of the Program, and (B) the total amount of
     Company and Other Employer LESOP Contributions for a Plan Year as provided
     in Sections 4.2(a) and 4.2(b) used to repay each loan for the Plan Year
     (including the amount used to repay interest on such loans), multiplied by
     (I) in the case of LESOP Contributions, a fraction, the numerator of which
     is the Participant's Considered Compensation for the Plan Year and the
     denominator of which is the Considered Compensation of all Active
     Participants for the Plan Year; provided that, if a Participant's
     allocations to his LESOP Account are reduced in order to reduce the Annual
     Excess in accordance with the provisions of this Article IX, the
     Participant's Considered Compensation for purposes of both the numerator
     and the denominator of this fraction shall be reduced to an amount equal to
     the Participant's Considered Compensation, multiplied by a fraction, the
     numerator of which is the Participant's allocation to his LESOP Account for
     the Plan Year,

                                      -66-
<PAGE>

     after applying the Annual Excess reduction provisions hereunder and the
     denominator of which is such allocation to his LESOP Account for the Plan
     Year before applying the Annual Excess reduction provisions hereunder.

          (3) The amount of LESOP Contributions deemed to be used to pay
     interest on a loan for purposes of Section 9.1(c)(2) for a Plan Year shall
     be the amount of LESOP Contributions made for the Plan Year multiplied by a
     fraction the numerator of which is the amount of interest payments made by
     the Trust for the Plan Year with respect to such loan (including any
     refinancing of such loan) from all sources and the denominator of which is
     the amount of all payments of both principal and interest made by the Trust
     for the Plan Year with respect to such loan (including any refinancing of
     such loan) from all sources.

     (d)  Elimination of Annual Excess. If a Participant has an Annual Excess
          ----------------------------
for a Plan Year, such excess shall not be allocated to the Participant's
Accounts, but shall be eliminated as follows:

          (1) If any Annual Excess exists, the Participant's Employer
     Contributions allocable to such Participant's Profit Sharing Account shall
     be reduced to the extent such reductions reduce the Annual Excess.

          (2) If any Annual Excess remains after application of the preceding
     paragraph, the Participant's LESOP Annual Additions (other than with
     respect to LESOP Employer Matching Allocations) shall be reduced by
     reducing the allocations made as of a given Valuation Date reducing
     allocations with respect to Forfeitures before allocations with respect to
     Employer Contributions for each loan starting first with the most recent
     loan and then with other loans in the reverse of the order in which made to
     the extent that the reductions reduce the amount of the Annual Excess.

          (3) If any Annual Excess remains after application of the preceding
     paragraph, Participant Elected Contributions and Employer Matching
     Contributions and Forfeitures and LESOP Employer Matching Allocations and
     LESOP Employer Matching Contributions and any Forfeitures allocated
     therewith shall be reduced by reducing those contributions most recently
     credited to the Participant's Accounts first (followed by the next most
     recent and so forth) and with respect to contributions credited as of a
     Valuation Date reducing contributions in the order listed, as follows: (A)
     Participant Elected Unmatched Contributions and (B) Participant Elected
     Matched Contributions and associated Employer Matching Contributions and
     Forfeitures or LESOP Employer Matching Allocations and LESOP Employer
     Matching Contributions and Forfeitures to the extent such reductions reduce
     the amount of the Annual Excess.

          (4) If any Annual Excess remains after application of the preceding
     paragraph, the Participant's allocations of Additional Employer
     Contributions

                                      -67-
<PAGE>

     shall be reduced to the extent such reductions reduce the amount of the
     Annual Excess.

          (5) If any Annual Excess remains after application of the preceding
     paragraph, the Participant's allocations of Special Section 401(k) Employer
     Contributions shall be reduced to the extent such reductions reduce the
     amount of the remaining Annual Excess.

          (6) If any Annual Excess remains after application of the preceding
     paragraph, the Participant's allocations to his Additional LESOP Account
     shall be reduced to the extent such reductions reduce the amount of the
     Annual Excess.

          (7) If any Annual Excess remains after application of the preceding
     paragraph, any Special Dividend Replacement Contributions credited to the
     Participant's LESOP Account shall be reduced to the extent such reductions
     reduce the amount of the remaining Annual Excess.

     Any allocations of Employer Contributions and Forfeitures reduced or
eliminated under this Section 9.1(d), as provided above, shall, subject to the
limits of this Section 9.1, be reallocated to the Accounts of the other
Participants not having such reductions as of the last day of that Plan Year in
the same manner as such Employer Contributions and Forfeitures were initially
allocated under Article VII. The amount of any Participant Elected Contributions
reduced or eliminated under this Section 9.1 which have been contributed to the
Program shall be allocated as (and in lieu of) Employer Matching Contributions,
if before November 1, 1998, or LESOP Employer Matching Allocations and LESOP
Employer Matching Contributions, if on or after November 1, 1998, in the Plan
Year for which or next following the Plan Year for which the reduction is made.
Any Employer Contributions and Forfeitures which, under the limits of this
Section 9.1, cannot be reallocated to the Accounts of other Participants in the
Plan Year shall, subject to the limits of this Section 9.1, be held in an
unallocated suspense account and reallocated in a subsequent Plan Year. If the
Program shall be terminated, any amounts held in a suspense account shall be
reallocated to the accounts of all Participants in accordance with Article VII
subject to the limitations of Section 9.1, and any such amounts which cannot be
reallocated to Participants in the Plan Year of the termination shall be
returned to the Employers in such proportions as shall be determined by the
Committee.

     (e)  Limitation in Case of Employee Participation in Both Defined Benefit
          --------------------------------------------------------------------
and Defined Contribution Plans. If a Participant participates in any defined
-------------------------------
benefit plan of the Employer (or any Related Defined Benefit Plan), the sum of
the Defined Benefit Plan Fraction (as defined in Section 415(e)(2) of the
Internal Revenue Code) and the Defined Contribution Plan Fraction (as defined in
Section 415(e)(3) of the Internal Revenue Code) for such Participant shall not
exceed 1.0 (called the "Combined Fraction"). If the Combined Fraction of such
Participant exceeds 1.0, the Participant's Defined Benefit Plan Fraction shall
be reduced by limiting the Participant's annual benefits payable from

                                      -68-
<PAGE>

     the Related Defined Benefit Plan in which he participates to the extent
     necessary to reduce the Combined Fraction of such Participant to 1.0, and
     to the extent the Combined Fraction continues to exceed 1.0, by reducing
     the Participant's Maximum Annual Additions to the extent necessary to
     reduce the Combined Fraction to 1.0. In calculating the Participant's
     Defined Contribution Fraction employee contributions as permitted under the
     Program or a Related Plan before January 1, 1987, shall be counted as
     Annual Additions only to the extent that they were counted under the
     Program as then in effect. This Section 9.1(e) shall not apply in Plan
     Years beginning after December 31, 1999.

  9.2    Employer Contribution Reductions. If a Participant's Participant
         --------------------------------
Elected Contributions or his allocations of Employer Contributions and
Forfeitures are reduced or eliminated under Section 9.1, the amount shall be
provided to the Participant under McEqual, McCAP I or McCAP II, or other non-
qualified plans maintained by the Company, to the extent therein provided.
Amounts of Participant Elected Contributions, Employer Matching Contributions
and LESOP Employer Matching Contributions expected to be within the limitations
under Section 9.1 shall be contributed to the Program and credited hereunder.
Amounts of such contributions expected to be in excess of the limitations under
Section 9.1 shall be tentatively credited to McEqual, McCAP I or McCAP II or
other non-qualified plans maintained by the Company. If it is subsequently
determined that additional amounts of Participant Elected Contributions,
Employer Matching Contributions or LESOP Employer Matching Contributions should
be contributed hereto to attain the limitations under Section 9.1, in order to
put the Participant in the same position he would have been in had such amounts
been contributed contemporaneously to the Program, contributions to the Program
will reflect, to the extent of the limits of Section 9.1, the income, gains and
losses which would have been credited to the Participant's Accounts hereunder
had such amounts been credited hereto instead of being tentatively credited to
McEqual, McCAP I, McCAP II or other non-qualified plans maintained by the
Company. The effect of adjustments to contributions for such income, gains and
losses may be that some Participants hereunder will be credited with Participant
Elected Contributions in excess of the limits stated in Sections 4.3(a) and 5.1
and in amounts which are more than or less than the amounts of such
contributions elected by the Participant, and may have rates of Employer
Matching Contributions or LESOP Employer Matching Contributions which are larger
or smaller than the rate established by the Company for the Plan Year in
accordance with Section 4.1. In determining the amounts to be credited to a
Participant's accounts during a Plan Year under McEqual, McCAP I, McCAP II and
other non-qualified plans maintained by the Company, the Committee may make
assumptions based upon reasonable estimates of the amount of the Participant's
Considered Compensation, his Participant Elected Contributions, levels of
Employer Contributions hereunder and other relevant factors and, as necessary,
make subsequent adjustments to the extent the estimates prove to be incorrect.

                                      -69-
<PAGE>

                                   ARTICLE X

                            TRUSTEE AND TRUST FUNDS

  10.1  Trust Agreements. The Company and the Trustee have entered into one or
        ----------------
more Trust Agreements which provide for the investment of the assets of the
Program and administration of the Trust Funds. The Trust Agreements, as from
time to time amended, shall continue in force and shall be deemed to form a part
of the Program, and any and all rights or benefits which may accrue to any
person under the Program shall be subject to all the terms and provisions of the
Trust Agreement.

  10.2  Trustee's Duties. The powers, duties and responsibilities of the Trustee
        ----------------
of the Trust shall be as stated in the respective Trust Agreements and as may be
delegated to, and accepted by, the Trustee from the Committee and Board of
Directors. Nothing contained in the Program either expressly or by implication
shall be deemed to impose any additional powers, duties or responsibilities upon
the Trustee. All Employer Contributions, Participant Contributions, Rollovers
and Participant Elected Contributions shall be paid into a Trust and all
withdrawals permitted and benefits payable under the Program shall be paid from
the Trust.

  10.3  Trust Expenses. Except to the extent an Employer agrees to pay them
        --------------
without reimbursement, all clerical, legal and other expenses of the Program and
the Trust and the Trustee's fees shall be paid by the Trust and shall be
proportionately charged to the Profit Sharing, McDESOP, Leveraged ESOP, Stock
Sharing and other parts of the Trust Fund except to the extent directly
attributable to a specific portion of a Trust Fund in which case it shall be
directly charged to that portion of the Trust Fund.

  10.4  Trust Entity. The Trust under this Program from its inception shall be a
        ------------
separate entity aside and apart from the Employers or their assets. The Trusts
and the corpus and income thereof, shall not be subject to the rights or claims
of any creditor of any Employer.

  10.5  Right of the Employers to Trust Assets. Subject to the provisions of
        --------------------------------------
Section 9.1, the Employers shall have no right or claims of any nature in or to
the Trust Fund except the right to require the Trustee to hold, use, apply, and
pay such assets in its possession in accordance with the Program for the
exclusive benefit of the Participants or their Beneficiaries and for defraying
the reasonable expenses of administering the Program and Trust, provided that:

        (a) if, and to the extent that, a deduction for Employer contributions
     under Section 404 of the Internal Revenue Code is disallowed, employer
     contributions conditioned on deductibility shall be returned to the
     appropriate Employer within one year after the disallowance of the
     deduction; and

        (b) if, and to the extent that, an Employer contribution is made through
     mistake of fact, such employer contribution shall be returned to the
     appropriate Employer within one year of the payment of the contribution and
     any Participant Elected Contributions shall be distributed to the
     Participants with respect to which such contributions were made.

                                      -70-
<PAGE>

     Notwithstanding any other provision of this Section 10.5, if, upon
application of (a) or (b) above, Employer contributions would be returned to an
Employer, then the Employer shall distribute the value of any portion of such
contributions to the appropriate Participants.

     All Employer Contributions are conditioned on their being deductible under
Section 404 of the Internal Revenue Code.

  10.6  Trust Investment Funds. Excluding those assets held in the Holding
        ----------------------
Funds, as provided in Section 10.23, assets of the Trust Fund shall be held as
follows:

        (a)  Profit Sharing Plan. The assets held in Participant's Profit
             -------------------
     Sharing Accounts and any amounts held in Participant's Diversification
     Accounts shall be held in the following Investment Funds:

             (1)  The Diversified Stock Fund invested in common stocks, and
                  --------------------------
        securities convertible into common stocks, of corporations other than
        McDonald's Corporation or its Domestic or Foreign Affiliates, and in any
        other securities which represent an equity investment, provided,
        however, that the Diversified Stock Fund may be invested in pooled or
        common trust funds or open-end investment companies without regard to
        whether assets of such funds or investment companies are invested in
        securities of McDonald's Corporation or its Domestic or Foreign
        Affiliates;

             (2)  The Profit Sharing McDonald's Common Stock Fund invested in
                  -----------------------------------------------
        common stock of McDonald's Corporation;

             (3)  The Stable Value Fund or such other fund designated by the
                  ---------------------
        Committee which shall be invested (i) in contracts issued by an
        insurance or other company (or companies), (ii) directly in debt
        securities that have fixed obligations to pay interest and principal on
        specified dates or which have similar investment characteristics (which
        may have equity features triggered by performance, the passage of time,
        or similar characteristics or may be securities which are derivatives of
        such securities) ("Fixed Income Obligations") or (iii) in pooled or
        common trust funds, regulated investment companies, or open-ended
        investment companies generally invested in Fixed Income Obligations
        without regard to whether assets of such common trust funds, regulated
        investment companies, or open-ended investment companies are invested in
        securities of McDonald's Corporation or its Domestic or Foreign
        Affiliates. The contracts issued by insurance or other companies held by
        the Stable Value Fund (iv) may be investment contracts or (v) may be
        investment management agreements which may provide separate book value
        guarantees pursuant to which the insurance or other company guarantees
        (A) the book value of a pool or segregated group of fixed income
        obligations held in the Stable Value Fund and (B) specified amounts of
        income under various conditions as provided in such agreement ((iv) and
        (v) collectively shall be referred to as "Assets Subject to Guarantee").
        With respect

                                     -71-
<PAGE>

     to Assets Subject to Guarantee, the Program shall use book value accounting
     and Participants' Accounts shall contain and shall be entitled only to
     their pro rata share of book value and guaranteed income which for all
     purposes hereunder will be treated as fair market value unless the
     Committee determines that the guarantees no longer apply, a market value
     distribution has occurred under the contract, or there has been a default
     on the guarantee.

          (4)  The Blended Stock Bond Fund invested in domestic common stocks,
               ---------------------------
     debt securities that have a fixed obligation to pay interest and principal
     on specified dates or which have substantially similar investment
     characteristics, international common stocks, and securities convertible
     into domestic common stocks of corporations other than McDonald's
     Corporation or its Domestic or Foreign Affiliates, and in any other
     securities which represent an equity investment, provided, however, that
     the Blended Stock Bond Fund may be invested in pooled or common trust funds
     or open-end investment companies without regard to whether assets of such
     funds or investment companies are invested in securities of McDonald's
     Corporation or its Domestic or Foreign Affiliates;

          (5)  The Money Market Fund invested in United States Government debt
               ---------------------
     securities which mature or become payable within two years and which are
     the direct obligation of or guaranteed by the United States Government,
     including bonds, notes, certificates of indebtedness, and treasury bills;
     in commercial paper rated according with such guidelines as the Board of
     Directors may from time to time approve; and in certificates of deposit in
     those banks designated in the agreement with the Investment Manager or, if
     there is no such agreement or if the agreement fails to designate such
     banks, in those banks designated under the McDonald's Corporation
     Investment Policy; and

          (6)  The S&P 500 Fund invested in the stocks, future contracts,
               ----------------
     options, warrants, options on futures contracts, convertible securities
     swap agreements, stock index futures contracts, repurchase agreements and
     similar investments and which seeks to replicate the return of the 500
     stocks which comprise the Standard & Poor's 500 Composite Stock Price Index
     from time to time including to the extent determined by the fund manager in
     securities of McDonald's Corporation or its Domestic Affiliates. The fund
     may also engage in securities lending. This fund became available on
     September 1, 1999.

     In order to maintain appropriate or adequate liquidity and pending or
pursuant to investment directions from an Investment Manager, the Trustee of the
Trust is authorized to hold such portions as it deems necessary of the
Diversified Stock Fund, the Profit Sharing McDonald's Common Stock Fund, the
Stable Value Fund, the Money Market Fund, the Blended Stock Bond Fund and the
S&P 500 Fund in cash, a short-term investment fund (a "STIF Fund"), or liquid
short-term cash equivalent investments or securities (including, but not limited
to United States government treasury bills,

                                      -72-
<PAGE>

commercial paper, and savings accounts and certificates of deposit, including
those of the Trustee or custodian, if the Trustee or custodian is a bank, and
common or commingled trust funds invested in such securities, including those of
the Trustee or custodian).

     (b)  LESOP. The assets of the LESOP portion of the Trust (other than any
          -----
amounts which have been transferred to a Participant's Diversification Account
pursuant to Section 10.10) shall be invested in Company Stock which is common
stock of McDonald's Corporation held in the McDESOP McDonald's Common Stock
Fund, provided that it shall at all times be possible to determine the number of
such shares of Company Stock which are allocated to a Participant's LESOP
Accounts.

     In order to maintain adequate liquidity, pending the investment of funds,
or the use of funds to make payments on a loan, or for funds which could not be
appropriately invested either because of the small amount involved or the short
time duration for which the investment is to be made, the Trustee is authorized
to hold portions of the LESOP Accounts and LESOP Suspense Accounts in cash, a
STIF Fund or liquid short-term cash equivalent investments or securities
(including, but not limited to United States government treasury bills,
commercial paper, and savings accounts and certificates of deposit, including
those of the Trustee or custodian, if the Trustee or custodian is a bank, and
common or commingled trust funds invested in such securities, including those of
the Trustee or custodian).

     (c)  (1)  McDESOP. The assets of the McDESOP portion of the McDESOP Trust
               -------
     (other than any amounts which have been transferred to a Participant's
     Diversification Account pursuant to Section 10.10) shall be held in the
     McDESOP McDonald's Common Stock Fund invested in Company Stock which is
     common stock of McDonald's Corporation.

          (2)  McDESOP Diversification. Portions of a Participant's Participant
               -----------------------
     Elected Contribution Account and Employer Matching Contribution Account
     which a Participant has elected to diversify pursuant to Section 10.10
     shall be credited to the Participant's McDESOP Contribution Diversification
     Account and invested in the Profit Sharing Trust Investment Funds listed in
     Section 10.6(a) as provided in Section 10.11 as of the first business day
     of the calendar month following the later of the month in which (1) the
     Diversification Election was made for amounts diversified in accordance
     with Sections 10.10 and (2) the Considered Compensation (from which the
     Participant Elected Contributions were taken) was paid or as of such
     earlier date as the Committee shall provide. Participant Elected
     Contributions and Employer Matching Contributions which the Participant has
     elected to diversify pursuant to Section 10.10 shall be invested in the
     McDESOP McDonald's Common Stock Fund until the Diversification Election is
     implemented pursuant to Section 10.11.

                                      -73-
<PAGE>

  10.7    Investment of Participant's Employer Profit Sharing Contributions. The
          -----------------------------------------------------------------
provisions of Sections 10.7(a) and 10.7(b) shall apply to Employer Profit
Sharing Contributions as follows:

          (a)  Each Participant's share of Employer Profit Sharing Contributions
     and the earnings thereon shall be invested in the Profit Sharing McDonald's
     Common Stock Fund in an amount equal to the Participant's share of Employer
     Profit Sharing Contributions multiplied by the Automatic McDonald's Stock
     Proportion. The "Automatic McDonald's Stock Proportion" is a percentage, if
     any, announced by the Board of Directors for the Plan Year. The remainder
     of the Participant's Employer Profit Sharing Contributions and the earnings
     thereon for the Plan Year shall be invested in accordance with Section 10.8
     or 10.9, as applicable; provided that if in accordance with a Participant's
     elections pursuant to Section 10.8, a percentage of his Employer Profit
     Sharing Contributions and the earnings thereon for the Plan Year greater
     than the Automatic McDonald's Stock Proportion would be invested in the
     Profit Sharing McDonald's Common Stock Fund, the Participant's Employer
     Profit Sharing Contributions and the earnings thereon with respect to the
     Profit Sharing Plan for the Plan Year shall be invested in accordance with
     the Participant's elections pursuant to Section 10.8.

          (b)  A Participant may elect, at such time and in such manner as the
     Committee shall designate for each Plan Year not to have the Automatic
     McDonald's Stock Proportion of his Employer Profit Sharing Contributions
     and Forfeitures and the earnings thereon with respect to the Profit Sharing
     Plan for the Plan Year invested in the Profit Sharing McDonald's Common
     Stock Fund. If a Participant elects not to have the Automatic McDonald's
     Stock Proportion of his Employer Profit Sharing Contributions and
     Forfeitures with respect to the Profit Sharing Plan for the Plan Year
     invested in the Profit Sharing McDonald's Common Stock Fund, his Employer
     Profit Sharing Contributions, such Forfeitures and the earnings thereon
     shall be invested in accordance with Sections 10.8 or 10.9, as applicable.

  10.8    Investment Election with Regard to a Participant's Profit Sharing,
          ------------------------------------------------------------------
Diversification, Investment Savings and Rollover Accounts.  The following two
---------------------------------------------------------
paragraphs are effective before January 1, 1998.  Four times each Plan Year (or
on such more frequent basis as the Committee shall permit), each Participant
shall have the right to elect, on such forms and in accordance with such rules
and procedures as the Committee may from time to time prescribe, to have each of
(a) his Profit Sharing Account (including any amounts which have previously been
invested in the Profit Sharing McDonald's Common Stock Fund pursuant to Section
10.7) and his Diversification Accounts, if any, (b) his Investment Savings
Account, or (c) his Rollover Account invested in the Diversified Stock Fund, the
Money Market Fund, the Profit Sharing McDonald's Common Stock Fund, the Stable
Value Fund, the Blended Stock Bond Fund or other similar fund designated from
time to time by the Committee or in any combination of them; provided that
amounts which have been invested in the Profit Sharing McDonald's Common Stock
Fund in accordance with Section 10.7 shall remain invested in the Profit Sharing

                                      -74-
<PAGE>

McDonald's Common Stock Fund until a new investment election made by the
Participant in accordance with this Section 10.8 is effective.

     If a Participant makes a LESOP Diversification Election, McDESOP Future
Contribution Diversification Election, or McDESOP Diversification Election in
accordance with Section 10.10, his Diversification Account, if any, shall be
invested in accordance with his Profit Sharing Account investment election in
effect at the time his diversification election is effective or from time to
time thereafter or in accordance with Section 10.9(a) if no such investment
election is in effect and shall be invested in accordance with any subsequently
effective Investment Election as provided above.  The Participant's election as
to the percentage of his Profit Sharing Account and Diversification Account to
be invested in each Investment Fund, shall be made in increments of 10 percent
(10%) up to 100 percent (100%).  A Participant may elect to invest as much as
100% of his Profit Sharing Account and Diversification Account in the Profit
Sharing McDonald's Common Stock Fund.  Subject to Section 10.7, a Participant's
investment election shall be effective until his next investment election is
effective.

     Effective January 1, 1998 the preceding two paragraphs shall be replaced
with the following:

     Once each month effective the first day of the next calendar month (or on
such more frequent basis as the Committee shall permit), each Participant shall
have the right to elect, on such forms and in accordance with such rules and
procedures as the Committee may from time to time provide, to have each of (a)
his Profit Sharing Account (including any amounts which have previously been
invested in the Profit Sharing McDonald's Common Stock Fund pursuant to Section
10.7) and his Diversification Accounts, if any, (b) his Investment Savings
Account, or (c) his Rollover Account invested in the Diversified Stock Fund, the
Money Market Fund, the Profit Sharing McDonald's Common Stock Fund, the Stable
Value Fund, the Blended Stock Bond Fund, the S&P 500 Fund or other similar fund
designated from time to time by the Committee or in any combination of them;
provided that amounts which have been invested in the Profit Sharing McDonald's
Common Stock Fund in accordance with Section 10.7 shall remain invested in the
Profit Sharing McDonald's Common Stock Fund until a new investment election made
by the Participant in accordance with this Section 10.8 is effective.

     If a Participant makes a LESOP Diversification Election, Participant
Elected Contribution Account Diversification Election, or McDESOP
Diversification Election in accordance with Section 10.10, his Diversification
Account, if any, shall be invested in accordance with his Profit Sharing Account
investment election in effect at the time his diversification election is
effective or in accordance with Section 10.9(a) if no such investment election
is in effect and shall be invested in accordance with any subsequently effective
Investment Election as provided above.  Each Participant may elect the
percentage of his Profit Sharing Account, Diversification Account and Investment
Savings Account to be invested up to 100 percent in each Investment Fund, in
increments of 10 percent (10%) for periods before September 1, 1999 and five
percent (5%) for periods after August 31, 1998.  A Participant may elect to
invest as much as 100% of his Profit Sharing Account and Diversification Account
in the

                                      -75-
<PAGE>

Profit Sharing McDonald's Common Stock Fund. Subject to Section 10.7, a
Participant's investment election shall be effective until his next investment
election is effective.

  10.9    Failure to Make an Investment Election.
          --------------------------------------

          (a)  Profit Sharing Accounts. If a Participant fails to make an
               -----------------------
     investment election for his Profit Sharing Account and his Diversification
     Account during any Plan Year, then such Accounts shall be invested in
     accordance with such Participant's immediately preceding investment
     election made with respect to such Accounts in accordance with Section
     10.8; provided that any amounts invested in the Profit Sharing McDonald's
     Common Stock Fund in accordance with Section 10.7 shall remain invested in
     the Profit Sharing McDonald's Common Stock Fund until a new investment
     election made by the Participant in accordance with Section 10.8 is
     effective. If a Participant has never made an investment election with
     respect to such Accounts, then the amount, if any, invested in the Profit
     Sharing McDonald's Common Stock Fund in accordance with Section 10.7 shall
     remain invested in the Profit Sharing McDonald's Common Stock Fund and the
     remainder of the Participant's Profit Sharing Account, the Participant's
     LESOP Diversification Account and the McDESOP Diversification Account shall
     be invested one hundred percent (100%) in the Money Market Fund.

          (b)  Investment Savings Fund Account and Rollover Account. If a
               ----------------------------------------------------
     Participant fails to make an investment election for his Investment Savings
     Account and/or his Rollover Account during any Plan Year, then such
     Account(s) shall be invested in accordance with such Participant's
     immediately preceding investment election made with respect to such
     Account(s). If a Participant has never made an investment election with
     respect to such Account(s) then such Account(s) shall be invested 100
     percent (100%) in the Money Market Fund.

  10.10   Diversification of McDESOP and LESOP Contributions and Accounts.
          ---------------------------------------------------------------

          Section 10.10(a1) shall remain in effect until the Committee or its
representative determines that the  procedures and systems are in place to
permit the implementation of Section 10.10(a2).

          (a1) Age Diversification of LESOP Account Balances.
               ---------------------------------------------

               (1)  Diversification Elections by Qualified Participant.
                    --------------------------------------------------
          Commencing with the first day of the month after a Participant becomes
          a Qualified Participant and during each Annual Election Period and, in
          addition, at the same times and subject to the same administrative
          requirements as apply to Investment Elections under Section 10.8, each
          Qualified Participant shall be permitted to make a diversification
          election with respect to his Qualified Account ("LESOP Diversification
          Election").

               (2)  Definitions. As used in Section 10.10(a), the following
                    -----------
          terms shall have the meanings indicated:

                                      -76-
<PAGE>

                    (A)  "Qualified Participant" means a Participant (including
                          ---------------------
               a Participant who has had a Termination of Employment) who has
               attained age 55 or the Beneficiary of a deceased Participant who
               would have attained the age of 55 if he were alive.

                    (B)  "Annual Election Period" means the 90 day period after
                          ----------------------
               the last day of each Plan Year commencing with the Plan Year in
               which the Participant first becomes a Qualified Participant.

                    (C)  "Qualified Account" means a Qualified Participant's
                          -----------------
               LESOP Accounts.

                    (D)  "Maximum Diversification Percentage" means:
                          ----------------------------------

                         (i)   In the case of a Qualified Participant who has
                    not attained age 60 and who has not had a Termination of
                    Employment, 25%;

                         (ii)  In the case of a Qualified Participant who has
                    attained age 60 and has not had a Termination of Employment,
                    50%; and

                         (iii) In the case of a Qualified Participant who has
                    had a Termination of Employment, 100%.

                    (E)  "Leveraged Diversification Election" means an election
                          ----------------------------------
               by a Qualified Participant to transfer to his LESOP
               Diversification Account, an amount not exceeding the difference
               between

                         (i)   the Maximum Diversification Percentage (or lesser
                    percentages in five percent (5%) increments) of the sum of
                    (a) the value of Company Stock credited to the Participant's
                    --
                    Qualified Account plus (b) the amounts previously
                                            -
                    transferred under this Section 10.10 from such Qualified
                    Account to the Participant's Diversification Accounts
                    ("Prior Diversification Transfers"), reduced by

                         (ii)  the Participant's Prior Diversification
                    Transfers.

                         If a Participant has made a LESOP Diversification
                    Election and has not made a subsequent LESOP Diversification
                    Election with a lower percentage election than his prior
                    LESOP Diversification Election, a percentage of the value of
                    all future allocations to the Participant's Qualified
                    Account equal to the percentage of the Participant's LESOP
                    Diversification Election shall be transferred to the
                    Participant's LESOP Diversification

                                      -77-
<PAGE>

                    Account. If a Participant who has made a LESOP
                    Diversification Election makes a new LESOP Diversification
                    Election at a percentage (including to zero) lower than the
                    percentage of the earlier LESOP Diversification Election, no
                    portion of allocations to the Participant's Qualified
                    Account shall be transferred to the Diversification Account
                    until the product of the new lower percentage elected
                    multiplied by the sum of the Qualified Account plus Prior
                    Diversification Transfers exceeds the Prior Diversification
                    Transfers, at which time such excess, and thereafter, a
                    percentage of all future allocations to the Participant's
                    Qualified Account equal to the percentage of the
                    Participant's LESOP Diversification Election shall be
                    transferred to Participant's Diversification Account. No
                    amount transferred to a Participant's Diversification
                    Account may be transferred back to the Participant's LESOP
                    Account.

               (3)  Investment of Amounts Subject to LESOP Diversification
                    ------------------------------------------------------
     Election. The amount subject to a Participant's LESOP Diversification
     --------
     Election shall be transferred to the Participant's LESOP Diversification
     Account under the Program and thereafter shall be invested in accordance
     with the Participant's elections pursuant to Section 10.8 or 10.9(a) but
     determined without regard to Section 10.7 provided that such transfer shall
     occur no later than 90 days after the date on which the Participant becomes
     a Qualified Participant, attains age 60 or the end of each Annual Election
     Period during which the Participant makes a LESOP Diversification Election
     or at such earlier dates as the Committee, pursuant to Section 10.11 shall
     permit.

     (a2) Age Diversification of LESOP Account Balances. Commencing with the
          ---------------------------------------------
first day of the month after a Participant attains the age of 50 and at the same
times and subject to the same administrative requirements as apply to Investment
Elections under Section 10.8, each such Participant shall be permitted to elect
to diversify up to 100 percent of his LESOP Accounts ("LESOP Diversification
Election"). LESOP Diversification Elections may also be made by the Beneficiary
of a deceased Participant who would have attained the age of 50 if he were alive
and by a Participant who has had a Termination of Employment regardless of his
age.

     (b)  Diversification of McDESOP Contributions.
          ----------------------------------------

          (1)  Future Participant Elected Contributions. Effective before
               ----------------------------------------
     January 1, 1998, a Participant may make an election ("McDESOP Future
     Contribution Diversification Election") with respect to his future
     Participant Elected Contributions to have up to 100 percent of the amount
     of such contributions, in increments of 5 percent, credited to his McDESOP
     Diversification Account. Once a Participant has made such a McDESOP Future
     Contribution Diversification Election, he may, with respect to periods
     before January 1, 1998,

                                      -78-
<PAGE>

     change his election with respect to future Participant Elected
     Contributions, subject to Section 10.11, but each such change shall only
     affect Participant Elected Contributions made to the Program after the date
     the election is effective and before the date a new McDESOP Future
     Contribution Diversification Election becomes effective. Effective January
     1, 1998, no further McDESOP Future Contribution Diversification Elections
     may be made. However, any such elections which are in effect on January 1,
     1998 shall remain in effect until the Participant makes a Participant
     Elected Contribution Account Diversification Election as provided in
     Section 10.10(b)(2).

          (2)  Participant Elected Contribution Accounts. Effective on or after
               -----------------------------------------
     January 1, 1998, a Participant may make an election ("Participant Elected
     Contribution Account Diversification Election") with respect to the amount
     in his Participant Elected Contribution Account (including his Participant
     Elected Contributions and the earnings credited thereon in the
     Participant's McDESOP Diversification Account) to have up to 100 percent of
     such total amount on the Valuation Date on which the diversification
     occurs, in increments of 5 percent, credited to his McDESOP Diversification
     Account. A Participant may make a Participant Elected Contribution Account
     Diversification Election with respect to his Participant Elected
     Contribution Account (including his Participant Elected Contributions and
     the earnings credited thereon to the Participant's McDESOP Diversification
     Account) in accordance with such rules and procedures as the Committee
     shall from time to time establish.

          Once a Participant has made a Participant Elected Contribution Account
     Diversification Election which selects a percentage of diversification
     which is higher than the percentage of the Participant's Participant
     Elected Contribution Account which has been transferred to the
     Participant's McDESOP Diversification Account, a transfer shall be made, as
     of the Valuation Date with respect to which such election is effective, to
     such Participant's McDESOP Diversification Account to achieve the
     percentage of diversification elected with respect to his Participant
     Elected Contribution Account (including his Participant Elected
     Contributions and the earnings thereon credited to the Participant's
     McDESOP Diversification Account) and, thereafter, the elected percentage of
     his future Participant Elected Contributions shall be transferred to his
     McDESOP Diversification Account, subject to Section 10.11.

          However, if a Participant makes a Participant Elected Contribution
     Account Diversification Election which selects a percentage of
     diversification which is equal to or less than the percentage of the
     Participant's Participant Elected Contribution Account which is credited to
     the Participant's McDESOP Diversification Account, no transfer shall be
     made from the McDESOP Diversification Account to the portion of the
     Participant's Participant Elected Contribution Account held in the McDESOP
     Trust. In addition, future Participant Elected Contributions shall be
     credited to the Participant's McDESOP

                                      -79-
<PAGE>

     Diversification Account in the percentage of diversification elected only
     after the percentage of the Participant's Participant Elected Contributions
     (including his Participant Elected Contributions and the earnings thereon
     credited to his McDESOP Diversification Account) which is credited to his
     McDESOP Diversification Account is reduced to the diversification
     percentage elected by the Participant.

          If a Participant makes a McDESOP Diversification Election, such
     election, as from time to time in effect, shall thereafter control the
     amount of diversification in the Participant's McDESOP Accounts and any
     election made under this Section 10.10(b) shall have no effect after the
     date of his first McDESOP Diversification Election.

     (c)  Age Diversification of McDESOP Accounts. Beginning with the first day
          ---------------------------------------
of the month following the month in which a Participant attains 50 years of age,
the Participant (or the Beneficiary of a Participant who would have attained age
50 if he had not died) may elect ("McDESOP Diversification Election") to
diversify by transferring up to 100 percent (100%) (in increments of five
percent (5%)) of his Participant Elected Contribution Account; and Employer
Matching Contribution Account to his McDESOP Diversification Account.

     The diversification amount transferred from a Participant's Participant
Elected Contribution Account shall be an amount equal to the difference between
(A) the diversification percentage elected by the Participant multiplied by the
sum of (i) the Participant's Participant Elected Contribution Account, and (ii)
the amounts previously transferred from the Participant's Participant Elected
Contribution Account to the Participant's McDESOP Diversification Account
("Prior Elected Contribution Transfers") reduced by (B) the amount of the
Participant's Prior Elected Contribution Transfers. The diversification amount
transferred from a Participant's Employer Matching Contribution Accounts shall
be an amount equal to the difference between (A) the diversification percentage
elected by the Participant multiplied by the sum of (i) the Participant's
Employer Matching Contribution Accounts and (ii) the amounts previously
transferred from the Participant's Employer Matching Contribution Accounts to
the Participant's McDESOP Diversification Account ("Prior Matching Contribution
Transfers") reduced by (B) the amount of the Participant's Prior Matching
Contribution Transfers. If a Participant has made a Diversification Election and
has not made a subsequent Diversification Election with a lower percentage, a
percentage of the value of all future allocations to the Participant's
Participant Elected Contribution Account and Employer Matching Contribution
Account respectively equal to the percentage of the Participant's
Diversification Election shall be transferred to the Participant's McDESOP
Diversification Account.

     If a Participant who has made a McDESOP Diversification Election, makes a
new McDESOP Diversification Election at a percentage (including zero) lower than
the percentage of the earlier McDESOP Diversification Election, no portion of
the

                                      -80-
<PAGE>

     allocations to the Participant's Participant Elected Contribution Account
     and Employer Matching Contribution Accounts, respectively, shall be
     transferred to the McDESOP Diversification Account until the respective
     products of the new lower percentage elected multiplied by (A) the sum of
     the Participant Elected Contribution Account plus Prior Elected
     Contribution Transfers and (B) the sum of the Employer Matching
     Contribution Accounts plus Prior Matching Contribution Transfers exceed (C)
     the Prior Elected Contribution Transfers and (D) Prior Matching
     Contribution Transfers, at which time each such respective excess, and
     thereafter, a percentage of all future allocations respectively to the
     Participant's Participant Elected Contribution Account and Employer
     Matching Contribution Accounts equal to the percentage of the Participant's
     McDESOP Diversification Election shall be transferred to the Participant's
     McDESOP Diversification Account. A McDESOP Diversification Election shall
     be made at the same time and with the same effective dates and such other
     rules as investment elections under Section 10.11. Once a Participant has
     made a McDESOP Diversification Election of a given percentage it will
     continue in effect until he makes a new election. A Participant can elect
     to reduce the percentage of his McDESOP Diversification Election to a
     larger or a lesser percentage (including to zero); however, amounts already
     credited to his McDESOP Diversification Account shall not be transferred
     back to his Participant Elected Contribution Account and his Employer
     Matching Contribution Accounts.

          (d)  Distributions from Diversification Accounts. The provisions of
               -------------------------------------------
     the Program shall apply to amounts subject to a Diversification Election
     under Section 10.10 in the same manner as to the Participant Elected
     Contribution Accounts, Employer Matching Contribution Accounts or LESOP
     Accounts, respectively, except that the balance in a Participant's McDESOP
     Diversification Account and LESOP Diversification Account shall be invested
     in the Investment Funds in the same manner as the Participant elects to
     invest his Profit Sharing Account pursuant to Section 10.8 or as provided
     in Section 10.9(a), whichever is applicable, but determined without regard
     to Section 10.7. A Participant to whom a distribution is payable under
     Article XI shall have the right to elect to receive any distributions made
     from his McDESOP Diversification Account and LESOP Diversification Account
     in McDonald's common stock.

          (e)  Required Diversification.  If not already permitted pursuant to
               ------------------------
     the foregoing provisions of this Section 10.10, each Participant who has
     had at least 10 years of service under the Program and has attained age 55
     shall be permitted to elect to diversify any Accounts to which Company
     Stock has been allocated pursuant to Section 6.3 of the Program at the
     times and to the extent provided in Section 401(a)(28) of the Internal
     Revenue Code.

  10.11  Effective Date of Participant's Investment and Diversification
         --------------------------------------------------------------
Elections. Participant's investment elections, pursuant to Section 10.8, or
Diversification Elections, pursuant to Section 10.10, submitted by the date
designated by the Committee shall be made effective as of the first day of the
next calendar month (or as soon thereafter as is administratively convenient) or
at such more frequent times as the Committee shall determine. Diversification
Elections with respect to future contributions made in accordance with Section

                                      -81-
<PAGE>

10.10 shall be implemented the first day of the calendar month after the month
in which such contributions are made to the Program (or as soon thereafter as is
administratively convenient) or at such more frequent times as the Committee
shall determine. This Section 10.11 is intended to give the Committee the
authority to implement Participants' Investment Elections and Diversification
Elections as soon as possible with due regard for requiring advance notice of
elections. The Committee may use such methods as making transfers between
Investment Funds based upon estimates followed by corrective adjustments made
when exact data becomes available and, in the event of inability to effectuate
elections because of data processing, communications or other systems
breakdowns, the Committee may effectuate such elections as soon as is reasonable
under the existing circumstances.

  10.12  Trust Income.  As of the close of business on each Valuation Date, the
         ------------
Trustee shall determine the fair market value of the Trust Fund and of each
separate Investment Fund.  The fair market value of Assets Subject to Guarantee,
as defined in Section 10.6(a)(3), shall be book value for all purposes hereunder
unless the Committee determines that the book value guarantees no longer apply,
a market value distribution has occurred under the contract or there has been a
default on the guarantee.  The fair market value of the Trust Fund and the
Investment Funds shall be recorded and communicated in writing to the Committee
by the Trustee.  The Trustee's determination of fair market value shall be final
and conclusive on all persons.

  10.13  Adjustment of Participant's Account Balances and the LESOP Suspense
         -------------------------------------------------------------------
Accounts.  As of each Valuation Date, the Committee shall determine the
--------
adjustment required to be made to the value of each Participant's Accounts and
the LESOP Suspense Accounts to make the total of the portion of all such Account
balances which are invested in an Investment Fund equal to the total value of
that Investment Fund.  The records of Participants' LESOP Accounts, Employer
Matching Contribution Accounts and Stock Sharing Accounts and LESOP Suspense
Accounts may be maintained in cash provided that it is at all times possible to
determine the number and the basis of the shares of Company Stock credited to
such accounts

          (a)  Valuation of the Portion of Profit Sharing Accounts, Investment
               ---------------------------------------------------------------
     Savings Accounts, Rollover Accounts, Diversification Accounts, Participant
     --------------------------------------------------------------------------
     Elected Contribution Accounts and Employer Matching Contribution Accounts
     --------------------------------------------------------------------------
     invested in an Investment Fund.  The value of the portion of each of a
     ------------------------------
     Participant's Accounts invested in an Investment Fund as of a Valuation
     Date shall be equal to the product for each Investment Fund of (1)
     multiplied by (2) where:

               (1)  is the value of an Investment Fund as of the Valuation Date,
          and

               (2)  is a fraction, the numerator of which is the value of the
          portion of each of a Participant's Accounts invested in such
          Investment Fund as of the immediately preceding Valuation Date reduced
          by any distributions therefrom on or since such Valuation Date and the
          denominator of which is the value of such Investment Fund as of the
          immediately preceding Valuation Date reduced by any distributions
          therefrom since such Valuation Date.

                                      -82-
<PAGE>

          (b)  Valuation of the Portion of the LESOP Suspense Account and of
               -------------------------------------------------------------
     Participants' LESOP Accounts and Stock Sharing Accounts invested in
     -------------------------------------------------------------------
     Company Stock. As of each Valuation Date, Participants' LESOP Accounts and
     -------------
     Stock Sharing Accounts and the LESOP Suspense Accounts shall be credited
     with the dividends and other distributions and earnings of the shares of
     Company Stock credited thereto; provided that any dividends credited to
     Participants' LESOP Accounts which are to be used to repay an Exempt Loan,
     pursuant to Section 6.3(b), shall immediately after being so credited to
     Participants' Accounts be transferred to the LESOP Suspense Account and
     held therein a separate account until used to repay an Exempt Loan. The
     amount of such dividends transferred to the LESOP Suspense Account for a
     Plan Year shall not exceed the sum of the fair market value of the Company
     Stock released from the Leveraged ESOP Suspense Account pursuant to Section
     6.3(b) for the Plan Year and the amount of Special Dividend Replacement
     Contributions made pursuant to Section 4.2(d) for the Plan Year (determined
     on the Valuation Date allocated). Earnings on Forfeitures from the LESOP
     portion of the Program shall be allocated to Participants' LESOP Accounts
     as of each Valuation Date in the proportion that dividends and other
     distributions and earnings are allocated in accordance with the preceding
     sentence. The income under Section 16.6 (d) shall be allocated to
     Participant's Stock Sharing Accounts in the proportion that each
     Participant's Stock Sharing Account balance is to the total of all
     Participant's Stock Sharing Account balances.

     The Accounts of Participants as adjusted according to Section 10.13 shall
determine the value of the interest of each Participant in the Trust for all
purposes subject to the crediting of any contributions as provided in Article
VII until a subsequent determination is made by the Committee.

  10.14  Allocation of Income of Holding Funds.
         -------------------------------------

         (a)  Profit Sharing Holding Fund.  Any net income and gains (after
              ---------------------------
     reduction by losses and by expenses not paid by an Employer) of the Profit
     Sharing Holding Fund for a Plan Year for which a Profit Sharing
     Contribution is made shall be allocated to each Participant's Profit
     Sharing Account in the proportion that the amount of Profit Sharing
     Contributions allocated to each Participant in accordance with Section 7.1
     bears to the total amount of Profit Sharing Contributions allocated under
     Section 7.1 to all Participants. If no Profit Sharing Contribution is made
     for a Plan Year, the net income and gains (after reduction by losses and by
     expenses not paid by an Employer) shall be allocated as provided in
     10.14(b).

         (b)  McDESOP Holding Fund.  Any net income and gains (after reduction
              --------------------
     by losses and by expenses not paid by an Employer) of the McDESOP Holding
     Fund for a Plan Year shall be credited to each Participant's Participant
     Elected Contribution Account as earnings in the amount of such net income
     and gains multiplied by the fraction in Section 10.13(a)(2).

                                      -83-
<PAGE>

          (c)  Rollover Holding Fund.  Any net income and gains (after
               ---------------------
     reduction by losses and by expenses not paid by an Employer) of the
     Rollover Holding Fund for a Plan Year shall be allocated to each
     Participant's Profit Sharing Accounts in the amount of such net income and
     gains multiplied by the fraction in Section 10.13(a)(2).

  10.15  Separate Accounting in the Trust Fund.  The Committee shall create and
         -------------------------------------
maintain separate accounts for each Participant as described in Section 1.1.
Every adjustment to a Participant's Accounts shall be considered as having been
made on the relevant Valuation Date, regardless of the date of actual entry or
receipt by the Trustee of Employer Contributions and Participant Elected
Contributions for a Plan Year.

  10.16  Trust Investment.  The assets of a Trust Fund may at any one time be
         ----------------
invested up to 100% exclusively in Company Stock subject to the provisions of
the Trust.

  10.17  Separate Accounting for LESOP Suspense Account.  The Committee shall
         ----------------------------------------------
create and maintain a separate account, called a LESOP Suspense Account, to
record and to separately account for (a) each loan or other extension of credit
made pursuant to Section 6.1, (b) all LESOP Contributions to the Program to
repay each such loan or extension of credit, (c) all dividends transferred to
the LESOP Suspense Account to repay an Exempt Loan pursuant to Section 6.3(b),
(d) net income, gains or losses charged to such LESOP Contributions and LESOP
Suspense Account under Sections 10.13(b), and (e) all payments made on such loan
or other extension of credit until such loan or other extension of credit is
repaid, in accordance with Sections 6.1, 6.2 and 6.3.

  10.18  Correction of Error.  In the event of any error, including but not
         -------------------
limited to an error in the adjustment of a Participant's Accounts or an error in
including or excluding persons as Participants, the Committee, in its sole
discretion, may correct such error by either crediting or charging the
adjustment required, or such adjustment as the Committee in its sole discretion
shall determine to be equitable, to make such correction to or against
Forfeitures or to or against income and expenses of the Trust for the Plan Year
in which the correction is made, or if an Employer contributes an amount to
correct any such error, from such amount.

     Corrections of Participant Elected Contributions and Employer Matching
Contributions which an individual should have been permitted to make, but
because of an error in Program administration was not permitted to make, shall
be made as provided in the preceding sentence by crediting the individual's
Participant Elected Contribution Account and Employer Matching Contribution
Account respectively with (a) Participant Elected Contributions equal to the
average percentage of compensation which was contributed for the preceding Plan
Year as such contributions by Highly Compensated Employees or Non-highly
Compensated Employees (whichever the individual is classified as) and (b) the
amount of Employer Matching Contributions, LESOP Employer Matching Allocations
and LESOP Employer Matching Contributions and any Forfeitures allocated with
respect to such contributions which would have been credited to such
individual's Employer Matching Contribution Account with respect to such
Participant Elected Matched Contributions.  After the preceding correction is
made, the Participant's Participant Elected Contribution Account and Employer
Matching Contribution

                                      -84-
<PAGE>

Account shall be credited with a rate of return which is equal to the rate of
return the Participant's accounts would have received had the accounts been
invested in the manner in which such accounts were invested at the time the
Participant was first given the opportunity to make Participant Elected
Contributions.

     Effective July 1, 1998, notwithstanding the foregoing, an Employee who
fails, upon request, to provide the Committee information, as requested by the
Committee, concerning his service as a Leased Employee and who, as a consequence
does not enter the Program as early as he could have if such service had been
taken into account shall not be deemed to have suffered an error in Program
administration and shall not receive corrected Participant Elected
Contributions, Employer Matching Contributions, LESOP Employer Matching
Allocation or LESOP Employer Matching Contributions for periods before the
earlier of such Employee's Entry Date determined without regard to such Leased
Employee service or such Employee's Entry Date including such Leased Employee
service from the date the Employee provides the Committee with such information
concerning such service as the Committee requests. Profit Sharing Contributions
and allocations from the leveraged ESOP Suspense Account pursuant to Section
6.3(a) which such a Participant would have received if his Leased Employee
service had been considered from his date of hire shall be credited to the
former Leased Employees' Accounts as of the first Valuation Date next following
the Leased Employee's actual Entry Date.

     Except as provided in this Section, the Accounts of other Participants
shall not be readjusted on account of such error.

  10.19  Statement of Accounts.  As soon as practicable after the last day of
         ---------------------
each Plan Year, the Committee shall have a statement of his Net Balance Account
have delivered to each Participant.

  10.20  Purchase or Sale of Company Stock.  The Trustee, on behalf of the
         ---------------------------------
Program, may (a) sell Company Stock to a Party in Interest or a Disqualified
Person if such sale is for at least the fair market value of the Company Stock
and (b) purchase Company Stock from a Party in Interest or a Disqualified
Person, if such purchase is for no more than the fair market value of the
Company Stock and (c) no commission is charged with respect to such sale or
acquisition; provided that such sale or acquisition is for the price of the
Company Stock prevailing on an established securities market, if the Company
Stock is readily tradeable on such market or determined by an independent
appraiser, if the Company Stock is not readily tradeable on an established
securities market.

  10.21  Shareholder Rights in Company Stock.  A fundamental purpose of the
         -----------------------------------
Program and the Trust is to obtain for the Company, its shareholders,
Participants and future Participants the benefits resulting from Participants
having the right to vote shares of Company Stock and to determine whether shares
of Company Stock should be sold or retained in response to a public or private
tender offer.  A key purpose of the Program is to encourage Participants to feel
and to act like owners of the Company by assuring them the opportunity to share
the economic benefit of ownership of Company Stock and the opportunity to direct
the manner in which shares held by the Program are voted at all shareholder
meetings and to determine whether shares of Company

                                      -85-
<PAGE>

Stock should be sold or retained in response to a public or private tender
offer. The broad employee participation in the Program at all levels of the
Company and limitations on maximum benefits to Participants who are officers,
shareholders or highly compensated employees assure that such voting and
decisions by Participants represent the overall knowledge and experience of a
broad representative cross-section of employees of the Company. It, therefore,
is anticipated that the votes and other decisions of Participants will be fairly
representative of both present and future Participants' interests. Accordingly
it has been concluded that Participants are best able to determine questions
concerning voting and whether to sell or retain shares of Company Stock in a
public or private tender offer with respect to shares allocated to their own
accounts, as each person is uniquely able to determine his best interests based
upon both his unique knowledge of his own situation and his unique knowledge of
the Company. Moreover, because the overall broad group of employees who are
Participants is fairly representative of both present and future Participants'
interests it is believed that such Participants as a group are uniquely able to
determine the best interests of future Participants who benefit from future
allocations of Company Stock under the Program. Further, such participation in
fundamental shareholder decisions by Participants is expected to result in
increased commitment to the success of the Company further enhancing financial
rewards of Program participation for such Participants, as well as enhancing
shareholder and Company values. In order to assure that each Participant will
express his or her unrestrained best judgment concerning how these rights should
be exercised independent of any considerations associated with such
Participant's employment status with the Company, Participants exercise such
rights through a method that assures the confidentiality of their votes and
other decisions.

               (a)  Allocated Shares.  With respect to shares (and fractional
                    ----------------
     shares) of Company Stock which have been allocated to Participants'
     Accounts each Participant or Beneficiary, as a named fiduciary, shall have
     the right to direct the Trustee as to the manner of voting and the exercise
     of all other rights which a shareholder of record has with respect to such
     shares (including, but not limited to, the right to sell or retain such
     shares in a public or private tender offer). In voting or exercising such
     other rights with respect to such shares, the Participants and
     Beneficiaries shall consider their own individual long-term best interests
     in providing benefits under the Program and Trust rather than a short term
     gain. In the event that a Participant shall fail to direct the Trustee as
     to the manner of voting of such shares of Company Stock allocated to the
     Participant's Accounts or as to the exercise of other rights in respect of
     such shares, the Trustee shall vote such shares or exercise such rights
     with respect to such shares in accordance with Section 10.21(b).

               (b)  Unallocated Shares and Allocated Shares Not Directed.
                    ----------------------------------------------------
     With respect to shares (and fractional shares) of Company Stock which are
     either not allocated to Participants' Accounts or are allocated to the
     Accounts of Participants who fail (or whose Beneficiaries fail) to provide
     any direction pursuant to Section 10.21(a), each Participant who is an
     Employee, as a named fiduciary, shall have the right to direct the Trustee
     as to the manner of voting the number of such shares (and fractional
     shares), and the exercise of all other rights which a shareholder of record
     has with respect to such shares (including, but not limited to, the right
     to sell or retain such shares in a public or private

                                      -86-
<PAGE>

     tender offer), as is equal to the product of (i) the sum of the number of
     unallocated shares and undirected shares multiplied by (ii) a fraction, the
     numerator of which is the number of shares (and fractional shares) of
     Company Stock for which directions are given pursuant to this Section
     10.21(b) and which have been allocated to the Accounts of such Participant
     and the denominator of which is the total number of shares (and fractional
     shares) of Company Stock which have been allocated to the Accounts of all
     Participants who give directions to the Trustee pursuant to this Section
     10.21(b). In voting or exercising such other rights with respect to such
     shares, such Participants shall consider the long term interests of both
     current and future Participants and Beneficiaries in providing benefits
     under the Program and Trust rather than short term gain.

          (c)  Named Fiduciaries.  The Trustee shall notify each Participant and
               -----------------
     Beneficiary who is authorized pursuant to Section 10.21(a) and (b) to
     direct the Trustee as to the manner of voting and the exercise of other
     shareholder rights with respect to shares (and fractional shares) of
     Company Stock that such Participant or Beneficiary is a named fiduciary,
     within the meaning of Section 402(a)(2) of ERISA, with respect to such
     shares (and fractional shares), and shall instruct each such Participant
     and Beneficiary that is exercising such authority to direct the Trustee,
     with respect to shares of Company Stock allocated to his Accounts, he
     should consider his own individual long-term best interests in providing
     benefits under the Program and, with respect to shares of Company Stock
     voted pursuant to Section 10.21(b), he should consider the long-term
     interests of both current and future Participants and Beneficiaries in
     providing benefits under the Program and Trust rather than a short term
     gain.

          (d)  Confidentiality.  The Trustee shall solicit the directions of
               ---------------
     Participants and Beneficiaries in accordance with Section 10.21(a) or (b)
     and shall follow such directions by delivering aggregated votes to the
     Company or otherwise implementing such directions in any convenient manner
     which preserves the confidentiality of the votes or other directions of
     individual Participants or Beneficiaries. Any designee of the Trustee who
     assists in the solicitation or tabulation of the directions of Participants
     or Beneficiaries shall certify that he will maintain the confidentiality of
     all directions given.

   10.22  Cash Distributions with Respect to Company Stock.  If there is a
          ------------------------------------------------
discrepancy between (1) the amount received by the Trust upon the sale of
Company Stock or credited to a portion of the Trust upon the transfer of Company
Stock from one portion of the Trust to another, for the purpose of making cash
distributions to Participants or Beneficiaries and (2) the value of such Company
Stock on the Valuation Date as of which such stock is valued for the purpose of
determining the amount of the Participant's cash distributions, such discrepancy
shall be credited to or charged against the Trust Income of the portion of the
Trust Fund (i.e., accounts in the Profit Sharing portion of the Program, the
LESOP Accounts, McDESOP Accounts and Stock Sharing Accounts) which held the
stock before sale or transfer as of the Valuation Date next following the sale
or transfer.

                                      -87-
<PAGE>

  10.23  Holding Funds.
         -------------

         (a)  Profit Sharing Holding Fund.  Profit Sharing Contributions made
              ---------------------------
     to the Program shall be held in the Profit Sharing Holding Fund until
     allocated to Participant's accounts in accordance with Section 7.1. Such
     contributions as provided in Section 3.1(a) and 3.1(b) shall be separately
     accounted for. Amounts which in accordance with Article XI are currently
     distributable in cash to Participants or Beneficiaries with respect to the
     Profit Sharing portion of the Plan shall be transferred to the Profit
     Sharing Holding Fund during the calendar month next following the calendar
     month within which such amount became distributable. Distributable amounts
     in the Profit Sharing Holding Fund shall be held (a) in a checking account
     of the Trustee in the name of the Trust with, if the Trustee or custodian
     is a bank or a Trust Company, the Trustee's or custodian's banking
     department, or (b) in a STIF Fund or in such types of investments or
     pooled, common, commingled or collective trust funds, including, if the
     Trustee or custodian is a bank, those of the Trustee or custodian, as the
     Committee may from time to time authorize the Trustee to invest in such
     respective amounts and proportions and in such manner as the Committee
     shall from time to time determine.

         (b)  McDESOP Holding Fund.  Participant Elected Contributions and
              --------------------
     Matching Contributions made to the Program shall be held in the McDESOP
     Holding Fund until credited to Participant's accounts in accordance with
     Sections 7.4 and 7.2, respectively, and amounts which are distributable to
     a Participant or Beneficiary in cash from the McDESOP and LESOP portions of
     the Program shall, at the direction of the Committee, be transferred to the
     McDESOP Holding Fund during the calendar month next following the calendar
     month within which such amount became distributable. Distributable amounts
     in the McDESOP Holding Fund shall be held (a) in a checking account of the
     Trustee in the name of the Trust with, if the Trustee or custodian is a
     bank, the banking department of the Trustee or custodian, or (b) in the
     STIF Fund or in such types of investments or pooled, common, commingled or
     collective trust funds including, if the Trustee or custodian is a bank,
     those of the Trustee or custodian, as the Committee may from time to time
     authorize the Trustee to invest in such respective amounts and proportions
     and in such manner as the Committee shall from time to time determine.

         (c)  Rollover Holding Fund.  Rollover Contributions to the Program
              ---------------------
     made in a calendar month shall be held in the Rollover Holding Fund until
     the next Valuation Date when such contributions shall be invested in
     accordance with the Participant's investment elections and amounts which
     are distributable to a Participant or Beneficiary in cash from
     Participants' Rollover Contribution Accounts or Investment Savings
     Accounts.

         (d)  Committee Action.  The Committee may authorize one or more of its
              ----------------
     members, or their designees, to sign, manually, or by facsimile signature,
     any and all checks, drafts, and orders, including orders or directions in
     informal or letter form, against any funds in the Holding Funds and the
     Trustee or custodian is authorized to honor any and all checks, drafts and
     orders so signed. As of each Valuation Date, income, gains, losses and
     expenses (to the extent not paid by an Employer) of the

                                      -88-
<PAGE>

     Holding Funds shall be determined separately from the remainder of the
     Trust and the net income or losses of the Holding Funds, for each Plan Year
     shall be added to the net income of the Trust Fund for such Plan Year as
     provided in Section 10.14 and any net losses of the Holding Funds for the
     Plan Year shall be paid by the Company.

  10.24  Restrictions Applicable to Participants Subject to Section 16.
         -------------------------------------------------------------
Effective November 1, 1996, anything herein to the contrary notwithstanding, a
Participant who is subject to Section 16 of the Securities Exchange Act of 1934
("1934 Act") may not engage in any one or more of the following transactions
involving Company Stock if he has engaged in an opposite way transaction, as
defined below, involving Company Stock within the preceding seven months:

         (a)  Investment elections into or out of Company Stock;

         (b)  Diversification elections of amounts invested in Company Stock
     under the McDESOP or LESOP portions of the Program; and

         (c)  Cash withdrawals during employment of amounts invested in Company
     Stock under the Investment Savings, Rollover, Stock Sharing or any other
     portions of the Program.

     For purposes of this Section 10.24, the transactions described in (i) are
opposite way transactions to the transactions described in (ii):

         (i)  a Participant's making an election which results in the investment
     or transfer of assets credited to his Net Balance Account into a McDonald's
     Common Stock Fund, on the one hand, and

         (ii) his election (x) to take a cash withdrawal from one or more
     Accounts invested in Company Stock, (y) to have assets in his Accounts
     transferred from Company Stock to another investment option available under
     the Program and (z) to make an diversification election with respect to his
     Accounts in the McDESOP or LESOP portions of the Program, on the other
     hand.

     In addition to the foregoing, the Committee may establish such rules and
procedures, applicable to Participants who are subject to Section 16 of the 1934
Act, as are necessary or desirable to prevent the occurrence of opposite way
transactions or of other circumstances which might create liabilities under
Section 16(b) of the 1934 Act, provided that such rules and procedures are not
inconsistent with the provisions of the Internal Revenue Code applicable to the
Program.

                                      -89-
<PAGE>

                                  ARTICLE XI

                            DISTRIBUTION OF BENEFITS

  11.1    Distributions, General.
          ----------------------

          (a)  Except as provided in Section 11.11 and subject to Section 11.8
     (with respect to withholding of taxes), upon the Participant's Termination
     of Employment on or after Vesting Retirement Date, Disability or for any
     other reason other than death, distributions shall be made in accordance
     with Section 11.2.

          (b)  Except as provided in Section 11.11 and subject to Section 11.8
     (with respect to withholding of taxes), upon the Participant's death,
     distributions shall be made in accordance with Section 11.3.

          (c)  If a Participant or Beneficiary is otherwise entitled to a
     distribution because of retirement on or after Vesting Retirement Date,
     Disability, death or other Termination of Employment, the Committee shall
     require that immediate distribution of small vested Accrued Benefits shall
     be made in accordance with and subject to the limitations of Section 11.11,
     notwithstanding the provisions of Sections 11.2 and 11.3.

          (d)  A Participant or Beneficiary shall receive a distribution not
     later than the April 1 of the calendar year after the calendar year in
     which he attains the age of 70-1/2 as provided in Section 11.13 subject to
     certain elections to the contrary.

          (e)  A Participant shall be entitled to elect to receive in-service
     withdrawals from Investment Savings Accounts, Rollover Accounts and Stock
     Sharing Accounts as provided in Section 11.16.

  11.2    Payment of Net Balance Account on Disability, or on Retirement or
          -----------------------------------------------------------------
Other Termination of Employment.
-------------------------------

          (a)  Form of Payment of Accounts.
               ---------------------------

               (1)  Retirement or Disability.  Subject to Sections 11.11 and
                    ------------------------
     11.14, if a Participant retires on or after his Vesting Retirement Date or
     has a Termination of Employment on account of a Disability and if the
     Participant makes no election pursuant to Section 11.2(b), the Trustee
     shall distribute to the Participant the vested portion of his Net Balance
     Account credited to his Accounts held in the Program in a single non-
     periodic distribution within a reasonable time after the Valuation Date
     next following the later of (i) such event or (ii) the last day of the Plan
     Year in which he attains his Required Beginning Date. A Participant whose
     Net Balance Account is payable pursuant to the preceding sentence may elect
     to receive payment in whichever of the following methods the Participant
     shall elect in writing:

                                      -90-
<PAGE>

                    (A)  A single non-periodic payment;

                    (B)  Substantially equal installments, not less frequently
               than annually, over a period certain determined in accordance
               with Section 11.12, either directly from the Program, or by
               purchase of a nontransferable period certain annuity contract
               purchased from an insurance company which is authorized to do
               business in any state and which has an A plus rating by A.M. Best
               Company or a comparable rating by a comparable service which
               rates insurance companies, payable for such period of time as the
               Participant shall elect; or

                    (C)  In the form of a nontransferable life annuity contract
               in an amount which can be purchased from an insurance company
               designated by the Participant which is authorized to do business
               in any state and which has an A plus rating by A.M. Best Company
               or a comparable rating by a comparable service which rates
               insurance companies, with the Participant's vested Net Balance
               Account credited to his Accounts or with the portion of the
               Participant's vested Net Balance Account which the Participant
               elects to receive in the form of a nontransferable life annuity
               contract.

               (2)  Termination for Reasons Other than Retirement or Disability
                    -----------------------------------------------------------
          or Death. If a Participant has a Termination of Employment for reasons
          --------
          other than retirement on or after his Vesting Retirement Date,
          Disability or death, the Trustee shall distribute the Participant's
          vested Net Balance Account, subject to the Participant's election to
          receive nonperiodic or installment distributions, as described in
          Section 11.2(a)(1)(A) or (B), as follows:

                    (A)  Profit Sharing Account. The vested portion of the
                         ----------------------
               Participant's Profit Sharing Account shall be distributed to the
               Participant in cash or in McDonald's common stock, in accordance
               with Section 11.2(f), within a reasonable time after the
               Participant elects to receive or to commence receiving a
               distribution of such account.

                    (B)  Investment Savings Account. The Participant's
                         --------------------------
               Investment Savings Account shall be distributed to the
               Participant in cash or in McDonald's common stock, in accordance
               with Section 11.2(f), within a reasonable time after the
               Participant elects to receive or to commence receiving a
               distribution of such account.

                    (C)  Rollover Account and Rollover Holding Account. The
                         ---------------------------------------------
               Participant's Rollover Account and Rollover Holding Account shall
               be distributed to the Participant in cash or in McDonald's common
               stock, in accordance with Section 11.2(f) within a reasonable
               time after the

                                      -91-
<PAGE>

               Participant elects to receive or to commence receiving a
               distribution of such account.

                    (D)  McDESOP Accounts and LESOP Accounts. The Participant's
                         -----------------------------------
               McDESOP Accounts and LESOP Accounts, including the vested portion
               of all accounts identified in Sections 1.1(b) and in 1.1(c) shall
               be distributed to the Participant in cash or in McDonald's common
               stock as provided in Sections 11.2(g) or 11.2(h), as applicable,
               within a reasonable time after the Participant elects to receive
               or to commence receiving a distribution of such account.

                    (E)  Stock Sharing Accounts. The Participant's Stock Sharing
                         ----------------------
               Accounts, including the vested portion of all accounts identified
               in Section 1.1(d) shall be distributed to the Participant in cash
               or in McDonald's common stock as provided in Section 11.2(i)
               within a reasonable time after the Participant elects to receive
               or to commence receiving a distribution of such account.

                    (F)  Distributions in Default of Election. In the absence of
                         ------------------------------------
               an election by a Participant to receive a distribution of his
               entire vested Net Balance Account or to commence to receive
               installment distributions at least equal to the greater of the
               Minimum Distribution Amount, as defined in Section 11.12(d), and
               the amount determined under Section 11.2(d)(3), his entire vested
               Net Balance Account shall be distributed not later than his
               Required Beginning Date.

               A Participant entitled to elect to receive a distribution or to
          commence receiving distributions pursuant to this Section 11.2(a)(2)
          is not entitled to elect an annuity form of distribution.

               (3)  Break in Service. If a Participant has a Break in Service
                    ----------------
          without having a Termination of Employment, the Trustee shall
          distribute the portion of his vested Net Balance Account in his Profit
          Sharing Accounts in cash and in a single non-periodic payment within a
          reasonable time after the earlier of the Valuation Date next following
          the date the Participant elects to receive such distribution or after
          the Participant attains his Required Beginning Date; provided that if
          the Participant completes one year of Eligibility Service following
          the Break in Service, he shall not be permitted further elections to
          receive distributions made pursuant to Article XI, except as he may
          otherwise be entitled to receive in-service distributions pursuant to
          Section 11.16, until he again has a subsequent Break in Service or
          Termination of Employment.

          (b)  Elections by Retired or Disabled Participants. As permitted in
               ---------------------------------------------
     Section 11.2(a)(1), with respect to a distribution on account of a
     Participant's Termination of Employment on or after his Vesting Retirement
     Date or on account of Disability, a

                                      -92-
<PAGE>

     Participant may elect separately with respect to the portion of his Net
     Balance Account held in the Profit Sharing, McDESOP, LESOP, Stock Sharing,
     Rollover and Investment Savings portions of the Program, on such form as
     may be provided or approved by the Committee, the form of benefit and the
     date (including an immediate or a delayed date) of commencement of
     benefits. The actual date of distribution shall be determined in accordance
     with the administrative procedures established by the Plan Administrator
     but shall be no earlier than the day following the Valuation Date which
     next follows the date the completed election form is submitted to the Plan
     Administrator. To the extent that such a Participant is receiving a portion
     of his benefit in a form other than an annuity purchased from an insurance
     company, he may from time to time make or change his benefit elections to
     accelerate or to delay the date and the rate of distribution on such a form
     as may be provided or approved by the Committee, subject to such rules as
     the Committee shall specify and to the limits stated in Sections 11.2(d)
     and 11.2(e), hereof. In the absence of any election, a Participant who has
     a Termination of Employment on or after his Vesting Retirement Date or on
     account of Disability shall be deemed to have elected to receive the vested
     portion of his Net Balance Account in a single non-periodic payment paid
     within a reasonable time after the end of the calendar year in which he
     attains his Required Beginning Date.

          (c)  Types of Annuities. If the Participant elects to receive his
               ------------------
     benefit in the form of an annuity contract as permitted under Section
     11.2(a)(1), each Participant, subject to Sections 11.2(d) and 11.2(e) shall
     have the right to direct the Trustee to purchase an available
     nontransferable annuity contract from an insurance company designated by
     the Participant which is authorized to do business in any state and which
     has an A plus rating by A.M. Best Company or a comparable rating by a
     comparable service which rates insurance companies. The benefit under such
     annuity contract shall be paid to the Participant prior to his death, and
     if a joint and survivor annuity is provided, unless such joint annuitant
     shall be the Participant's spouse, the periodic benefit payable to the
     Participant's Beneficiary shall not be greater than the Applicable
     Percentage of the benefit paid to the Participant as shown in Appendix A.

          (d)  Limitations on Participant Elections. Notwithstanding the
               ------------------------------------
     provisions of Section 11.9, 11.12 or any elections made by the Participant
     pursuant 11.2(a) or (b),

               (1)  Period for Installment or Annuity Payments. Except as
                    ------------------------------------------
          provided in Section 11.14, installment payments and period certain
          payments under any annuity contract purchased from an insurance
          company shall be made or shall commence not later than the Required
          Beginning Date and shall be made over a period not in excess of the
          lesser of (A) the period determined under Section 11.2(d)(3) or (B)
          the Participant's life expectancy or the joint and last survivor life
          expectancy of the Participant and his Beneficiary (such life
          expectancies to be determined in accordance with Section 11.12(e)). In
          the case of payments made in the form of a life annuity, payments
          shall be made over a period not in excess of the life of the
          Participant or the lives of the Participant and his Beneficiary.

                                      -93-
<PAGE>

               (2)  Annuity Payments. If benefits are paid under an annuity
                    ----------------
          contract, payments shall be non-increasing or shall increase only as
          follows:

                    (A)  with any percentage increase in a specified and
               generally recognized cost-of-living index;

                    (B)  to the extent of the reduction in the Participant's
               payments to provide for a survivor benefit upon death of the
               beneficiary whose life was being used to determine the period
               over which benefits are being paid; or

                    (C)  to provide cash refunds of Participant Contributions
               upon the Participant's death.

               (3)  Minimum Distribution Incidental Benefit Requirements. If
                    ----------------------------------------------------
          benefits are paid in installments to the Participant and if the
          Participant's beneficiary is not his spouse or his former spouse
          receiving benefits pursuant to a Qualified Domestic Relations Order as
          defined in Section 16.5, payments for the later of the calendar year
          in which the Participant has a Termination of Employment or attains
          the age of 70-1/2 and in each calendar year thereafter shall equal at
          least the dollar value of the Participant's vested Net Balance Account
          as of the last Valuation Date of the immediately preceding Plan Year
          divided by the following Applicable Divisor from Appendix B.

          If benefits are paid in the form of an annuity with a period certain
          feature and if the Participant's beneficiary is not his spouse or his
          former spouse receiving benefits pursuant to a Qualified Domestic
          Relations Order as defined in Section 16.5, the number of years over
          which such period certain payments are made shall not exceed the
          lesser of (1) the Participant's or the Participant's and Beneficiary's
          joint and last survivor life expectancy as determined in Section
          11.12(e) or (2) the number of years shown in the Applicable Divisor
          column in Appendix B.

          (e)  Qualified Joint and Survivor Annuities.
               --------------------------------------

               (1)  Notwithstanding the foregoing provisions of this Section
          11.2 to the contrary, in the case of a Participant who has elected
          pursuant to Section 11.2(a)(1) to receive one or more of his Accounts
          in a life annuity, such distribution shall be in the form of a
          Qualified Joint and Survivor Annuity purchased by the Trust from an
          insurance company designated by the Participant which is authorized to
          do business in any state and which has an A plus rating by A.M. Best
          Company or a comparable rating by a comparable service which rates
          insurance companies, unless the Participant with his spouse's consent
          as provided in Section 11.10 elects to receive a different form of
          annuity or another form of benefit. The term "Qualified Joint and
          Survivor Annuity" means an immediate annuity payable, for a married
          Participant, to the Participant for life and, if the Participant's
          spouse survives the Participant, a survivor annuity payable to the

                                      -94-
<PAGE>

          spouse for life in an amount equal to 50 percent (50%) of the annuity
          payable to the Participant and, for an unmarried Participant, a single
          life annuity payable to the Participant for life. The amount of the
          benefits payable under a Qualified Joint and Survivor Annuity shall be
          the amount which can be purchased from an insurance company with the
          vested portion of one or more of his Accounts with respect to which
          the Participant elects to receive benefits in the form of a life
          annuity.

               (2)  If a Participant who has elected to receive all or a portion
          of his vested Net Balance Account in the form of a life annuity dies
          before the annuity starting date, such portion of his vested Net
          Balance Account shall be paid to his surviving spouse in the form of a
          Qualified Preretirement Survivor Annuity payable to the surviving
          spouse for life ("QPSA") unless either the Participant, with his
          spouse's consent in accordance with Section 11.10, has elected to
          waive the QPSA or the spouse elects pursuant to Section 11.3(a)(3) to
          waive the QPSA and to receive another form of benefit; provided that
          if the Trust has paid for an annuity to provide a life annuity benefit
          elected by the Participant and the Participant dies before his annuity
          starting date under the contract, the QPSA shall be provided by the
          annuity contract and the surviving spouse shall have no claim against
          the Trust with respect to the Accounts which he has elected to receive
          in the form of a life annuity. Any portion of a Participant's vested
          Net Balance Account in excess of the value of a QPSA, if paid directly
          by the Program, or remaining after the payment of annuity premiums to
          an insurance company, if paid by an insurance company, shall be
          distributed to the Participant's Beneficiary as provided in Section
          11.3.

               (3)  A Participant who elects to receive benefits in the form of
          a life annuity and to whom benefits would be payable in the form of a
          Qualified Joint and Survivor Annuity pursuant to this Section 11.2(e)
          shall have the right to waive a Qualified Joint and Survivor Annuity
          (such waiver shall be consented to by the Participant's spouse in
          writing in accordance with Section 11.10) and the QPSA by delivering
          written notice to the Committee, at any time within the 90 day period
          prior to the annuity starting date, electing to receive all or a
          portion of such benefits in a different form of annuity or another
          form of benefit. If a Participant elects to receive benefits in the
          form of a life annuity, the Committee shall within a reasonable period
          of time provide the Participant, by personal delivery or first class
          mail, with a written explanation of:

                    (A)  the terms and conditions of the Qualified Joint and
               Survivor Annuity and the QPSA;

                    (B)  the Participant's right to make, and the effect of, an
               election to waive the Qualified Joint and Survivor Annuity and
               the QPSA;

                                      -95-
<PAGE>

                    (C)  the rights of the Participant's spouse to consent to
               the Participant's election to waive the Qualified Joint and
               Survivor Annuity and the QPSA and the effect of consenting to
               such waiver; and

                    (D) the Participant's right to make, and the effect of, a
               revocation of an election to waive the Qualified Joint and
               Survivor Annuity and the QPSA.

          Any election made by a Participant to receive a life annuity form of
     benefit pursuant to this Section 11.2(e) may be revoked by such Participant
     (with his spouse's consent) by delivering written notice to the Committee
     at any time prior to the Participant's annuity starting date and, once
     revoked, may be made again at any time by delivering written notice to the
     Committee prior to the Participant's annuity starting date. If a
     Participant, who has elected a life annuity form of benefit and who has not
     waived (with his spouse's consent) the QPSA, dies before his annuity
     starting date, his surviving spouse may elect pursuant to (A) through (D)
     and Section 11.10 to waive the QPSA.

          (f)  Form of Profit Sharing Distributions. If the method of
               ------------------------------------
     distribution selected by a Participant includes either a nonperiodic
     payment or installment payments or a combination of nonperiodic payments
     and installments, the Participant may elect, on such form and in such
     manner as the Committee shall provide or permit, to receive the Profit
     Sharing Plan portion of his vested Net Balance Account distributed in cash
     or in shares of McDonald's common stock or in any combination of the two as
     elected by the Participant; provided however that, in the absence of an
     election to receive shares of McDonald's common stock, such distributions
     shall be made in cash and, further provided, that the portion of such
     distribution distributed in the form of shares of McDonald's common stock
     shall not, except as otherwise provided below, exceed the portion (if any)
     of the Participant's Net Balance Account invested in the Profit Sharing
     McDonald's Common Stock Fund.

          Until such time as a Participant's vested Net Balance Account has been
     distributed, transferred to a Holding Fund in accordance with Section 10.23
     or forfeited in accordance with Section 11.4, any portion of the
     Participant's Net Balance Account remaining in the Profit Sharing Plan
     portion of the Program shall continue to be invested in accordance with
     Section 10.7 and the Participant's (or his Beneficiary's) investment
     elections in accordance with Section 10.8 or Section 10.9, as applicable.

          (g)  Form of McDESOP Distributions. A Participant's vested balances in
               -----------------------------
     his Participant Elected Contribution Account, Employer Matching
     Contribution Account and McDESOP Diversification Account shall be
     distributed in cash unless the Participant (or his Beneficiary) elects, at
     such time and in accordance with such procedures as the Committee shall
     from time to time permit, with respect to the portions of such accounts
     invested in McDonald's common stock, whether held in the Profit Sharing
     McDonald's Common Stock Fund or the McDESOP McDonald's Common Stock Fund,
     to receive a distribution in shares of McDonald's common stock.

                                      -96-
<PAGE>

          (h)  LESOP Accounts. A Participant's vested balances in his LESOP
               --------------
     Accounts and his LESOP Diversification Account shall be distributed in cash
     unless the Participant (or his Beneficiary) elects, at such time and in
     accordance with such procedures as the Committee shall from time to time
     permit, with respect to the portions of such accounts invested in Company
     Stock, whether held in the Profit Sharing McDonald's Common Stock Fund or
     the LESOP portion of the Trust, to receive a distribution in shares of
     McDonald's common stock.

          (i)  Stock Sharing Accounts. A Participant's vested balances in his
               ----------------------
     Stock Sharing Accounts shall be distributed in cash unless the Participant
     (or his Beneficiary) elects, at such time and in accordance with such
     procedures as the Committee shall from time to time permit, with respect to
     the portions of such accounts invested in McDonald's common stock to
     receive a distribution in shares of McDonald's common stock.

          (j)  Distributions in Whole Shares. A Participant or Beneficiary who
               -----------------------------
     is entitled to a distribution in the form of Company Stock may elect to
     receive McDonald's common stock distribution in lieu of cash by filing a
     written election with the Committee on forms approved by the Committee and
     in a manner prescribed by the Committee on or before the Valuation Date
     coincident with or next preceding the date of distribution. However, if any
     distribution in shares of McDonald's common stock described in this Section
     11.2 would not be in whole shares, the value of any fractional share shall
     be distributed in cash.

          Until such time as a Participant's vested Net Balance Account has been
     distributed, transferred to a Holding Fund in accordance with Section
     10.23, or forfeited in accordance with Section 11.4, (A) any portion of his
     Net Balance Account in his Diversification Account shall continue to be
     invested as provided in Section 10.10, and (B) any portion of his Net
     Balance Account remaining in the McDESOP, LESOP or Stock Sharing portions
     of the Program shall continue to be invested in Company Stock and held
     therein.

          (k)  Put Option. If any Company Stock distributed from a Participant's
               ----------
     Participant Elected Contribution Account, Employer Matching Contribution
     Account, McDESOP Diversification Account, LESOP Diversification Account or
     Stock Sharing Account is not readily tradeable on an established market
     when distributed, the distributee shall have the put option rights with
     respect to such shares which are described in Section 6.5(b).

          (l)  Distributions After Rehire. If a Participant who has had a
               --------------------------
     Termination of Employment subsequently becomes an Employee, such
     Participant shall not be entitled to elect distributions until he again
     becomes eligible to receive distributions as provided in Section 11.2.

                                      -97-
<PAGE>

  11.3    Payment of Net Balance Account on Death of Participant.
          ------------------------------------------------------

          (a)  Form of Payment. The Net Balance Account of a Participant who
               ---------------
     dies before having a Termination of Employment shall be fully vested. The
     Net Balance Account of a Participant who dies after having a Termination of
     Employment for reasons other than a Termination of Employment on or after
     his Vesting Retirement Date, death or Disability shall be vested as
     provided in Section 11.4(b). If a Participant dies before his entire vested
     Net Balance Account has been paid from the Program, except to the extent
     otherwise provided in Section 11.2(e)(2) in cases in which the Participant
     has elected a life annuity form of distribution, distributions shall be
     made as follows:

               (1)  If the Participant has a surviving spouse, the Trustee shall
          distribute the vested portion of the Participant's Net Balance Account
          to the Participant's surviving spouse as the Participant's Beneficiary
          in accordance with Section 11.3(a)(3) unless the Participant (with his
          spouse's consent in accordance with Section 11.10) has named another
          Beneficiary.

               (2)  If the Participant does not have a surviving spouse or if
          the Participant (with his spouse's written consent in accordance with
          Section 11.10) has named another Beneficiary, the Trustee shall
          distribute the vested portion of the Participant's Net Balance Account
          in accordance with Section 11.3(a)(3) to the Beneficiary named by the
          Participant in accordance with Section 11.6.

               (3)  The Participant's vested Net Balance Account shall be
          distributed within a reasonable time after the Valuation Date
          following the Participant's death or at such later date as the
          Beneficiary may elect under Section 11.3(b). Distributions to the
          Participant's Beneficiary shall be in whichever of the following
          methods of payment the Beneficiary, by written notice to the
          Committee, shall elect, unless the Participant has elected in a
          written notice delivered to the Committee not to permit such
          Beneficiary elections in which case the Participant shall elect the
          method of payment, from the following:

                    (A)  A single non-periodic payment;

                    (B)  Substantially equal installments, not less frequently
                    than annually, over a period certain, directly from the
                    Profit Sharing Plan portion of the Program; or

                    (C)  In the form of a nontransferable annuity contract
                    purchased from an insurance company designated by the
                    Beneficiary which is authorized to do business in any state
                    and which has an A plus rating by A.M. Best Company or a
                    comparable rating by a comparable service which rates
                    insurance companies payable to the Beneficiary over his
                    life.

                                      -98-
<PAGE>

          In the absence of any election by a Participant or a Beneficiary as to
     time and manner of payment, the Participant and the Beneficiary shall be
     deemed to have elected to receive the entire benefit in an immediate single
     non-periodic payment. Distributions shall be made to a Participant's
     Beneficiary in cash or in Company Stock as provided under Sections 11.2(f)
     through 11.2(j).

          (b)  Beneficiary's Elections. With respect to a distribution on
               -----------------------
     account of a Participant's death, his Beneficiary, as designated pursuant
     to Section 11.6, may elect the form of benefit and the date of commencement
     of benefits, unless the Participant has elected not to permit such
     Beneficiary elections. If the Participant has not elected otherwise, the
     Beneficiary may also elect, with respect to benefits not being received in
     the form of an annuity, to accelerate or to delay the receipt of benefits.
     Such elections shall be made in writing on a form provided or approved by
     the Committee and are subject to such rules as the Committee shall specify
     and to the limits stated in Sections 11.3(c) through 11.3(h), as
     applicable. Once a Beneficiary has made benefit elections, he may in the
     same manner and subject to the same conditions, with respect to benefits
     not being received in the form of an annuity contract purchased from an
     insurance company, change the election at any time, and with respect to any
     election delay or accelerate the receipt of benefits from time to time.

          (c)  Period of Distribution - Death After Distributions Commence.
               -----------------------------------------------------------
     Notwithstanding any other provisions of this Program and any elections made
     by the Participant or his Beneficiary, except an election made in
     accordance with Section 11.13(a), if a Participant dies on or after his
     Required Beginning Date but before his entire vested Net Balance Account
     has been distributed, and on or after the date upon which distribution of
     his vested Net Balance Account has commenced in installments over a period
     certain:

               (1)  not in excess of the life expectancy of the Participant or
          the joint and last survivor life expectancy of the Participant and his
          Beneficiary and such life expectancy was not subject to
          redetermination under Section 11.12(e), the balance of the
          Participant's vested Net Balance Account shall be distributed to his
          Beneficiary at least as rapidly as under the method of distribution in
          effect on the date of the Participant's death; or

               (2)  not in excess of the Participant's life expectancy or the
          life expectancies of the Participant and his Beneficiary one or both
          of which are subject to periodic redetermination in accordance with
          Section 11.12(e), the balance of the Participant's vested Net Balance
          Account shall be distributed to his Beneficiary (A) by the last day of
          the Plan Year following the Plan Year in which the Participant died,
          if the period was based solely upon the Participant's life expectancy
          and (B) over a period not longer than the Beneficiary's remaining life
          expectancy as determined under the method of determining life
          expectancy used for the Beneficiary at the time benefit payments
          commenced to the Participant, if the period was based upon the joint
          and last survivor life expectancy of the

                                      -99-
<PAGE>

          Participant and the Beneficiary. The remaining life expectancy of a
          Beneficiary for purposes of the preceding sentence shall be (1) if
          such life expectancy is not subject to redetermination, the
          Beneficiary's life expectancy at the time installment payments
          commenced to be made to the Participant reduced by one year for each
          year over which such payments have been made or (2) if such life
          expectancy is subject to redetermination, the Beneficiary's life
          expectancy as redetermined at the applicable times following the
          Participant's death.

          (d)  Period of Distribution - Death Before Distributions Commence.
               ------------------------------------------------------------
     Notwithstanding any elections made by a Participant or Beneficiary, if
     Section 11.3(c) is not applicable, and a Participant dies before his entire
     vested Net Balance Account has been distributed or commenced to be
     distributed, the Participant's vested Net Balance Account shall be
     distributed not later than December 31 of the calendar year which contains
     the fifth anniversary of the Participant's death; except that if his
     Beneficiary is an individual, the Participant's vested Net Balance Account
     may be distributed over a period not exceeding the Beneficiary's life
     expectancy (or, if there are multiple Beneficiaries, the Beneficiary with
     the shortest life expectancy) determined as of the date of the
     Participant's death, and if the Beneficiary is a trust, the Participant's
     vested Net Balance Account may be distributed over a period not exceeding
     the life expectancy of the beneficiary of the trust or estate who then has
     the shortest life expectancy determined as of the Participant's death,
     beginning, in either event, no later than December 31 of the calendar year
     after the calendar year of the Participant's death to the extent permitted
     under Section 11.3(h). Notwithstanding the foregoing, if the Beneficiary is
     the Participant's surviving spouse, distribution shall be made or shall
     commence not later than December 31 of the calendar year in which the
     Participant would have attained the age of 70-1/2 years.

          (e)  Death of Surviving Spouse Who Is Beneficiary Before Benefit
               -----------------------------------------------------------
     Payments Commence. If the surviving spouse of a Participant is the
     -----------------
     Beneficiary, and the surviving spouse dies before distributions have begun
     to the surviving spouse in accordance with Section 11.3(c)(1) or (2), the
     rules of Sections 11.3(c) and 11.3(d) shall apply as though such surviving
     spouse were the Participant, substituting the date of death of such spouse
     for the date of the Participant's death to determine the dates therein.
     Distributions are considered to have begun to the surviving spouse on the
     later of the dates specified in Section 11.3(c)(1) or (2).

          (f)  Death of Beneficiary After Benefit Payments Commence. If a
               ----------------------------------------------------
     Beneficiary has commenced to receive distributions under Section 11.3(d),
     and such Beneficiary dies before the entire vested Net Balance Account has
     been distributed, any subsequent Beneficiary whose status as a Beneficiary
     was contingent on the death of the first Beneficiary shall receive
     distributions at least as rapidly as under the distribution method in
     effect upon the first Beneficiary's death.

                                     -100-
<PAGE>

          (g)  Amount Paid to a Child. Any amount paid to a child, in accordance
               ----------------------
     with regulations prescribed by the Secretary of the Treasury, shall be
     treated as if it had been paid to the Participant's surviving spouse if
     such amount will become payable to the surviving spouse upon such child
     reaching majority (or such other events as the Secretary of the Treasury
     may by regulations prescribe).

          (h)  Trust as Beneficiary. Notwithstanding the foregoing provisions of
               --------------------
     Section 11.3, if a trust is designated the Beneficiary under the Program
     and

               (1)  if the following requirements are met, the Beneficiary or
          Beneficiaries of the trust shall be considered the Beneficiary in
          accordance with applicable regulations and rulings for the purpose of
          determining the period over which distributions in the form of
          installments or annuities may be distributed. The applicable trust
          requirements are:

                    (A)  the trust is a valid trust under state law, or would be
                    but for the fact that there is no corpus;

                    (B)  the trust is irrevocable or will become so by its terms
                    upon the Participant's death;

                    (C)  the beneficiaries of the trust with respect to the
                    trust's interest in the Participant's vested Net Balance
                    Account are identifiable from the trust instrument as
                    provided in Section 401(a)(9) of the Internal Revenue Code
                    and the regulations adopted or proposed thereunder; and

                    (D)  a copy of the trust instrument has been provided to the
                    Plan Administrator; and

               (2)  If the above listed requirements are not met and the
          Participant dies on or after the Participant's Required Beginning
          Date, the Participant shall be treated as not having designated a
          Beneficiary for purposes of determining the period over which
          distributions may be made and distributions shall be made to the trust
          at least as rapidly as over the longest period over which
          distributions could have been made under Section 11.3(c) if the
          Participant had no Beneficiary.

               (3)  If the above listed requirements are not met, and the
          Participant dies before his Required Beginning Date, the Participant
          shall be treated as not having designated a Beneficiary for purposes
          of the exception to the requirement in Section 11.3(d) that
          distributions be made within five years and, therefore, distributions
          shall be made within the five year period designated in Section
          11.3(d).

                                     -101-
<PAGE>

  11.4    Vesting and Forfeitures.
          -----------------------

          (a)  A Participant who has a Termination of Employment on or after his
     Vesting Retirement Date or who has a Termination of Employment on account
     of Disability or death shall be fully vested in his Net Balance Account.

          (b)  If a Participant has a Break in Service or has a Termination of
     Employment with the Employer for reasons other than retirement on or after
     his Vesting Retirement Date, death, or Disability, such Participant shall
     be fully vested in his (1) Investment Savings Account; (2) his Rollover
     Account; (3) Rollover Holding Account; (4) Participant Elected Contribution
     Account; (5) Employer Matching Contribution Account; (6) McDESOP
     Diversification Account; and (7) Stock Sharing Account. Such Participant
     shall be vested in his Profit Sharing Account, LESOP Account and LESOP
     Diversification Account in accordance with the following table wherein the
     first column represents the Credited Service of the Participant, and the
     second column represents the Vested Percentage of the Participant's Profit
     Sharing Account, LESOP Account and LESOP Diversification Account:

               (A)  For Participant's Whose Termination of Employment was on or
          before December 31, 1999

          Years of Credited Service               Vested Percentage
          -------------------------               -----------------

          less than 2 years                               0
          2 years but less than 3                         5
          3 years but less than 4                        20
          4 years but less than 5                        40
          5 years but less than 6                        60
          6 years but less than 7                        80
          7 years and over                              100

               (B)  For Participant's Whose Termination of Employment is on or
          after January 1, 2000

          Years of Credited Service               Vested Percentage
          -------------------------               -----------------

          less than 1 year                                0
          1 years but less than 2                        20
          2 years but less than 3                        40
          3 years but less than 4                        60
          4 years but less than 5                        80
          5 years and over                              100

                                     -102-
<PAGE>

          (c)  The portion of the Participant's Profit Sharing Account, LESOP
     Account and LESOP Diversification Account which is not vested as of his
     Termination of Employment or the occurrence of a Break in Service shall
     become a Forfeiture at the earlier of (1) the first day of the Plan Year
     immediately following the Plan Year in which the Participant has five
     consecutive Breaks in Service or (2) as of the Valuation Date immediately
     following the Valuation Date as of which the Vested Percentage of the
     Participant's Profit Sharing Account, LESOP Account and LESOP
     Diversification Account, respectively, are distributed. Subject to Section
     11.3(d) and 11.3(e), (A) Forfeitures occurring with respect to a
     Participant's Profit Sharing Account shall be credited to the McDESOP
     Holding Fund as of the Valuation Date following the date the amount of such
     Forfeiture is determined but not later than the sixth Valuation Date after
     the date as of which the amounts became a Forfeiture and (B) from
     Participants' LESOP Accounts and LESOP Diversification Account shall be
     allocated for the Plan Year among all Active Participants as provided in
     Section 7.3 for Forfeitures from Participants' LESOP Accounts. A
     Participant whose Vested Percentage is zero at the time of his Termination
     of Employment or Break in Service shall be deemed to have had a
     distribution of the Vested Percentage of his Profit Sharing Account, LESOP
     Account and LESOP Diversification Account as of the Valuation Date
     immediately following the date on which the Participant has a Termination
     of Employment or Break in Service.

          (d)  If a Participant, (1) who had a Termination of Employment,
     resumes employment with an Employer before he has a Break in Service or,
     (2) who had a Termination of Employment or Break in Service occurring on or
     after January 1, 1985, earns one Year of Eligibility Service following the
     Break in Service (but before having five consecutive Breaks in Service),
     the amount of the Participant's Profit Sharing Account, LESOP Account and
     LESOP Diversification Account, if any, forfeited under Section 11.4(c)
     shall be reinstated to the respective Accounts out of Forfeitures from the
     Profit Sharing portion and the LESOP portion of the Program, respectively,
     for the Plan Year in which such resumption of employment occurs or such one
     Year of Eligibility Service is earned, whichever is applicable. To the
     extent that Forfeitures for such Plan Year are not sufficient, the amount
     to be reinstated shall be charged against income of the Profit Sharing
     Holding Fund and the McDESOP Holding Fund, respectively. Thereafter, in the
     case of a Participant who received a distribution and had his Forfeiture
     reinstated, the Participant's Vested Percentage in his Profit Sharing
     Account, LESOP Account or LESOP Diversification Account shall be equal to
     an amount determined by subtracting the amount distributed (the
     "Distributed Amount") on the Participant's Termination of Employment or
     Break in Service from the product of (1) the Participant's Vested
     Percentage determined pursuant to Section 11.4 multiplied by (2) the sum of
     (a) the Distributed Amount and (b) the value of the Participant's Profit
     Sharing Account, LESOP Account or LESOP Diversification Account,
     respectively.

          (e)  The amount, if any, forfeited under Section 11.4(c) shall not be
     reinstated if a Participant is rehired or again becomes a Participant and
     if the Participant either (1) had a Break in Service before January 1, 1985
     or (2) did not have a Break in Service before January 1, 1985 and had five
     consecutive Breaks in Service. If all or a portion of

                                     -103-
<PAGE>

     the Vested Percentage of a Participant's Profit Sharing Account, LESOP
     Account or LESOP Diversification Account prior to his Termination of
     Employment or Break in Service was not distributed prior to his resumption
     of service and he was not 100% vested in such accounts upon Termination of
     Employment or Break in Service, then: (1) the Vested Percentage of the
     Participant's Profit Sharing Account, LESOP Account or LESOP
     Diversification Account at the time of Forfeiture which was not distributed
     shall be held in a "Pre-Break Profit Sharing Account," "Pre-Break LESOP
     Account" or "Pre-Break LESOP Diversification Account," respectively, which
     shall be 100% vested; and (2) the Participant's Profit Sharing
     Contributions and the net earnings thereon and LESOP Contributions and the
     net earnings thereon attributable to service after the Break in Service or
     five (5) consecutive Breaks in Service, as applicable, shall be held in a
     "Post-Break Profit Sharing Account," and "Post-Break LESOP Account,"
     respectively, which shall be vested in accordance with Section 11.4(b). Any
     amounts transferred to the Participant's LESOP Diversification Account from
     the Participant's Pre-Break LESOP Account shall be held in the
     Participant's Pre-Break LESOP Diversification Account and amounts
     transferred from the Participant's Post-Break LESOP Account shall be held
     in the Participant's Post-Break LESOP Diversification Account.

          (f)  Each Participant who is a certified swing manager, primary
     maintenance employee, crew member or other hourly restaurant employee who
     is an Employee on July 1, 1992, shall be fully vested in his LESOP Account
     as of July 1, 1992.

  11.5    Payment of Employer Profit Sharing Contribution for Year of
          -----------------------------------------------------------
Termination of Employment. If a Participant (or the Beneficiary thereof) who is
-------------------------
an Active Participant for the Plan Year in which or immediately before which he
has a Termination of Employment receives an allocation of Employer Profit
Sharing Contributions pursuant to Section 7.1, an allocation of Company Stock
released from the LESOP Suspense Account pursuant to Section 7.3 or an
allocation of Employer Matching Contributions and Forfeitures pursuant to
Section 7.2 after he has received a single sum distribution of his Net Balance
Account, the vested portion of any such allocation shall be distributed to the
Participant or, in the event of his death, to his Beneficiary within a
reasonable time after the later of the close of the Plan Year or the Valuation
Date following the Participant's election to receive such distribution. If such
Participant or Beneficiary has not received a single sum distribution of his
vested Net Balance Account, any such allocations pursuant to Sections 7.1, 7.2
and 7.3 for the Plan Year shall be credited to the Participant's respective
Accounts and the vested portion of such contributions shall be distributed as a
part of such account in the manner provided in Section 11.2 or 11.3, whichever
shall apply.

  11.6    Designation of Beneficiary and Form of Beneficiary Benefit. Subject to
          ----------------------------------------------------------
Sections 11.3 and 11.10, the Participant may (1) designate his Beneficiary, (2)
elect the form of his Beneficiary's benefit and (3) elect to prohibit
Beneficiary elections under Section 11.3(b) on forms provided by and filed with
the Committee; provided that a beneficiary designation completed and filed with
the Committee before January 1, 1989, under the McDonald's Corporation Savings
and Profit Sharing Plan shall be deemed to apply to the Profit Sharing Plan
portion of the Program and a beneficiary designation completed and filed with
the Committee

                                     -104-
<PAGE>

before January 1, 1989, under the McDonald's Matching and Deferred Stock
Ownership Plan shall be deemed to apply to the McDESOP and LESOP portions of the
Program. A beneficiary designation form filed with the Committee on or after
January 1, 1989 and before January 1, 1996 shall be deemed to apply to the
Profit Sharing, McDESOP and LESOP portions of the Program and to replace all
prior Beneficiary designations unless the Beneficiary designation provides
otherwise. A Beneficiary designation filed by a Participant under the Stock
Sharing Plan before January 1, 1996 shall be deemed to apply to the Stock
Sharing portion of the Program. A Beneficiary designation filed with the
Committee on or after January 1, 1996, shall be deemed to apply to the entire
Program and to replace all prior Beneficiary designations except to the extent
such Beneficiary designation provides otherwise. The Participant may submit
separate Beneficiary designations for the Profit Sharing, McDESOP, LESOP and
Stock Sharing portions of the Program and change his Beneficiary designation and
his elections concerning his Beneficiary's benefit from time to time by filing
the beneficiary designation form with the Committee. No designation of
Beneficiary or election concerning a Beneficiary's benefit or change of such
designation or election shall be effective until filed with the Committee. If a
Participant shall fail to file a valid Beneficiary designation, if all persons
designated on the Beneficiary designation form predecease the Participant (or,
in the case of a Beneficiary other than an individual, cease to exist prior to
the Participant's death) or to the extent that the Participant's Beneficiary
designation form fails to dispose of his entire interest, the Trustee shall
distribute the Participant's vested Net Balance Account to the following persons
in the following order of precedence:

          (a)  His surviving spouse;

          (b)  With respect to the Profit Sharing Plan portion of the Program,
     his Beneficiary designated under McDESOP portion of the Program; with
     respect to the McDESOP and LESOP portions of the Program, his Beneficiary
     designated under the McDonald's Corporation Savings and Profit Sharing Plan
     or the Profit Sharing Plan portion of the Program; and with respect to the
     Stock Sharing portion of the Program, those persons designated by the
     Participant to receive his death benefits under the Participant's
     McDonald's basic group term life insurance benefits or, in the absence of
     such designation, under the Profit Sharing Plan portion of the Program.

          (c)  The person or entity who receives the Participant's McDonald's
     basic group term life insurance benefits;

          (d)  His lawful descendants including adopted children per stirpes;

          (e)  His parents in equal shares, or (if only one parent survives him)
     his surviving parent;

          (f)  The lawful descendants of his parents, per stirpes;

          (g)  His estate.

                                     -105-
<PAGE>

In the absence of a Participant's election to prohibit the Beneficiary elections
allowed in Section 11.3(b), his Beneficiary shall be permitted to make such
elections.

  11.7    Incompetency, Distribution of Benefits.
          --------------------------------------

          (a)  If a Participant or Beneficiary is declared an incompetent or is
     a minor, and a conservator, guardian or other person legally charged with
     his care is appointed or if such Participant is not a minor and has
     executed a so-called durable power of attorney and if the Committee is
     given written notice of such appointment or power of attorney, any benefits
     to which such Participant or Beneficiary is entitled shall be distributable
     to such conservator, guardian or other person legally charged with his care
     or to the attorney-in-fact under the power of attorney.

          (b)  If a Participant or Beneficiary is incompetent, a minor or, in
     the opinion of the Committee, would fail to derive benefit from
     distribution of his accounts and if a conservator, guardian or other person
     legally charged with his care has not been appointed or if the Committee
     has not been given written notice of such appointment, the Committee may
     (1) require the appointment of a conservator or guardian, (2) distribute
     the Participant's Accounts to relatives of the Participant or Beneficiary
     for the benefit of the Participant or Beneficiary, or (3) distribute such
     Accounts directly to or for the benefit of the Participant or Beneficiary.

          (c)  The decision of the Committee in such matters shall be final,
     binding and conclusive upon the Employer and the Trustee and upon each
     Employee, Participant, Beneficiary and every other person or party
     interested or concerned, and neither the Employer, the Committee nor the
     Trustee shall be under any duty to see to the proper application of such
     distribution made to or for a Participant or Beneficiary, or conservator,
     guardian or relative of a Participant or Beneficiary.

  11.8    Deduction of Taxes from Accounts Payable. The Trustee or the Committee
          ----------------------------------------
may deduct from the amount to be distributed such amount as the Trustee or the
Committee, in its sole discretion, deems proper to protect the Trustee, the
Committee and the Trust against liability for the payment of death, succession,
inheritance, income, or other taxes, and out of the money so deducted, the
Trustee may discharge any such liability and pay the amount remaining to the
Participant, the Beneficiary or the deceased Participant's estate, as the case
may be.

  11.9    Deadline for Payment of Benefits. Except to the extent that a
          --------------------------------
Participant in accordance with the Program otherwise elects and except to the
extent it is not administratively feasible, payment of benefits shall be made or
commence not later than sixty (60) days after the latest of (a) the close of the
Plan Year in which the Participant attains age fifty-five (55), (b) the close of
the Plan Year in which occurs the tenth (10th) anniversary of the Plan Year in
which the Participant commenced participation, and (c) the close of the Plan
Year in which the Participant has a Termination of Employment; provided that, a
Participant, who is entitled to receive a distribution pursuant to this Section
11.9 and whose vested account balance is equal to at least $5,000, must submit a
claim for benefits before any distributions will be made hereunder.

                                     -106-
<PAGE>

  11.10   Spousal Consent to a Beneficiary or a Waiver.
          --------------------------------------------

          (a)  A valid spousal consent to the Participant's naming of a
     Beneficiary other than his spouse or to the Participant's Waiver of a
     Qualified Joint and Survivor Annuity or a Qualified Preretirement Survivor
     Annuity shall be:

               (1)  in a writing acknowledging the effect of the consent;

               (2)  witnessed by a notary public;

               (3)  effective only with respect to a specific Beneficiary and,
          in the case of a waiver of a Qualified Joint and Survivor Annuity or
          Qualified Preretirement Survivor Annuity, shall specify an optional
          form of benefit unless the spouse voluntarily in such consent
          expressly permits subsequent designations of beneficiaries or
          elections of optional forms of benefit without further spousal consent
          and acknowledges the spouse's right to limit the consent to a specific
          Beneficiary and optional form of benefit, where applicable; and

               (4)  effective only for the spouse who exercises the consent;

     provided that notwithstanding the provisions of this Article XI, the
     consent of a Participant's spouse shall not be required if it is
     established to the satisfaction of a Plan representative that such consent
     may not be obtained because there is no spouse, because the spouse cannot
     be located or because of such other circumstances as the Secretary of the
     Treasury may by regulations prescribe.

          (b)  To the extent provided in any Qualified Domestic Relations Order
     (as defined in Section 16.5, the former spouse of a Participant shall be
     treated as the surviving spouse of such Participant for purposes of Section
     11.3 and for providing consent in accordance with Section 11.10(a).

  11.11   Single Sum Payment without Election. Notwithstanding any provisions of
          -----------------------------------
this Article XI to the contrary (except Section 11.14 to the extent therein
provided), if the Participant or Beneficiary is entitled to a distribution
because of the Participant's Break in Service (but not in the case of a Break in
Service without a Termination of Employment), retirement on or after his Vesting
Retirement Date, death, Disability, or other Termination of Employment, and if
the value of the vested portion of a Participant's Net Balance Account under the
Program does not exceed $5,000, the Committee shall direct the immediate
distribution of such benefit prior to the annuity starting date or other date of
distribution or commencement of distribution, regardless of any election or
consent of the Participant, his spouse, or other Beneficiary.  If the Net
Balance Account under the Program of an alternate payee under a Qualified
Domestic Relations Order, as provided under Section 16.5, does not exceed
$5,000, the Committee shall direct the immediate distribution of such benefit
regardless of any election of the alternate payee absent a contrary provision in
the Qualified Domestic Relations Order.

                                     -107-
<PAGE>

  11.12   Installment Payments. Subject to Section 11.4 and 11.2(d):
          --------------------

          (a)  Elected Installments Paid to Participant. If a Participant elects
               ----------------------------------------
     installment payments, they shall be substantially equal installments, paid
     at least annually, over a period certain as elected by the Participant
     which period shall not be in excess of the life expectancy of the
     Participant or the joint and last survivor life expectancy of the
     Participant and his Beneficiary, if such Beneficiary is an individual
     ("Applicable Life Expectancy") determined as of the date such payments
     commence; provided that if elected by the Participant pursuant to Section
     11.12(e), life expectancy may be redetermined.

          (b)  Required Installments Paid to Participant. The Applicable Life
               -----------------------------------------
     Expectancy of a Participant, who according to the records of the Employer
     has attained the age of 70-1/2 and who elects to receive installments but
     who fails to make a permissible election with respect to the period over
     which installments shall be paid or fails to provide the Committee with any
     requested proof of his age or the age of his Beneficiary by such deadline
     as the Committee shall require, shall be deemed to be the life expectancy
     of the Participant as reasonably determined from the records of the
     Employer; provided that if a Participant subsequently provides the
     Committee with proof that his age is greater than the Employer's records
     indicated, the Committee shall redetermine the Participant's Applicable
     Life Expectancy based upon the corrected information and shall distribute
     to the Participant any amounts which would have been required to be
     distributed if the Participant's correct age had been used to determine his
     Applicable Life expectancy for the purpose of determining the Minimum
     Distribution Amount, as defined in Section 11.12(d), for any installment
     distributions which have already been made.

          (c)  Installments Commencing After Participant's Death. If
               -------------------------------------------------
     installments commence to be paid after the Participant's death to the
     Participant's Beneficiary who is an individual, they shall be substantially
     equal installments, paid at least annually, over a period certain not in
     excess of the life expectancy of such individual determined as of the date
     such payments commence; provided that if the Participant's Beneficiary is
     his surviving spouse, such Beneficiary may elect to have his life
     expectancy redetermined as provided in Section 11.12(e).

          (d)  Minimum Distribution Amount. Installment payments are
               ---------------------------
     substantially equal if the amount of each installment distributed in a
     calendar year is not less than an amount equal to the balance of the
     person's Net Balance Account as of the last day of the preceding calendar
     year divided by the Applicable Life Expectancy ("Minimum Distribution
     Amount"). In calculating the Minimum Distribution Amount for each calendar
     year after the calendar year in which the Participant attained the age of
     70-1/2 or for each calendar year after payments to the Beneficiary have
     commenced (either of which is called the "First Year"), the Applicable Life
     Expectancy shall be reduced by one for each calendar year which has elapsed
     commencing with the First Year.

                                     -108-
<PAGE>

          (e)  Determination of Life Expectancy. The life expectancy of a
               --------------------------------
     Participant and of his spouse and the joint and last survivor life
     expectancy of the Participant and his spouse may be redetermined for
     purposes of determining the amounts required to be distributed pursuant to
     Section 11.2(c), 11.2(d) or 11.12(a), if elected by the Participant (or his
     spouse, if the Participant is deceased and if his spouse is the
     Participant's Beneficiary) in accordance with such uniform and
     nondiscriminatory rules as the Committee shall establish, but may not be
     redetermined more frequently than annually. Life expectancies shall not be
     redetermined unless the Participant (or spouse) so elects by the date
     distributions are required to commence under the Program. Unless subject to
     redetermination, life expectancies are calculated using the Participant's
     or Beneficiary's birth date in the calendar year in which the Participant
     attains the age of 70-1/2, in the case of benefits commencing during the
     Participant's lifetime and in the case of payments to the Beneficiary, as
     of the date such payments commence. In the case of annuity payments made
     pursuant to an insurance contract, however, life expectancy is determined
     in the calendar year in which annuity payments commence. If a Participant's
     or his spouse's life expectancy is not being redetermined, it shall be
     reduced by one for each year after the calendar year in which it was
     determined for the purpose of determining the amount of installment
     payments hereunder. All life expectancies shall be determined using the
     expected return multiples in Tables V and VI of Treas. Reg. (S) 1.72-6 or
     any successor tables issued from time to time by the Internal Revenue
     Service.

  11.13   Required Minimum Distributions to Employed Participants.
          -------------------------------------------------------

          (a)  Subject to Section 11.13(d) or 11.3(e), a Participant who has
     attained the age of 70-1/2 but has not had a Termination of Employment
     shall commence receiving installment payments in the Minimum Distribution
     Amount for the calendar year in which he becomes 70-1/2 not later than
     April 1 of the following year and installment payments for each calendar
     year after the calendar year in which he became 70-1/2, not later than the
     last day of each such year.

          (b)  The amount distributed for the year in which such Participant
     becomes 70-1/2 and in each calendar year thereafter shall be not less than
     the Minimum Distribution Amount determined under Section 11.12(d).

          (c)  A Participant who has not had a Termination of Employment and who
     will attain his Required Beginning Date in the next calendar year, may
     elect at such time and on such form as the Committee shall permit to
     receive his first distribution required pursuant to Section 11.13(a) in the
     year before the calendar year in which his Required Beginning Date occurs.

          (d)  A Participant who has not had a Termination of Employment attains
     the age of 70-1/2 may elect to receive his entire vested Net Balance
     Account on or after the attainment of that age. Such a Participant, who
     elects to receive his entire vested Net Balance Account pursuant to the
     preceding sentence, may elect to have such election

                                     -109-
<PAGE>

     continue to apply each subsequent Plan Year until he changes the election
     with respect to a future Plan Year.

          (e)  Notwithstanding the foregoing provisions of Section 11.13, a
     Participant, who is not a Five Percent Owner and has attained the age of 70
     1/2 but has not had a Termination of Employment, may elect to receive or
     not to receive distributions as provided in Sections 11.13(a) and 11.13(b).
     If the Participant fails to make such an election, the distributions
     provided in Sections 11.13(a) and 11.13(b) shall be made to such a
     Participant. If such distributions have commenced to such a Participant, he
     or she may make an election to discontinue such distributions. If such
     distributions are not being made to a Participant, he or she may make one
     election, which shall be irrevocable subject to the Participant's right
     under Section 11.16(c) to elect a distribution of his entire Net Balance
     Account or to commence receiving distributions as provided in Sections
     11.13(a) and 11.13(b). Elections made hereunder shall be made at such time
     and in accordance with such procedures as the Committee shall from time to
     time permit.

  11.14   Transitional Rules.
          ------------------

          (a)  TEFRA 242(b) Elections. Effective for all Participants and
               ----------------------
     Beneficiaries whether or not the Participant was an Employee after the
     Effective Date of the Program, notwithstanding any other provision herein,
     distributions to Participants or Beneficiaries made from the Profit Sharing
     Plan portion of the Program, except for the Participant's Diversification
     Account, are subject to any valid election under TEFRA Section 242(b) made
     under the McDonald's Corporation Savings and Profit Sharing Plan by a
     Participant prior to January 1, 1984 to have the distribution of the
     Participant's benefits deferred or extended beyond the period otherwise
     permitted under the provisions of this Article XI which was then permitted
     under applicable law until the Participant (or his Beneficiary) revokes the
     election by an act recognized as a revocation under TEFRA 242(b); provided
     that if the Participant's spouse is not the Beneficiary of 100 percent of
     his vested Accrued Benefit under the Program, the Participant's spouse
     shall have consented to the naming of another Beneficiary in accordance
     with Section 11.10.

          (b)  Distributions to Certain Participants and Beneficiaries in Pay
               --------------------------------------------------------------
     Status. Effective for all Participants and Beneficiaries whether or not the
     ------
     Participant was an Employee after January 1, 1984, for any distribution
     which would not have disqualified the Trust under Code Section 401(a)(9) as
     in effect prior to amendment by the Tax Reform Act of 1984, which was
     permitted under the Program as in effect on the date such distributions
     commenced, and which either

               (1)  commenced prior to and continued on or after January 1,
          1984, distributions may continue to the Participant or the Beneficiary
          to whom such distribution is being made under the method of
          distribution in effect; provided that the method of distribution was
          specified in a writing including the time at which the distribution
          was to commence, the period over which such distributions will

                                     -110-
<PAGE>

            be made and, in the case of any distribution upon the Participant's
            death, a list of the Beneficiaries of the Participant in order or
            priority; or

                 (2) commenced prior to the first Plan Year beginning in 1985,
            distributions may continue to the Participant or the Beneficiary to
            the extent permitted under applicable law, regulations and rulings.

     11.15  Sale of Restaurant - Special Vesting Rules. Notwithstanding any of
            ------------------------------------------
the provisions herein to the contrary, a Participant who is not 100% vested in
his Profit Sharing Account and his LESOP Account and who has a Termination of
Employment on account of a sale on or after December 1, 1986 but prior to
January 1, 1993 of a McDonald's restaurant to a joint venture partnership in
which the Company owns an interest ("Joint Venture") shall have a single
opportunity to elect, in accordance with such procedures as the Committee shall
establish, to receive a distribution of his benefits as provided in Article XI
(or to retain the ability to make an election to receive such a distribution at
any time) or (notwithstanding the provisions of Section 11.11 to the contrary),
solely for purposes of determining the Participant's Vested Percentage in his
Profit Sharing Account, his LESOP Account and LESOP Diversification Account, if
any, to continue to be credited with Credited Service for employment with the
Joint Venture. If the Participant elects to continue to be credited with
Credited Service for employment with the Joint Venture, his Accounts will
subsequently be distributed by applying Article XI as if the Joint Venture were
his sole Employer for the purpose of determining when such Participant
thereafter has a Termination of Employment. Service for periods of employment
with the Joint Venture shall be determined by crediting each such electing
Participant with one Year of Credited Service for each subsequent consecutive
October 31 that such Participant is employed by the Joint Venture; provided that
a Participant shall not receive more than one Year of Credited Service for a
single Plan Year.

     11.16  In-Service Withdrawals.
            ----------------------

            (a)  Investment Savings and Rollover Accounts. A Participant may,
                 ----------------------------------------
     upon written notice to the Committee, given before the administrative
     cutoff date prior to the end of any calendar month, withdraw all or any
     portion of such Participant's Investment Savings Account, Rollover Account
     and Rollover Holding Account valued as of the Valuation Date of the
     calendar month in which such notice is given. Distribution of such
     withdrawals shall be made within the next calendar month. The Committee
     may, from time to time, establish such rules and procedures as it deems
     appropriate to administer or limit the withdrawal of Participant's
     Investment Savings Accounts, Rollover Accounts and Rollover Holding
     Accounts under this Section 11.16 provided, however, that in no event shall
     the Committee limit Participants' rights of withdrawal to less than one
     withdrawal per Plan Year. To the extent administratively feasible the
     period of notice required for withdrawal or distribution can be relaxed,
     reduced or eliminated upon appropriate request to the Committee.

            (b)  Stock Sharing Accounts. A Participant may, on a form at such
                 ----------------------
     time and in such manner as the Committee shall prescribe, elect to have
     distributed to him in cash or

                                     -111-
<PAGE>

     in shares of common stock of the Company, the shares which have been
     allocated to his Stock Sharing Account for eighty-four (84) months
     following the month in which such shares were allocated to his Stock
     Sharing Account, provided that such withdrawals shall consist of whole
     shares. As of the Effective Date all shares of common stock of the Company
     purchased with contributions to the Stock Sharing Plan have been held for
     more than 84 months and therefore may be distributed.

            (c)  Distributions after Age 70-1/2.  A Participant who has
                 ------------------------------
     attained the age of 70-1/2 but has not had a Termination of Employment may
     elect, at such time and on such form as the Committee shall permit, to
     begin receiving installment payments or a distribution of his entire Net
     Balance Account as provided in Section 11.13.

11.17       Direct Rollovers.
            ----------------

            (a)  A Distributee whose benefit is distributable pursuant to
     another provision of the Program may elect, at the time and in the manner
     prescribed by the Committee, to have any portion of an Eligible Rollover
     Distribution paid directly to an Eligible Retirement Plan specified by the
     Distributee in a Direct Rollover; subject to such reasonable administrative
     requirements as the Committee may from time to time establish which may
     include, but shall not be limited to, requirements consistent with Treasury
     Regulations and other guidance issued by the Internal Revenue Service
     permitting de minimis standards for amounts eligible to be rolled over or
     paid partly to the Participant and partly rolled over. A Participant may
     make an election pursuant to this Section 11.17 only after the Distributee
     has met otherwise applicable requirements for receipt of a distribution
     under the Program, including but not limited to any applicable requirements
     that the Participant's spouse or (pursuant to a Qualified Domestic
     Relations Order as defined in Section 16.5) former spouse consent to the
     Participant's waiver of a Qualified Joint and Survivor Annuity or Qualified
     Preretirement Survivor Annuity.

            (b)  In the absence of the adoption by the Committee of any
     requirements to the contrary, the following shall apply:

                 (1)  A Distributee whose Eligible Rollover Distribution is less
     than $200 upon the Valuation Date immediately preceding the date of
     distribution shall not be permitted to elect to have all or any portion of
     the distribution made in the form of a Direct Rollover.

                 (2)  A Distributee who elects a Direct Rollover in an amount
          equal to at least $500 may also elect to have the remaining portion of
          his distribution paid to the Distributee.

                 (3)  A Distributee shall be permitted to divide an Eligible
          Rollover Distribution into separate distributions to be paid to two or
          more Eligible Retirement Plans in two or more Direct Rollovers.

                                     -112-
<PAGE>

                 (4)  A Distributee's election to make or not to make a Direct
          Rollover with respect to a payment in a series of periodic payments
          shall apply to all subsequent payments in the series until the
          Distributee changes his election.

                 (5)  If a Distributee, who has been notified as to the
          availability of the Direct Rollover option, fails to elect a Direct
          Rollover with respect to an Eligible Rollover Distribution, such
          Distributee shall be deemed to have elected not to make a Direct
          Rollover.

          (c)  As used in this Section 11.17, the following terms shall have the
     following meanings:

               (1)  "Eligible Rollover Distribution" means any distribution of
                     ------------------------------
          all or any portion of the balance to the credit of the Distributee,
          except that an Eligible Rollover Distribution does not include: any
          distribution that is one of a series of substantially equal periodic
          payments (not less frequently than annually) made for the life (or
          life expectancy) of the Distributee or the joint lives (or joint life
          expectancies) of the Distributee and the Distributee's designated
          Beneficiary, or for a specified period of ten years or more; any
          distribution to the extent such distribution is required under Section
          11.13; and the portion of any distribution that is not includable in
          gross income (determined without regard to the exclusion for net
          unrealized appreciation with respect to employer securities).

               (2)  "Eligible Retirement Plan" means an individual retirement
                     ------------------------
          account described in Section 408(a) of the Internal Revenue Code, an
          individual retirement annuity described in Section 408(b) of the
          Internal Revenue Code, an annuity plan described in Section 403(a) of
          the Internal Revenue Code, or a qualified trust described in Section
          401(a) of the Internal Revenue Code, that accepts the Distributee's
          Eligible Rollover Distributions. However, in the case of an Eligible
          Rollover Distribution to a Participant's surviving spouse or surviving
          former spouse who is a Distributee pursuant to a Qualified Domestic
          Relations Order, an Eligible Retirement Plan is an individual
          retirement account or individual retirement annuity.

               (3)  "Distributee" means a Participant.  In addition, a
                     -----------
          Participant's surviving spouse and a former spouse who is the
          alternate payee under a Qualified Domestic Relations Order are
          Distributees with regard to the interest of such spouse or former
          spouse.

               (4)  "Direct Rollover" means a payment by the Program to the
                     ---------------
          Eligible Retirement Plan specified by the Distributee.

11.18     Waiver of 30 Day Period.  If a Participant or Beneficiary elects to
          -----------------------
receive a Direct Rollover or a distribution in a form other than an annuity as
provided in Section 11.2(a)(1)(C) or 11.3(a)(3)(C), such distribution may be
made or commence to be made less than 30 days after

                                     -113-
<PAGE>

the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations
is given, provided that:

          (a)  the Committee shall inform the Participant or Beneficiary that he
     has a right to a period of at least 30 days after receiving the notice to
     consider the decision of whether or not to elect a distribution (and, if
     applicable, a particular distribution option or a Direct Rollover), and

          (b)  the Participant or Beneficiary after receiving the notice
     affirmatively waives his right to consider his decision for a 30 day
     period.

                                     -114-
<PAGE>

                                  ARTICLE XII

                            SUBSIDIARY PARTICIPATION

  12.1 Adoption of Program and Trust.  Any Commonly Controlled Entity,
       -----------------------------
Subsidiary or Domestic or Foreign Affiliate of the Company (or other business
entity in which the Company owns an interest) may, with the approval of the
Board of Directors and under such terms and conditions as the Board of Directors
may prescribe, adopt the Program and Trust by resolution of its board of
directors (or approval of other appropriate persons in the case of a
noncorporate entity); provided that the LESOP portion of the Program (which for
this purpose shall include all allocations from the LESOP Suspense Account
including LESOP Employer Matching Allocations and LESOP Employer Matching
Contributions without regard to the Account to which such amounts would be
credited under the Program) can be adopted only by a corporation which is a
Commonly Controlled Entity or another corporation included with the Company in a
group defined in (a) or (b) below:

          (a)  a corporation which is part of a group of corporations in which a
     common parent owns directly stock possessing at least 50 percent of the
     voting power of all classes of stock and at least 50 percent of each class
     of non-voting stock in a first tier subsidiary and such subsidiary (and all
     other corporations below it in the chain) which would meet the 80 percent
     test of Section 1563(a) of the Code if the first tier subsidiary were the
     common parent); and

          (b)  a corporation which is part of a group of corporations in which a
     common parent owns directly stock possessing all of the voting power of all
     classes of stock and all of the non-voting stock in the first tier
     subsidiary and the first tier subsidiary owns directly stock possessing at
     least 50 percent of the voting power of all classes of stock, and at least
     50 percent of each class of non-voting stock, in a second tier subsidiary
     of the common parent and such second tier subsidiary (and all other
     corporations below it in the chain which would meet the 80 percent test of
     Section 1563(a) of the Code if the second tier subsidiary were a common
     parent).

          The terms and conditions under which a Commonly Controlled Entity,
     Subsidiary or Domestic or Foreign Affiliate of the Company is permitted to
     adopt the Program may include limitations on the portion of the Program or
     the types of contributions which the Employees of an Employer shall
     receive.

  12.2 Withdrawal from Program by Participating Employer.  While it is not the
       -------------------------------------------------
present intention of any Employer to withdraw from the Program, any Employer
other than the Company shall have the right, at any time, upon the approval of
and under such terms and conditions as may be provided by the Board of
Directors, to withdraw from the Program and Trust by delivering to the Committee
and the Trustee written notice of its election so to withdraw.

                                     -115-
<PAGE>

     Upon receipt of such notice by the Committee, the Accounts of Participants
employed by the withdrawing Employer as of the date of withdrawal shall be fully
vested and shall not thereafter be subject to Forfeiture unless such Participant
shall transfer to another Employer as of the date of the withdrawal.  In the
event of the withdrawal of an Employer, such Employer shall elect and notify the
Committee of its election, whether the Net Balance Accounts of the Participants
employed by such Employer (a) shall be immediately distributable by the Trustee,
(b) shall be retained in the Program and become distributable when such
employees die, or otherwise terminate their employment with the Employer, or (c)
if the Employer establishes a plan which meets the requirements of Section
401(a) of the Code which plan permits a transfer from this Program to it by
transfer of the Net Balance Accounts of Participants who are employees of such
Employer to such Employer's plan to be held in separate accounts under such plan
for the benefit of the respective Participants; provided that a distribution
shall not be made to a Participant who is not otherwise entitled to a
distribution in accordance with Article XI unless there has been a disposition
of substantially all the assets used by the Employer in a trade or business and
the Employee continues employment with the corporation acquiring such assets or
the Company has disposed of its interest in the Employer and the Employee
continues employment with the former Employer.

                                     -116-
<PAGE>

                                 ARTICLE XIII

                         ADMINISTRATION OF THE PROGRAM

  13.1 Appointment and Removal of, and Resignation by, Trustee.  The Board of
       -------------------------------------------------------
Directors shall have the power to appoint a successor to a Trustee (including
any one or more individuals acting as Trustee) which has resigned or been
removed, to direct the Trustee to enter into a custodial agreement providing for
deposit of all or any part of the Trust Fund with the custodian, and, with the
consent of the Trustee, to appoint a co-Trustee.  The Trustee may resign at any
time upon thirty (30) days' written notice (or such shorter period of time as
the Board of Directors shall permit by written consent) to the Company and the
Committee.  The Board of Directors shall have the power to remove the Trustee,
with or without cause, upon written notice to the Trustee.

     The appointment of a successor Trustee or co-Trustee shall become effective
upon acceptance in writing of such appointment by the successor Trustee or co-
Trustee and upon acceptance of such appointment by the successor Trustee, the
Trustee shall assign, transfer and pay over to the successor Trustee the Trust
Fund.  The successor Trustee or co-Trustee may be either a corporate Trustee or
an individual, and, except as required by federal law, the successor Trustee or
co-Trustee shall not be personally liable for anything done or omitted to be
done by a predecessor Trustee or co-Trustee prior to the appointment of the
successor or co-Trustee or be required to examine the accounts, records or acts
of any predecessor Trustee or co-Trustee.  Each successor Trustee appointed to
and accepting a Trusteeship hereunder shall have all the rights, title, powers,
duties, exemptions and limitations of the original Trustee.

  13.2 Appointment of Committee; Tenure in Office.  The administrative committee
       ------------------------------------------
("Committee") shall consist of not less than five (5) members who shall be
appointed by the Board of Directors.  The Board of Directors shall have power to
determine the period during which any Committee member shall serve and, in its
discretion, may remove any member of the Committee at any time without assigning
any reason therefore.  A Committee member may resign at any time by written
notice to the Chief Executive Officer or any Executive Vice President of the
Company.  Upon a vacancy occurring, owing to the death, resignation or removal
by the Board of Directors of any member of the Committee, a successor shall be
appointed by the Board of Directors.  Until a vacancy in the Committee is filled
by the Board of Directors, the remaining members of the Committee shall continue
to act as the Committee.  The Board of Directors shall certify to the Trustee
and the Committee the names of the members of the Committee and, thereafter, any
change in its membership.

  13.3 Named Fiduciaries. The Company, the Board of Directors, the Committee and
       -----------------
every Participant, Beneficiary or Employee of the Company, its subsidiaries or
affiliates who becomes a fiduciary by virtue of the delegation of duties,
responsibilities and authority with respect to the administration and operation
of the Program in accordance with Article XIII shall be "named fiduciaries" as
provided in Section 402(a) of ERISA, and shall, accordingly, be afforded the
protection provided for in Section 405(c)(2) of ERISA with respect to named
fiduciaries.

                                     -117-
<PAGE>

  13.4 Delegation of Responsibilities.  The Committee and the Board of Directors
       ------------------------------
shall have the authority, as it may deem advisable, to delegate, from time to
time, by instrument in writing all or any part of its responsibilities under the
Program (including the power to delegate) to such person or persons as it may
deem suitable, and in the same manner to revoke any such delegation of
responsibility.  Periodically the delegate shall report to the Committee or
Board of Directors concerning the discharge of his delegated responsibilities.
Any action of the delegate in the exercise of such delegated responsibilities
shall have the same force and effect for all purposes hereunder as if such
action had been taken by the Committee or the Board of Directors.  Neither the
Committee, the Board of Directors nor any of their members shall be liable for
the acts or omissions of such delegate except as otherwise required by Federal
law.

     The Committee's authority to delegate in accordance with this Section 13.4
shall include, but not be limited to, authority to delegate all or any part of
the responsibilities set forth in Section 13.5 to any department or employee of
the Company or other Employer including but not limited to the Legal Department,
the Tax Department, the Accounting Department, the Human Resources Department,
the Information Services Department or the Payroll Department.

  13.5 Committee Duties.  The Committee on behalf of the Participants and all
       ----------------
other Beneficiaries of the Program and the Trust shall administer and operate
the Program and the Trust Agreement in accordance with the terms of the Program
and the Trust Agreement and shall periodically report to the Board of Directors
on the administration and operation of the Program.  The Committee shall have
all powers necessary to discharge its duties, including, but not by way of
limitation, the following:

          (a)  To periodically review and monitor the performance of the
     Investment Managers, as defined in the Trust Agreement, and provide
     recommendations to the Board of Directors for the appointment or removal of
     the Program's Investment Managers;

          (b)  To prepare and furnish to the Board of Directors its
     recommendations with respect to the establishment of and, from time to
     time, changes in the general investment objectives and guidelines for the
     management and investment of the assets of the Program;

          (c)  To prepare and furnish the Board of Directors with periodic
     reports on the performance of the Investment Funds and the general
     administration of the Program;
          (d)  To review and monitor the performance of the Trustee with respect
     to the responsibilities set forth in the Trust Agreements;

          (e)  To construe and interpret the Program, decide all questions
     concerning eligibility for participation and questions relating to the
     amount and manner of payment of benefits hereunder and all such
     determinations shall be conclusive and binding upon Participants, spouses
     and other Beneficiaries;

                                     -118-
<PAGE>

          (f)  To receive from the Company and Employer or have prepared by the
     Company and Employer such records and information as shall be necessary for
     the proper administration of the Program;

          (g)  To have prepared and furnished to Participants or Beneficiaries
     all information required under Federal law or provisions of this Program to
     be furnished to them;

          (h)  To have prepared and filed or published with the Department of
     Labor and the Department of Treasury or other governmental agency all
     reports or other information required under federal law;

          (i)  To have maintained records of the Trust Fund with respect to the
     Net Balance Accounts of Participants;

          (j)  To determine all questions arising in the administration of the
     Program, including those relating to the eligibility of persons to become
     Participants; the rights of Participants and their Beneficiaries; and
     Employer Contributions; and its decision thereon shall be final and binding
     upon all persons hereunder;

          (k)  To review the performance of any person to whom duties and
     responsibilities have been delegated under Section 13.4;

          (l)  To annually review and approve the proposed budget for the
     Program's administrative expenses and to approve and direct the Trustee as
     to the payment of such expenses including but not limited to those which
     arise which were not anticipated in the budget; and

          (m)  To direct the Trustee as to the payment of distributions from the
     Trust or otherwise arrange for distributions to be made from the Trust Fund
     through a commercial banking account as provided in Section 3.2 of the
     Trust.

  13.6 Committee Action by Majority -- Authorization of Members to Execute
       -------------------------------------------------------------------
Documents.  The Committee may act at a meeting (including a meeting at which
---------
some or all of the members of the Committee are present by telephone) by the
consent of a majority of its members, or without a meeting by the unanimous
written consent of its members.

     No member of the Committee shall vote or decide upon any matter relating
specifically to himself or to his specific rights or benefits under the Program.

     The Committee may authorize any of its members to execute on its behalf any
document which reflects an action or decision of the Committee and the Committee
shall notify the Trustee in writing of the names of its members so authorized.
Until the Committee revokes or alters such authorization by a written notice to
the Trustee, the Trustee may accept and rely upon any document executed by such
members as reflecting action by the Committee.

                                     -119-
<PAGE>

  13.7   Secretary.  The Committee shall appoint a Secretary (who may, but need
         ---------
not, be a member of the Committee) to keep records of the acts and resolutions
of the Committee. The Secretary may also perform such other duties which may,
from time to time, be delegated to him in writing by the Committee.

  13.8   Member as Participant.  A member of the Committee who is also a
         ---------------------
Participant or a Beneficiary shall receive any benefit to which he may be
entitled as a Participant or Beneficiary in the Program so long as such benefit
is computed and paid on a basis that is consistent with the terms of the Program
as applied to all other Participants and Beneficiaries.

  13.9   Rules and Decisions.  The Committee may, from time to time, adopt or
         -------------------
amend such rules and regulations as it deems necessary or desirable which are
consistent with the provisions or the purposes of the Program.  All rules and
decisions of the Committee shall be applied to all Participants in similar
circumstances in a uniform and non-discriminatory manner.  In adopting, amending
or applying its rules and regulations, the Committee shall be entitled to, but
need not, rely upon information furnished by a Participant or Beneficiary, a
delegate, an Employer or Employee, the Trustee or the Company.  All rules and
regulations of the Committee shall be conclusive and binding upon Participants,
spouses and Beneficiaries.

  13.10  Electronic Elections.  Anything in the Plan to the contrary not
         --------------------
withstanding, the Committee may determine to permit Participants or their
Beneficiaries to make electronic elections (except for elections to receive
amounts from a Participant's accounts whether by distribution, in-service
withdrawal or otherwise) in lieu of written elections provided in the Plan.  In
making such a determination, the Committee shall consider the availability of
electronic elections to Participants, the protection of the rights of
Participants and their Beneficiaries, the appropriateness of the standards for
authentication of identity and other security considerations involved in the
electronic election system and any guidance issued by the Internal Revenue
Service and the Department of Labor.

  13.11  Agents and Counsel.  The Committee and its delegates shall have the
         ------------------
authority to appoint or employ individuals to assist or to advise in the
administration of the Program and any other agent deemed advisable, including
but not limited to, independent certified public accountants and legal and
actuarial counsel, who may but need not be the accountants or the legal or the
actuarial counsel of the Company.

  13.12  Authorization of Benefit Distribution.  The Committee shall issue
         -------------------------------------
directions to the Trustee concerning all distributions to be made from the Trust
Fund pursuant to the provisions of the Program.  All such directions shall be in
accordance with the Program.

  13.13  Claims Procedure.
         ----------------

         (a)  Each Participant or Beneficiary (for purposes of this Section
     called a "Claimant") may submit his claim for benefits to the Plan
     Administrator in writing in such form as is permitted by the Committee. A
     Claimant shall have no right to seek review of a denial of benefits, or to
     bring any action in any court to enforce a claim for

                                     -120-
<PAGE>

     benefits, prior to his filing a claim for benefits and exhausting his
     rights to review in accordance with this Section.

          When a claim for benefits has been filed properly, such claim for
     benefits shall be evaluated and the Claimant shall be notified of the
     approval or the denial within ninety (90) days after the receipt of such
     claim unless special circumstances require an extension of time for
     processing the claim.  If such an extension of time for processing is
     required, written notice of the extension shall be furnished to the
     Claimant prior to the termination of the initial ninety (90) day period,
     and such notice shall specify the special circumstances requiring an
     extension and the date by which a final decision will be reached (which
     date shall not be later than one hundred and eighty (180) days after the
     date on which the claim was filed).  A Claimant shall be given a written
     notice in which he shall be advised as to whether the claim is granted or
     denied, in whole or in part.  If a claim is denied, in whole or in part,
     the Claimant shall be given written notice which shall contain (1) the
     specific reasons for the denial, (2) references to pertinent Plan
     provisions on which the denial is based, (3) a description of any
     additional material or information necessary to perfect the claim and an
     explanation of why such material or information is necessary, and (4) the
     Claimant's rights to seek review of the denial.

          (b)  If a claim is denied, in whole or in part, the Claimant shall
     have the right to request that the Committee review the denial, provided
     that he files a written request for review with the Committee within sixty
     (60) days after the date on which he received written notification of the
     denial (or such longer period as the Committee for good cause may permit).
     A Claimant (or his duly authorized representative) may review pertinent
     documents and submit issues and comments in writing to the Committee.
     Within sixty (60) days after a request for review is received, the review
     shall be made and the Claimant shall be advised in writing of the decision
     on review, unless special circumstances require an extension of time for
     processing the review, in which case the Claimant shall, within such
     initial sixty (60) day period, be given a written notification specifying
     the reasons for the extension and when such review shall be completed
     (provided that such review shall be completed within one hundred and twenty
     (120) days after the date on which the request for review was filed). The
     decision on review shall be forwarded to the Claimant in writing and shall
     include specific reasons for the decision and references to Plan provisions
     upon which the decision is based. A decision on review shall be final and
     binding on all persons for all purposes. If a Claimant shall fail to file a
     request for review in accordance with the procedures herein outlined, such
     Claimant shall have no rights to review and shall have no right to bring
     action in any court, and the denial of the claim shall become final and
     binding on all persons for all purposes.

  13.14  Information to be Furnished to Committee. The Company and Employers
         ----------------------------------------
shall furnish the Committee or its delegate such evidence, data and information
as the Committee or its delegate may reasonably request. Participants and their
Beneficiaries shall also furnish to the Committee such evidence, data or
information as the Committee or its delegate shall request.

                                     -121-
<PAGE>

  13.15   Plan Administrator. The Committee may appoint a Plan Administrator
          ------------------
who may (but need not) be a member of the Committee; and in the absence of such
appointment, the Committee shall be the Plan Administrator.

  13.16   Fiduciary as Participant. A fiduciary who is also a Participant or a
          ------------------------
Beneficiary shall receive any benefit to which he may be entitled as a
Participant or Beneficiary in the Program so long as such benefit is computed
and paid on a basis that is consistent with the terms of the Program as applied
to all other Participants and Beneficiaries.

  13.17   Fiduciary Responsibility. If a Plan fiduciary acts in accordance with
          ------------------------
ERISA, Title I, Subtitle B, Part 4:

          (a)  in determining that a Participant's spouse has consented to the
     naming of a Beneficiary other than the spouse, in relying on a
     Participant's election to waive a Qualified Joint and Survivor Annuity or a
     qualified survivor annuity or a revocation of such an election, or in
     determining that the consent of the Participant's spouse may not be
     obtained because there is no spouse, the spouse cannot be located or other
     circumstances prescribed by the Secretary of the Treasury by regulations,
     then to the extent of payments made pursuant to such consent, revocation or
     determination, the Program and its fiduciaries shall have no further
     liability;

          (b)  in treating a domestic relations order as being (or not being) a
      Qualified Domestic Relations Order, or, during any period in which the
      issue of whether a domestic relations order is a Qualified Domestic
      Relations Order is being determined (by the Committee, by a court of
      competent jurisdiction, or otherwise), in segregating in a separate
      account in the Program or in an escrow account the amounts which would
      have been payable to the alternate payee during such period if the order
      had been determined to be a Qualified Domestic Relations Order, in paying
      the amounts segregated or held in escrow to the person entitled thereto if
      within 18 months the domestic relations order (or a modification thereof)
      is determined to be a Qualified Domestic Relations Order, in paying such
      amounts to the person entitled thereto if there had been no order, if
      within 18 months the domestic relations order is determined not to be
      qualified or if the issue is not resolved within 18 months and in
      prospectively applying a domestic relations order which is determined to
      be qualified after the close of the 18-month period, then the obligation
      of the Program and its fiduciaries to the Participant and each alternate
      payee shall be discharged to the extent of any payment made pursuant to
      such acts.

   13.18  Year 2000 Problem. Although the Company and the Committee have mad
          -----------------
all reasonable goo faith efforts to assure that Year 2000 Problems do not
interfere with the normal operations of the Program, it is appropriate to adopt
a provision which would permit the temporary suspension of normal Program
operations if unexpected Year 2000 Problems should occur. Notwithstanding any
other provision of the Program to the contrary, the Company or the Committee may
take such actions it deems necessary or appropriate in the event any Year 2000
Problem arises which affects the administration of the Program (whether
involving Systems in the use of the Company or of other parties). If, due to a
Year 2000 Problem, Program

                                     -122-
<PAGE>

administration is delayed beyond the times otherwise permitted or required by
the Program, the Program shall be deemed to permit such delay until such time as
is administratively practicable after the Year 2000 problem no longer adversely
affects, impedes or delays compliance with such provisions, including but not
limited to the implementation of Participant elections, the crediting of
contributions and earnings to Participants' Accounts, the making of
distributions to Participants, and any and all other actions dependent upon the
proper operation of Systems in a manner unaffected by the Year 2000 Problem. For
purposes hereof, "Year 2000 Problem" shall have the broadest meaning necessary
to effectuate the purposes of this provision, but shall generally mean: (a) the
inability of any computer system, chip, hardware or software (the "Systems") to
record, store, process, sort, sequence, and present calendar dates following
December 31, 1999, with the same accuracy and functionality as such calendar
dates on or before December 31, 1999; (b) the loss by such Systems of
functionality or a degradation in performance of any such Systems as a result of
such Systems operating at a date later than December 31, 1999; (c) the failure
of any such Systems to accurately and automatically process all leap year
calendar dates, including February 29, 2000; (d) the failure of any such Systems
to interface with other computer systems, hardware, and software in a manner
that will be fully interoperable with such other computer systems, hardware, and
software on or after December 31, 1999 and (e) the inability to complete
software revisions affecting Program administration because available resources
are committed to fixing and testing systems for a Year 2000 Problem.

                                     -123-
<PAGE>

                                  ARTICLE XIV

           AMENDMENT, TERMINATION, MERGER AND CONSOLIDATION OF PLAN

   14.1   Amendment. The Board of Directors shall have the right, at any time
          ---------
and from time to time, to amend, in whole or in part, any or all of the of the
Program and the Trust Agreement, provided that no amendment shall authorize or
permit any part of the Trust Fund to be used for or diverted to purposes other
than for the exclusive benefit of the Participants or their beneficiaries, or
permit any portion of the Trust Fund to revert to or become the property of any
Employer, except as may be permitted under applicable law, regulations and
rulings. No amendment shall deprive any Participant or any Beneficiary of a
deceased Participant of any of the benefits or of an optional form of benefit to
which he is entitled under this Program with respect to contributions previously
made or, except to the extent permitted in regulations and rulings issued by the
Secretary of the Treasury, shall eliminate an optional form of benefit with
respect to contributions previously made, nor shall any amendment decrease any
Participant's Accounts provided that no amendment made in conformance to
provisions of the Internal Revenue Code or any other statute relating to
employee's trusts, or any official regulations or rulings issued pursuant
thereto, shall be considered prejudicial to the rights of any Participant or
Beneficiary. No amendment which affects the rights, duties or responsibilities
of the Trustee may be made without the Trustee's written consent.

     The Committee shall have the same authority with respect to the adoption of
amendments to the Program and the Trust Agreement as the Board of Directors in
the following circumstances:

          (a)  to adopt amendments to the Program or Trust which the
     Committee determines are necessary or desirable for the Program to comply
     with or to obtain benefits or advantages under the provisions of applicable
     law, regulations or rulings or requirements of the Internal Revenue Service
     or other government administrative agency or of changes in such law,
     regulations, rulings or requirements; and

          (b)  to adopt any other procedural or cosmetic amendment that the
     Committee determines to be necessary or desirable that does not materially
     change benefits to Participants or their Beneficiaries or materially
     increase the Employers' contributions to the Program.

     The Committee shall provide notice of amendments adopted by the Committee
to the Board of Directors on a timely basis.

   14.2   Termination of Program By the Company. Although it is the intention of
          -------------------------------------
the Company that this Program be permanent, the Company reserves the right to
terminate the Program and the Trust at any time, by delivering to the Committee,
the Trustee and each Employer hereunder, written notice of termination.

                                     -124-
<PAGE>

     Upon termination of the Program or permanent discontinuance of Employer
Contributions to the Program, the interest in his Net Balance Account of each
Participant who is an Employee at the time of the termination, shall become
fully vested.  Such vested Accounts, shall, however, be subject to readjustment
as provided in Sections 10.14, 10.15, 10.16, 10.17 and 10.19.  In the event of
termination of this Program, the Board of Directors may direct that the Trustee
continue the Trust for a specified period of time, or for such period of time,
as the Trustee, in its sole discretion, may deem to be in the best interest of
the Participants or their Beneficiaries.  In the absence of specific direction
from the Board of Directors, the Trust assets shall be distributed by the
Trustee to Participants under the options set forth in Section 11.2 hereof or to
Beneficiaries under the options set forth in Section 11.3: provided, however,
that Participant Elected Contributions, Employer Matching Contributions and
Special Section 401(k) Employer Contributions shall be distributed only if (a)
the Participant has a Termination of Employment, death or Disability, or has
attained the age of 59-1/2, (b) the Program is terminated without the Employer's
establishment or maintenance of another defined contribution plan (excluding a
leveraged ESOP as defined in Code Section 4975(e)(7)), (c) the Employer disposes
of substantially all of its assets used in a trade or business to an unrelated
corporation and the Employee continues employment with the acquiring corporation
or (d) the Employer disposes of its interest in a subsidiary to an unrelated
party and the Employee continues employment with the corporation acquiring the
assets or the subsidiary and if, in the case of a distribution made pursuant to
(b), (c) or (d), the distribution is made in the form of a single distribution
of the entire balance to the credit of the Participant in a single taxable year.
Upon the partial termination of the Program the interest of each Participant
whose employment is terminated on account of, or who is affected by, such
partial termination shall become fully vested and such Participant's benefits
shall be distributable to the extent permitted in the preceding sentence.  Sales
of McDonald's Restaurants by the Company or another Employer will not constitute
a partial termination unless such sale under all other facts and circumstances
constitutes a partial termination.

  14.3  Merger, Consolidation, or Transfer of Assets.  This Program shall not be
        --------------------------------------------
merged or consolidated with, nor shall any assets or liabilities be transferred
to, any other plan, unless the benefits payable to each Participant if the
Program were terminated immediately after such action would not be less than the
benefits which would have been payable to each such Participant if the Program
had been terminated immediately before such action.

  14.4  Transfer of Assets from Plans of Subsidiaries. The Board of Directors
        ---------------------------------------------
may, in its sole and exclusive discretion, authorize and direct the transfer to
the Trust of all (or any designated portion) of the assets of any defined
contribution plan (the "Transferred Assets") which is a Related Plan. The
Transferred Assets, to the extent allocable to persons who are Participants in
the Program, shall be held, managed and distributed for the benefit of
participants of the Related Plan (the "Transferred Assets") subject to such
terms and conditions as the Board of Directors and the board of directors (or
persons having authority similar to the board of directors of a corporation) of
the Commonly Controlled Entity shall provide.

        (a)  The Trustee shall accept, under such terms and conditions as the
     Board of Directors shall provide for, all Transferred Assets.

                                     -125-
<PAGE>

        (b)  Except as otherwise expressly provided by the Board of Directors
     and the board of directors (or persons having authority similar to the
     board of directors of a corporation) of the Commonly Controlled Entity, if
     applicable, all Participants' interests in the Transferred Assets shall be
     100 percent (100%) vested and non-forfeitable.

        (c)  The Committee shall keep separate records of account for each
     Participant's interests in the Transferred Assets.

        (d)  Except as otherwise expressly provided herein, the Transferred
     Assets shall be held, managed, invested and distributed in the same manner
     (and subject to the same restrictions) as the Participant's Rollover
     Account as provided in Article VIII of the Program; provided that
     restrictions placed on the timing of distributions by the Internal Revenue
     Code shall apply to the Transferred Assets.

        (e)  Each Participant's Transferred Assets shall be distributable in the
     same manner as a Participant's Rollover Account; provided that the
     Participant can also elect any benefit option which was available with
     respect to the Transferred Assets under the Related Plan.

                                     -126-
<PAGE>

                                  ARTICLE XV

                             TOP HEAVY PROVISIONS

  15.1  Application.  The definitions in Section 15.2 shall apply under this
        -----------
Article XV and the special rules in Section 15.3 shall apply, notwithstanding
any other provisions of the Program, for any Plan Year in which the Program is a
Top Heavy Plan and for such other Plan Years as may be specified herein.
Anything in this Article XV to the contrary notwithstanding, if the Program is a
multiple employer plan as described in Internal Revenue Code Section 413(c), the
provisions of this Article XV shall be applied separately to each Employer
(together with the businesses which with that Employer are Commonly Controlled
Entities or members of an Affiliated Service Group) taking account of benefits
under the plan provided to employees of the Employer, Commonly Controlled Entity
or members of an Affiliated Service Group because of service with that Employer
or Commonly Controlled Entity.

  15.2  Special Top Heavy Definitions. The following special definitions shall
        -----------------------------
apply under this Article XV.

        (a)  "Aggregate Employer Contributions" means the sum of all Employer
              --------------------------------
     Contributions and Forfeitures under this Program allocated for a
     Participant to the Program and employer contributions and forfeitures
     allocated for the Participant to all Related Defined Contribution Plans in
     the Aggregation Group; provided, however, that Participant Elected
     Contributions, Employer Matching Contributions, LESOP Employer Matching
     Contributions and Special Section 401(k) Contributions shall not be
     included for Non-Key Employees.

        (b)  "Aggregation Group" means the group of plans in a Mandatory
              -----------------
     Aggregation Group, if any, that includes the Program, unless inclusion of
     Related Plans in the Permissive Aggregation Group in the Aggregation Group
     would prevent the Program from being a Top Heavy Plan, in which case
     "Aggregation Group" means the group of plans consisting of the Program and
     each other Related Plan in a Permissive Aggregation Group with the Program.

             (1)  "Mandatory Aggregation Group" means each plan (considering the
                   ---------------------------
        Program and Related Plans) that, during the Plan Year that contains the
        Determination Date or any of the four preceding Plan Years,

                  (A) had a participant who was a Key Employee, or

                  (B) was necessary to be considered with a plan in which a Key
             Employee participated in order to enable the plan in which the Key
             Employee participated to meet the requirements of Section 401(a)(4)
             and Section 410 of the Internal Revenue Code.

        If the Program is not described in (A) or (B) above, it shall not be
        part of a Mandatory Aggregation Group.

                                     -127-
<PAGE>

             (2)  "Permissive Aggregation Group" means the group of plans
                   ----------------------------
        consisting of (A) the plans, if any, in a Mandatory Aggregation Group
        with the Program, and (B) any other Related Plan, that, when considered
        as a part of the Aggregation Group, does not cause the Aggregation Group
        to fail to satisfy the requirements of Section 401(a)(4) and Section 410
        of the Internal Revenue Code. A Related Plan in (B) of the preceding
        sentence may include a simplified employee pension plan, as defined in
        Internal Revenue Code Section 408(k), and a collectively bargained plan,
        if when considered as a part of the Aggregation Group such plan does not
        cause the Aggregation Group to fail to satisfy the requirements of
        Section 401(a)(4) and Section 410 of the Internal Revenue Code
        considering, if the plan is a multiple employer plan as described in
        Internal Revenue Code Section 413(c), benefits under the plan only to
        the extent provided to employees of the employer because of service with
        the employer and, if the plan is a simplified employee pension plan,
        only the employer's contribution to the plan .

        (c)  "Determination Date" means, with respect to a Plan Year, the last
              ------------------
     day of the preceding Plan Year or, in the case of the first Plan Year, the
     last day of such Plan Year. If the Program is aggregated with other plans
     in the Aggregation Group, the Determination Date for each other plan shall
     be, with respect to any Plan Year, the Determination Date for each such
     other plan which falls in the same calendar year as the Determination Date
     for the Program.

        (d)  "Key Employee" means, for the Plan Year containing the
              ------------
     Determination Date, any person or the beneficiary of any person who is an
     employee or former employee of an Employer, a Commonly Controlled Entity or
     member of an Affiliated Service Group as determined under Internal Revenue
     Code Section 416(i) and who, at any time during the Plan Year containing
     the Determination Date or any of the four (4) preceding Plan Years (the
     "Measurement Period"), is a person described in paragraph (1), (2), (3) or
     (4), subject to paragraph (5).

             (1)  An officer of the Employer, Commonly Controlled Entity or
        member of an Affiliated Service Group who:

                  (A) in any Measurement Period is an officer during the Plan
             Year and has annual Considered Compensation for the Plan Year in an
             amount greater than fifty percent (50%) of the amount in effect
             under Section 415(b)(1)(A) of Internal Revenue Code for the
             calendar year in which such Plan Year ends ($120,000 in 1996,
             adjusted in subsequent years as determined in accordance with
             regulations prescribed by the Secretary of the Treasury or his
             delegate pursuant to the provisions of Section 415(d) of the
             Internal Revenue Code); and

                                     -128-
<PAGE>

     No more than a total of fifty (50) persons (or, if lesser, the greater of
     three (3) persons or ten percent (10%) of all persons or beneficiaries of
     persons who are employees or former employees) shall be treated as Key
     Employees under this paragraph (1) for any Measurement Period. In the case
     of an Employer, Commonly Controlled Entity or member of an Affiliated
     Service Group which is not a corporation in any Measurement Period, the
     term "officer" as used in this subsection (d) shall include administrative
     executives as described in Section 1.416-1(T-13) of the Treasury
     Regulations.

             (2)  One (1) of the ten (10) persons who, during a Plan Year in the
     Measurement Period:

                  (A) have annual Considered Compensation from the Employer,
             Commonly Controlled Entity or member of an Affiliated Service Group
             for such Plan Year greater than the amount in effect under Section
             415(c)(1)(A) of the Internal Revenue Code for the calendar year in
             which such Plan Year ends (the greater of $30,000 for 1996 or one-
             fourth of the dollar limitation in effect under Section
             415(b)(1)(A) of the Internal Revenue Code, adjusted in subsequent
             years as determined in accordance with regulations prescribed by
             the Secretary of the Treasury or his delegate pursuant to the
             provisions of Section 415(d) of the Internal Revenue Code); and

                  (B) own (or are considered as owning within the meaning of
             Internal Revenue Code Section 318) in such Plan Year, the largest
             percentage interests in the Employer, Commonly Controlled Entity or
             member of an Affiliated Service Group, in such Plan Year, provided
             that no person shall be treated as a Key Employee under this
             paragraph unless he owns more than one-half percent (1/2%) interest
             in the Employer, Commonly Controlled Entity or member of an
             Affiliated Service Group.

     No more than a total of ten (10) persons or beneficiaries of persons who
     are employees or former employees shall be treated as Key Employees under
     this paragraph (2) for any Measurement Period.

             (3)  A person who, for a Plan Year in the Measurement Period, is a
     more than five percent (5%) owner (or is considered as owning more than
     five percent (5%) within the meaning of Internal Revenue Code Section 318)
     of the Employer, Commonly Controlled Entity or member of an Affiliated
     Service Group.

             (4)  A person who, for a Plan Year in the Measurement Period, is a
     more than one percent (1%) owner (or is considered as owning more than one
     percent (1%) within the meaning of Internal Revenue Code Section 318) of
     the Employer, a Commonly Controlled Entity or member of an Affiliated
     Service

                                     -129-
<PAGE>

          Group and has an annual Considered Compensation for such Plan Year
          from the Employer, Commonly Controlled Entity or member of an
          Affiliated Service Group of more than $150,000 .

              (5)  If the number of persons who meet the requirements to be
          treated as Key Employees under paragraph (1) or (2) exceed the
          limitation on the number of Key Employees to be counted under
          paragraph (1) or (2), those persons with the highest annual Considered
          Compensation in a Plan Year in the Measurement Period for which the
          requirements are met and who are within the limitation on the number
          of Key Employees will be treated as Key Employees.

          If the requirements of paragraph (1) or (2) are met by a person in
          more than one (1) Plan Year in the Measurement Period, each person
          will be counted only once under paragraph (1) or (2):

                   (A) under paragraph (1), the Plan Year in the Measurement
              Period in which a person who was an officer and had the highest
              annual Considered Compensation shall be used to determine whether
              the person will be treated as a Key Employee under the preceding
              sentence;

                   (B) under paragraph (2), the Plan Year in the Measurement
              Period in which the ownership percentage interest is the greatest
              shall be used to determine whether the person will be treated as a
              Key Employee under the preceding sentence.

          Notwithstanding the above provisions of paragraph (5), a person may be
          counted in determining the limitation under both paragraphs (1) and
          (2). In determining the sum of the Present Value of Accrued Benefits
          for Key Employees under subsection (h) of this Section, the Present
          Value of Accrued Benefits for any person shall be counted only once.

          (e) "Non-Key Employee" means (1) a person or the beneficiary of a
              ----------------
     person with an account balance in the Program or an account balance or
     accrued benefit in any Related Plan in the Aggregation Group or (2) an
     employee, a former employee or the beneficiary of such person who has
     received a distribution during the Measurement Period and (3) who during
     the Measurement Period is not a Key Employee.

          (f) "Present Value of Accrued Benefits" means, for any Plan Year, an
               ---------------------------------
     amount equal to the sum of (1), (2) and (3) for each person who, in the
     Plan Year containing the Determination Date, was a Key Employee or a Non-
     Key Employee.

              (1)  Subject to (4) below, the value of a person's Net Balance
          Account under the Program and his accrued benefit under each Related
          Defined Contribution Plan in the Aggregation Group, determined as of
          the valuation date coincident with or immediately preceding the
          Determination Date, adjusted for contributions due as of the
          Determination Date, as follows:

                                     -130-
<PAGE>

                    (A)  in the case of a plan not subject to the minimum
               funding requirements of Section 412 of the Internal Revenue Code,
               by including the amount of any contributions actually made after
               the valuation date but on or before the Determination Date, and,
               in the first plan year of a plan, by including contributions made
               after the Determination Date that are allocated as of a date in
               that first plan year; and

                    (B)  in the case of a plan that is subject to the minimum
               funding requirements, by including the amount of any
               contributions that would be allocated as of a date not later than
               the Determination Date, plus adjustments to those amounts as
               required under applicable rulings, even though those amounts are
               not yet required to be contributed or allocated (e.g., because
               they have been waived) and by including the amount of any
               contributions actually made (or due to be made) after the
               valuation date but before the expiration of the extended payment
               period in Section 412(c)(10) of the Internal Revenue Code.

               (2)  Subject to (4) below, the sum of the actuarial present
          values of a person's accrued benefits under each Related Defined
          Benefit Plan in the Aggregation Group, expressed as a benefit
          commencing at Vesting Retirement Date (or the person's attained age,
          if later) determined based on the following actuarial assumptions:

                    (A)  Interest rate 5%; and

                    (B)  Post Retirement Mortality: 1984 Unisex Pension Table;

          and determined in accordance with Internal Revenue Code Section
          416(g), provided, however, that if a defined benefit plan in the
          Aggregation Group provides for different or additional actuarial
          assumptions to be used in determining the present value of accrued
          benefits thereunder for the purpose of determining the top heavy
          status thereof, then such different or additional actuarial
          assumptions shall apply with respect to each defined benefit plan in
          the Aggregation Group, and further provided that the accrued benefit
          of any Non-Key Employee shall be determined under the method which is
          used for accrual purposes for all Related Defined Benefit Plans or, if
          no single accrual method is used in all such plans, such accrued
          benefit shall be determined as if such benefit accrued not more
          rapidly than the slowest accrual rate permitted under Section
          411(b)(1)(C) of the Internal Revenue Code.

          The present value of an accrued benefit for any person who is employed
          by an employer maintaining a plan on the Determination Date is
          determined as of the most recent valuation date which is within a 12-
          month period ending on the Determination Date, provided however that:

                                     -131-
<PAGE>

                    (C)  for the first plan year of the plan, the present value
               for an employee is determined as if the employee had a
               Termination of Employment (i) on the Determination Date or (ii)
               on such valuation date but taking into account the estimated
               accrued benefit as of the Determination Date; and

                    (D)  for the second and subsequent plan years of the plan,
               the accrued benefit taken into account for an employee is not
               less than the accrued benefit taken into account for the first
               plan year unless the difference is attributable to using an
               estimate of the accrued benefit as of the Determination Date for
               the first plan year and using the actual accrued benefit as of
               the Determination Date for the second plan year.

          For purposes of this paragraph (2), the valuation date is the
          valuation date used by the plan for computing plan costs for minimum
          funding, regardless of whether a valuation is performed that year.

               If the plan provides for a nonproportional subsidy as described
          in Treasury Regulations Section 1.416-1 (T-27), the present value of
          accrued benefits shall be determined taking into account the value of
          nonproportional subsidized early retirement benefits and
          nonproportional subsidized benefit options.

               (3)  Subject to (4) below, the aggregate value of amounts
          distributed during the plan year that includes the Determination Date
          or any of the four preceding plan years including amounts distributed
          under a terminated plan which, if it had not been terminated, would
          have been in the Aggregation Group.

               (4)  The following rules shall apply in determining the Present
          Value of Accrued Benefits:

                    (A)  Amounts attributable to qualified voluntary employee
               contributions, as defined in Section 219(e) of the Internal
               Revenue Code, shall be excluded.

                    (B)  In computing the Present Value of Accrued Benefits with
               respect to rollovers or plan-to-plan transfers, the following
               rules shall be applied to determine whether amounts which have
               been distributed during the five (5) year period ending on the
               Determination Date from or accepted into this Program or any plan
               in the Aggregation Group shall be included in determining the
               Present Value of Accrued Benefits:

                         (i)  Unrelated Transfers made from the Program or any
                    plan in the Aggregation Group shall be included.

                                     -132-
<PAGE>

                         (ii) Related Transfers made from the Program or any
                    plan in the Aggregation Group shall not be included by the
                    transferor plan (but shall be counted by the accepting
                    plan).

          The accrued benefit of any individual who has not performed services
     for an Employer maintaining the Program at any time during the five (5)
     year period ending on the Determination Date shall be excluded in computing
     the Present Value of Accrued Benefits.

          (g)  "Related Transfer" means a rollover or a plan-to-plan transfer
                ----------------
     which is either not initiated by the Employee or is made between plans each
     of which is maintained by a Commonly Controlled Entity or member of an
     Affiliated Service Group.

          (h)  A "Top Heavy Aggregation Group" means an Aggregation Group in any
                  ---------------------------
      Plan Year for which, as of the Determination Date, the sum of the Present
     Value of Accrued Benefits for Key Employees under all plans in the
     Aggregation Group exceeds sixty percent (60%) of the sum of the Present
     Value of Accrued Benefits for all employees under all plans in the
     Aggregation Group; provided that, for purposes of determining the sum of
     Present Value of Accrued Benefits for all employees, former Key Employees
     who have not performed any services for an Employer, a Commonly Controlled
     Entity or a member of an Affiliated Service Group in the Plan Year
     containing the Determination Date or the preceding four Plan Years shall be
     excluded entirely from the calculation of the Present Value of Accrued
     Benefits for the Plan Year that contains the Determination Date. For
     purposes of applying the special rules herein with respect to a Super Top
     Heavy Plan, a Top Heavy Aggregation Group will also constitute a "Super Top
     Heavy Aggregation Group" if in any Plan Year as of the Determination Date,
     the sum of the Present Value of Accrued Benefits for Key Employees under
     all plans in the Aggregation Group exceeds ninety percent (90%) of the sum
     of the Present Value of Accrued Benefits for all employees under all plans
     in the Aggregation Group.

          (i)  "Top Heavy Plan" means the Program in any Plan Year in which it
                --------------
     is a member of a Top Heavy Aggregation Group, including a Top Heavy
     Aggregation Group consisting solely of the Program. For purposes of
     applying the rules herein with respect to a Super Top Heavy Plan, a Top
     Heavy Plan will also constitute a "Super Top Heavy Plan" if the Program in
     any Plan Year is a member of a Super Top Heavy Aggregation Group, including
     a Super Top Heavy Aggregation Group consisting solely of the Program.

          (j)  "Unrelated Transfer" means a rollover or a plan-to-plan
                ------------------
     transfer which is both initiated by the Employee and (1) made from a plan
     maintained by a Commonly Controlled Entity or member of an Affiliated
     Service Group to a plan maintained by an employer which is not a Commonly
     Controlled Entity or member of an Affiliated Service Group or (2) made to a
     plan maintained by a Commonly Controlled Entity or member of an Affiliated
     Service Group from a plan maintained by an employer which is not a Commonly
     Controlled Entity or member of an Affiliated Service Group.

                                     -133-
<PAGE>

   15.3   Special Top Heavy Provisions.  For each Plan Year in which the Program
          ----------------------------
is a Top Heavy Plan, the following rules shall apply, except that the special
provisions of this Section 15.3 shall not apply with respect to any employee
included in a unit of employees covered by an agreement which the Secretary of
Labor finds to be a collective-bargaining agreement between employee
representatives and one or more employers if there is evidence that retirement
benefits were the subject of good faith bargaining between such employee
representative and the Employer or Employers:

          (a)  Minimum Employer Contributions.  In any Plan Year in which the
               ------------------------------
     Program is a Top Heavy Plan, the Employers shall make additional Employer
     Contributions to the Program as necessary for each Participant who is
     employed on the last day of the Plan Year and who is a Non-Key Employee to
     bring the amount of his Aggregate Employer Contributions for the Plan Year
     up to at least three percent (3%) of his Considered Compensation, or such
     lesser amount as is equal to the largest percentage of a Key Employee's
     Considered Compensation allocated to the Key Employee as Aggregate Employer
     Contributions.

     For purposes of determining whether a Non-Key Employee is a Participant
     entitled to have minimum Employer Contributions made on his behalf, a Non-
     Key Employee will be treated as a Participant even if he is not otherwise a
     Participant (or accrues no benefit) under the Program because:

               (1)  he has failed to complete the requisite number of hours of
          service (if any) after becoming a Participant in the Program,

               (2)  he is excluded from participation in the Program (or accrues
          no benefit) merely because his compensation is less than a stated
          amount, or

               (3)  he is excluded from participation in the Program (or accrues
          no benefit) merely because of a failure to make mandatory employee
          contributions or because of a failure to make elective 401(k)
          contributions.

          (b)  Vesting.  For each Plan Year in which the Program is a Top Heavy
               -------
     Plan and for each Plan Year thereafter, the vested right of each
     Participant who has an Hour of Service after the Program becomes a Top
     Heavy Plan to a percentage of his Profit Sharing Account and Employer LESOP
     Account (to the extent such Accounts had not been forfeited prior to the
     Program's becoming a Top Heavy Plan) shall be determined under the better
     of the following table or as provided in Section 11.4:

          Year of Credited Service       Vested Percentage
          ------------------------       -----------------
          Less than 2                          0%
          2 but less than 3                   20
          3 but less than 4                   40
          4 but less than 5                   60
          5 but less than 6                   80
          6 or more                          100

                                     -134-
<PAGE>

          (c)  Limitations.  In computing the limitations under Article IX
               -----------
     hereof for years in which the Program is a Top Heavy Plan, the special
     rules of Section 416(h) of the Code shall be applied in accordance with
     applicable regulations and rulings so that, in determining the denominator
     of the defined contribution plan fraction, as defined in Section 415(e)(3)
     of the Internal Revenue Code ("Defined Contribution Plan Fraction") and the
     defined benefit plan fraction as defined in Section 415(e)(2) of the
     Internal Revenue Code ("Defined Benefit Plan Fraction") at each place at
     which "1.25" would have been used, "1.00" shall be substituted and by
     substituting $41,500 for $51,875 in the numerator of the transition
     fraction described in Section 415(e)(6)(B) of the Internal Revenue Code,
     unless the Program is not a Super Top Heavy Plan and the special
     requirements of Section 416(h)(2) of the Internal Revenue Code have been
     satisfied. This Section 15.3(c) shall not apply in Plan Years beginning
     after December 31, 1999.

          (d)  Transition Rule for a Top Heavy Plan.  Notwithstanding the
               ------------------------------------
     provisions of Section 15.3(c), for each Plan Year in which the Program is a
     Top Heavy Plan and in which the Program does not meet the special
     requirements of Section 416(h)(2) of the Internal Revenue Code in order to
     use 1.25 in the denominator of the Defined Contribution Plan Fraction and
     the Defined Benefit Plan Fraction, if an Employee was a participant in one
     or more defined benefit plans and in one or more defined contribution plans
     maintained by the Employer before the plans became Top Heavy Plans and if
     such Participant's Combined Fraction exceeds 1.00 because of accruals and
     additions that were made before the plans became Top Heavy Plans, a factor
     equal to the lesser of 1.25 or such lesser amount (but not less than 1.00)
     as shall be needed to make the Employee's Combined Fraction equal to 1.00
     shall be used in the denominator of the Defined Benefit Plan Fraction and
     the Defined Contribution Plan Fraction if there are no further accruals or
     annual additions under any Top Heavy Plans until the Participant's Combined
     Fraction is not greater than 1.00 when a factor of 1.00 is used in the
     denominators of the Defined Benefit Plan Fraction and the Defined
     Contribution Plan Fraction. Any provisions herein to the contrary
     notwithstanding, if the Program is a Top Heavy Plan and the Program does
     not meet the special requirements of Section 416(h)(2) of the Internal
     Revenue Code in order to use 1.25 in the denominator of the Defined Benefit
     Plan Fraction and the Defined Contribution Plan Fraction, there shall be no
     further Annual Additions for a Participant whose Combined Fraction is
     greater than 1.00 when a factor of 1.00 is used in the denominator of the
     Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction,
     until such time as the Participant's Combined Fraction is not greater than
     1.00. This Section 15.3(d) shall not apply in Plan Years beginning after
     December 31, 1999.

          (e)  Transition Rule for a Super Top Heavy Plan.  Notwithstanding the
               ------------------------------------------
     provisions of Sections 15.3(c) and 15.3(d), for each Plan Year in which the
     Program is a Super Top Heavy Plan, (1) if an Employee was a participant in
     one or more defined benefit plans and in one or more defined contribution
     plans maintained by the employer before the plans became Super Top Heavy
     Plans, and (2) if such Participant's Combined Fraction exceeds 1.00 because
     of accruals and additions that were made before the plans became Super Top
     Heavy Plans and if immediately before the plans became Super Top Heavy
     Plans the Combined Fraction as then computed did not exceed 1.00, then a
     factor

                                     -135-
<PAGE>

     equal to the lesser of 1.25 or such lesser amount (but not less than 1.00)
     as shall be needed to make the Employee's Combined Fraction equal to 1.00
     shall be used in the denominator of the Defined Benefit Plan Fraction and
     the Defined Contribution Plan Fraction if there are no further accruals or
     annual additions under any Super Top Heavy Plans until the Participant's
     Combined Fraction is not greater than 1.00 when a factor of 1.00 is used in
     the denominators of the Defined Benefit Plan Fraction and the Defined
     Contribution Plan Fraction. Any provisions herein to the contrary
     notwithstanding, if the Program is a Super Top Heavy Plan, there shall be
     no further Annual Additions for a Participant whose Combined Fraction is
     greater than 1.00 when a factor of 1.00 is used in the denominator of the
     Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction
     until the Participant's Combined Fraction is not greater than 1.00. This
     Section 15.3(e) shall not apply in Plan Years beginning after December 31,
     1999.

          (f)  Terminated Plan.  If the Program becomes a Top Heavy Plan after
               ---------------
     it has formally been terminated, has ceased crediting for benefit accruals
     and vesting and has been or is distributing all plan assets to participants
     and their beneficiaries as soon as administratively feasible or if a
     terminated plan has distributed all benefits of participants and their
     beneficiaries, the provisions of Section 15.3 shall not apply to the
     Program.

          (g)  Frozen Plans.  If the Program becomes a Top Heavy Plan after
               ------------
     contributions have ceased under the Program but all assets have not been
     distributed to participants or their beneficiaries, the provisions of
     Section 15.3 shall apply to the Program.

                                     -136-
<PAGE>

                                  ARTICLE XVI

                           MISCELLANEOUS PROVISIONS

   16.1   Headings.  Headings of sections and subsections of the Program are
          --------
inserted for convenience of reference and are neither part of the Program nor to
be considered in the construction thereof.

   16.2   Indemnification.  Each member of the Committee, each member of the
          ---------------
Board of Directors, each individual serving as Trustee without compensation, and
each and every Employee to whom are delegated duties, responsibilities and
authority with respect to the Program and the Trust shall be indemnified, held
harmless and promptly reimbursed by the Company against all claims, liabilities,
fines and penalties and all expenses (including, but not limited to, attorney
fees) reasonably incurred by or imposed upon such member, individual or Employee
which arise as a result of his actions or failure to act in connection with the
operation and administration of the Program and the Trust, to the extent
lawfully allowable; provided that to the extent that such claim, liability,
fine, penalty or expense is paid for by liability insurance purchased by or paid
for by the Company, reimbursement shall be limited to amounts which would not
cause the loss of coverage under such insurance and further provided that to the
extent that the Company has reimbursed the Employee, the Company shall be
subrogated to the Trustee's rights to reimbursement under such insurance.
Notwithstanding the foregoing, the Company shall not indemnify any person for
any such amount incurred through any settlement or compromise of any action
unless the Company consents in writing to such settlement or compromise.
Expenses incurred in defending a civil or criminal action, suit or proceeding
shall be paid by the Company in advance of the final disposition of such action,
suit or proceeding as authorized by the Company in the specific case upon
receipt of an undertaking by or on behalf of the member of the Committee, member
of the Board of Directors, individual Trustee or Employee to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Company as authorized in this Section 16.2.

   16.3   Employees' Trust.  This Program is created for the exclusive purpose
          ----------------
of providing benefits to the Participants in the Program and their
Beneficiaries, and shall be interpreted in a manner consistent with its being a
plan described in Section 401(a) of the Internal Revenue Code and with the
Trust's being a trust exempt under Section 501(a) of the Internal Revenue Code.

   16.4   Nonalienation of Benefits.  Benefits payable under this Program shall
          -------------------------
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, prior to actually being received by the
person entitled to the benefit under the terms of the Program; and any attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge,
garnish, execute on, levy or otherwise dispose of any right to benefits payable
hereunder, shall be void.  The Trust Fund shall not in any manner be liable for,
or subject to, the debts, contracts, liabilities, engagements or torts of any
person entitled to benefits hereunder.  The foregoing provisions of this Section
16.4 shall not preclude the (1) enforcement of a Federal tax

                                     -137-
<PAGE>

levy made pursuant to Section 6331 of the Internal Revenue Code or (2)
collection by the United States on a judgment resulting from an unpaid tax
assessment.

   16.5   Qualified Domestic Relations Order.
          ----------------------------------

          (a)  Qualified Domestic Relations Order means any judgment, decree, or
     order (including approval of a property settlement agreement):

               (1)  which is made pursuant to a state domestic relations law
          (including a community property law),

               (2)  which relates to the provision of child support, alimony
          payments, or marital property rights to a spouse, former spouse,
          child, or other dependent of a Participant,

               (3)  which creates or recognizes the existence of an alternate
          payee's right to receive all or a portion of the Participant's Net
          Balance Account under the Program, and

               (4)  with respect to which the requirements of paragraphs (b) and
          (c) are met.

          (b)  A domestic relations order can be a Qualified Domestic Relations
     Order only if such order clearly specifies:

               (1)  the name and the last known mailing address, if any, of the
          Participant and the name and mailing address of each alternate payee
          covered by the order,

               (2)  the amount or percentage of the Participant's Accrued
          Benefit to be paid by the Program to each such alternate payee, or the
          manner in which such amount or percentage is to be determined,

               (3)  the number of payments or period to which such order
          applies, and

               (4)  each Plan to which such order applies.

          (c)  A domestic relations order can be a Qualified Domestic Relations
     Order only if such order does not:

               (1)  require the plan to provide any type or form of benefit, or
          any option not otherwise provided under the Program,

               (2)  require the Program to provide increased benefits
          (determined on the basis of actuarial value), or

                                     -138-
<PAGE>

               (3)  require the payment of benefits to an alternate payee which
          are required to be paid to another alternate payee under another order
          previously determined to be a Qualified Domestic Relations Order.

          (d)  In the case of any payment made before a Participant has had a
     Termination of Employment, a domestic relations order shall not be treated
     as failing to meet the requirements of Section 16.5(c)(1) solely because
     such order requires that payment of benefits be made to an alternate payee:

               (1)  without regard to the Participant's attainment of any
          specified age;

               (2)  as if the Participant had retired on the date on which such
          payment is to begin under such order; and

               (3)  in any form in which such benefits may be paid under the
          Program to the Participant (other than in the form of a Qualified
          Joint and Survivor Annuity with respect to the alternate payee and his
          or her subsequent spouse).

          (e)  To the extent provided in any Qualified Domestic Relations Order
     the former spouse of a Participant if married to the Participant for at
     least one year, shall be treated as the surviving spouse of such
     Participant for purposes of consenting to the waiver of a Qualified Joint
     and Survivor Annuity as provided in Sections 11.2(f) and 11.10 and the
     naming of another Beneficiary to the extent provided in Sections 11.3 and
     11.10.

          (f)  Notwithstanding anything to the contrary in Article X, if,
     pursuant to a Qualified Domestic Relations Order, a segregated account is
     established containing the interest of an alternate payee, the alternate
     payee shall direct the manner in which such segregated account shall be
     invested in accordance with the procedures under Article X; provided that
     such segregated account shall remain invested in the same manner as the
     assets were invested before the account was segregated until the alternate
     payee's election in accordance with this Section 16.5(f) becomes effective.

   16.6   Unclaimed Amounts.  Unclaimed amounts shall consist of the amounts of
          -----------------
the Accounts of a retired, deceased or terminated Participant (including amounts
held in the Holding Fund with respect to checks which are distributed but which
are not cashed) which cannot be distributed because of the Committee's
inability, after a reasonable search, to locate a Participant or his Beneficiary
within a period of two (2) years after the payment of benefits becomes due.

          (a)  Unclaimed amounts with respect to Accounts held in the Profit
     Sharing Plan portion of the Program for a Plan Year shall become a
     Forfeiture and shall be allocated for such Plan Year as determined in
     accordance with Section 7.1 hereof, within a reasonable time after the
     close of the Plan Year in which such two-year period shall end.

                                     -139-
<PAGE>

          (b)  The Committee shall allocate Forfeitures with respect to Accounts
     held in the McDESOP portion of the Program to Participants' Participant
     Elected Contribution Accounts and Employer Matching Contribution Accounts
     by crediting such Forfeitures to the McDESOP Holding Fund as of the
     Valuation Date following the date the amount of such Forfeitures is
     determined for the immediately preceding Plan Year but not later than March
     31 of the year following the Plan Year with respect to which such
     Forfeitures occurred.

          (c)  Forfeitures arising in respect to a LESOP Account to
     Participants' LESOP Accounts shall be allocated in the same manner as
     Forfeitures under Section 7.3 are allocated to such Accounts.

          (d)  As of the last day of the Plan Year, Forfeitures arising in
     respect to the Stock Sharing Accounts of Participants shall be charged with
     the expenses of the Stock Sharing portion of the Program without regard to
     the limitations on reimbursement for expenses prescribed by Section 409(l)
     of the Internal Revenue Code. Any net Forfeitures after such charges and
     charges pursuant to Section 16.6(e) shall be allocated as income of the
     Stock Sharing portion of the Program as provided in Section 10.13(b).

          (e)  If an unclaimed amount is subsequently properly claimed by the
     Participant or the Participant's Beneficiary ("Reclaimed Amount") and
     unless an Employer in its discretion makes a contribution to the Program
     for such year in an amount sufficient to pay such Reclaimed Amount, it
     shall be charged as follows:

               (1)  To the extent such Reclaimed Amount originated as an
          unclaimed amount with respect to the Accounts held in the Profit
          Sharing Plan portion of the Program, it shall be charged against
          Forfeitures from the Profit Sharing portion of the Program and, if
          such Forfeitures are not sufficient, the remainder shall be treated as
          an expense of the Profit Sharing Plan portion of the Program during
          the Plan Year in which the Participant or Beneficiary makes such
          claim.

               (2)  To the extent that the Reclaimed Amount originated as an
          unclaimed amount with respect to the amounts held in the McDESOP
          portion of the Program it shall be charged against Forfeitures for the
          Plan Year with respect to Participants' Participant Elected
          Contribution Accounts and Employer Matching Contribution Accounts and,
          to the extent such Forfeitures are not sufficient, shall be treated as
          an expense of the McDESOP portion of the Program.

               (3)  To the extent that such Reclaimed Amount originated as an
          unclaimed amount in respect to a LESOP Account, it shall be treated as
          a charge against Forfeitures arising under Sections 11.4 and 16.6 for
          the Plan Year with respect to Participants' LESOP Accounts and, to the
          extent such Forfeitures are not sufficient, shall be treated as an
          expense of the LESOP portion of the Program.

                                     -140-
<PAGE>

               (4)  To the extent that such Reclaimed Amount originated as an
          unclaimed amount with respect to a Stock Sharing Account, it shall be
          treated as a charge against Forfeitures arising under Section 16.6 for
          the Plan Year with respect to Participants' Stock Sharing Accounts
          and, to the extent that such Forfeitures are not sufficient, shall be
          treated as an expense of the Stock Sharing portion of the Program.

   16.7   Maximum Age Condition.  Anything to the contrary herein
          ---------------------
notwithstanding, eligibility to participate in the Program and to elect or
receive allocations of contributions to the Trust shall not be subject to any
restrictions on account of a maximum age condition.

   16.8   Invalidity of Certain Provisions.  If any provision of this Program
          --------------------------------
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and this Program shall be
construed and enforced as if such provisions, to the extent invalid or
unenforceable, had not been included.

   16.9   Gender and Number.  Except when otherwise indicated by the context,
          -----------------
any masculine terminology herein shall also include the feminine and the
singular shall also include the plural.

   16.10  Law Governing.  This Program and Trust shall be construed and enforced
          -------------
according to the laws of the State of Illinois other than its laws respecting
choice of law, to the extent not preempted by ERISA.

     Executed in multiple originals this 17th day of December, 1999

                                        McDonald's Corporation

                                        By: Stanley R. Stein

                                        Its: Executive Vice President

                                     -141-
<PAGE>

                                  APPENDIX A

     Maximum Percentage of Annuity Benefit Paid to Participant Which Can Be Paid
to a Non-spouse Beneficiary.

          Excess of age of employee          Applicable
           over age of beneficiary           percentage
           -----------------------           ----------

             10 years or less                  100
             11                                 96
             12                                 93
             13                                 90
             14                                 87
             15                                 84
             16                                 82
             17                                 79
             18                                 77
             19                                 75
             20                                 73
             21                                 72
             22                                 70
             23                                 68
             24                                 67
             25                                 66
             26                                 64
             27                                 63
             28                                 62
             29                                 61
             30                                 60
             31                                 59
             32                                 59
             33                                 58
             34                                 57
             35                                 56
             36                                 56
             37                                 55
             38                                 55
             39                                 54
             40                                 54
             41                                 53
             42                                 53
             43                                 53
             44 and greater                     52
<PAGE>

                                  APPENDIX B

     The Applicable Divisor for purposes of Section 11.2(d)(3) shall be:

          Attained Age of Participant
          on Birthday in Calendar Year    Applicable Divisor
          ----------------------------    ------------------

             70                               26.2
             71                               25.3
             72                               24.4
             73                               23.5
             74                               22.7
             75                               21.8
             76                               20.9
             77                               20.1
             78                               19.2
             79                               18.4
             80                               17.6
             81                               16.8
             82                               16.0
             83                               15.3
             84                               14.5
             85                               13.8
             86                               13.1
             87                               12.4
             88                               11.8
             89                               11.1
             90                               10.5
             91                                9.9
             92                                9.4
             93                                8.8
             94                                8.3
             95                                7.8
             96                                7.3
             97                                6.9
             98                                6.5
             99                                6.1
             100                               5.7
             101                               5.3
             102                               5.0
             103                               4.7
             104                               4.4
             105                               4.1
             106                               3.8
             107                               3.6
             108                               3.3
             109                               3.1
             110                               2.8
             111                               2.6
             112                               2.4
             113                               2.2
             114                               2.0
             115                               1.8

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