-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, M6ttx6JOZGRiis+0F56fHHLi33xNMZFP26vocGYQg00upG0ueBo/GlSeZUt6Ob8h QLGHbgV4BqLljQf0kNbphw== 0000950130-95-001318.txt : 19950717 0000950130-95-001318.hdr.sgml : 19950717 ACCESSION NUMBER: 0000950130-95-001318 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 15 REFERENCES 429: 033-42642 FILED AS OF DATE: 19950713 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCDONALDS CORP CENTRAL INDEX KEY: 0000063908 STANDARD INDUSTRIAL CLASSIFICATION: 5812 IRS NUMBER: 362361282 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-60939 FILM NUMBER: 95553810 BUSINESS ADDRESS: STREET 1: ONE MCDONALD'S PLZ CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7085753000 S-3 1 FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 13, 1995 REGISTRATION STATEMENT NO. 33- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- MCDONALD'S CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 36-2361282 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION OF INCORPORATION OR NUMBER) ORGANIZATION) ONE MCDONALD'S PLAZA OAK BROOK, ILLINOIS 60521 (708) 575-3000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) --------------- SHELBY YASTROW SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY MCDONALD'S CORPORATION ONE MCDONALD'S PLAZA OAK BROOK, ILLINOIS 60521 (708) 575-6178 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT OF SERVICE) COPIES TO: ALAN BELLER CLEARY, GOTTLIEB, STEEN & HAMILTON ONE LIBERTY PLAZA NEW YORK, NEW YORK 10006 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement as determined by market conditions. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (the "Securities Act"), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. [_] --------------- CALCULATION OF REGISTRATION FEE - - ------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------
PROPOSED PROPOSED TITLE OF EACH CLASS OF AMOUNT MAXIMUM MAXIMUM SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE AMOUNT OF REGISTERED REGISTERED PER UNIT(1)(2) OFFERING PRICE(1)(2) REGISTRATION FEE - - --------------------------------------------------------------------------------------------- Debt Securities........ $500,000,000(3) 100% $500,000,000 $172,414 - - ---------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------- (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o). (2) Exclusive of accrued interest, if any. (3) Or, if any Debt Securities are issued at a discount, such greater amount as shall result in an aggregate offering price to the public which shall not exceed $500,000,000. --------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. PURSUANT TO THE PROVISIONS OF RULE 429 OF THE GENERAL RULES AND REGULATIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE PROSPECTUS CONTAINED IN THIS REGISTRATION STATEMENT ALSO RELATES TO THE SECURITIES REGISTERED PURSUANT TO THE REGISTRANT'S REGISTRATION STATEMENT NO. 33-42642 ON FORM S-3. IN THE EVENT ANY PREVIOUSLY REGISTERED DEBT SECURITIES ARE OFFERED PRIOR TO THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THEY WILL NOT BE INCLUDED IN ANY PROSPECTUS HEREUNDER. - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- EXPLANATORY NOTE This Registration Statement contains (i) a base prospectus, consisting of a cover page and numbered pages 2 through 13, relating to debt securities of McDonald's Corporation (the "Company") having an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or the equivalent thereof in one or more foreign currencies or composite currencies, (ii) a prospectus supplement, consisting of a cover page, numbered pages S-2 through S-24 and a back cover page, relating to the possible offering in the United States of such debt securities as medium-term notes (the "U.S. Offering") and (iii) a prospectus supplement, consisting of a cover page, numbered pages S-2 through S-29 and a back cover page, relating to a possible concurrent offering outside the United States of such debt securities as medium-term notes (the "Euro Offering"). The prospectus supplement for the U.S. Offering follows immediately. Following such prospectus supplement is the prospectus supplement for the Euro Offering followed by the base prospectus. The base prospectus will be used for both the U.S. Offering and the Euro Offering. In the event that the Company decides, following the effectiveness of the Registration Statement, to proceed with either the U.S. Offering, the Euro Offering or both, the complete prospectus supplement for the U.S. Offering, the Euro Offering or both, as the case may be, in the exact form in which it will be used, will be filed with the Securities and Exchange Commission (the "Commission") pursuant to Rule 424(b)(2). In the event that any such medium- term notes are sold, pricing and certain other information with respect to such medium-term notes will be included in one or more pricing supplements filed in accordance with the rules and regulations of the Commission. The Company may decrease the initial public offering price or purchase price of medium-term notes that may be offered pursuant to either of the prospectus supplements contained herein or otherwise modify in any respect the medium-term note programs described in such prospectus supplements. Upon any material change in either of the medium-term note programs, the Company will file an additional prospectus supplement or prospectus supplements, as the case may be, describing such change or changes in accordance with the rules and regulations of the Commission. The Company also may offer additional debt securities in other series pursuant to the base prospectus contained herein. Upon any public offering of any debt securities of such other series, a prospectus supplement or prospectus supplements describing such debt securities and the particular terms of such offering will be filed in accordance with the rules and regulations of the Commission. ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS + +SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY + +NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH + +OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR + +QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JULY 13, 1995 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED JULY , 1995) $584,662,000 MCDONALD'S CORPORATION MEDIUM-TERM NOTES, SERIES E DUE FROM NINE MONTHS TO 60 YEARS FROM DATE OF ISSUE ---------- McDonald's Corporation (the "Company") may from time to time offer its Medium-Term Notes, Series E (the "Notes") with an aggregate initial public offering price or purchase price of up to $584,662,000, or the equivalent thereof in one or more foreign or composite currencies including European Currency Units ("ECU"), subject to reduction as a result of the sale of other Debt Securities. In addition to the Notes in registered form ("Registered Notes") being offered hereby in the United States, the Company may from time to time offer Notes in bearer form ("Bearer Notes") outside the United States. A separate Prospectus Supplement will be used for any such offering of Bearer Notes. Any Bearer Notes sold will reduce correspondingly the principal amount of Registered Notes that may be sold hereunder. See "Plan of Distribution." Each Registered Note will mature on any day from nine months to 60 years from its date of issue and may be subject to redemption at the option of the Company, or to repayment at the option of the Holder, prior to Stated Maturity. Each Registered Note will be denominated in the currency designated by the Company (the "Specified Currency"). See "Important Currency Information" and "Currency Risks." Each Registered Note will bear interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case of certain Original Issue Discount Notes, or at a floating rate (a "Floating Rate Note") determined by reference to the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate, the Treasury Rate or any other Base Rate, as selected by the initial purchaser and agreed to by the Company, adjusted by the Spread and/or Spread Multiplier, if any, applicable to such Note. A Registered Note may be issued as an indexed note (an "Indexed Note") the interest amount (an "Interest Indexed Note") or principal amount (a "Principal Indexed Note" and, together with Interest Indexed Notes, "Indexed Notes") payable at Maturity of which will be determined by reference to a designated stock, currency, commodity or other index or will otherwise be determined by application of a formula. See "Description of Registered Notes--Indexed Notes." The Specified Currency, any applicable interest rate or interest rate formula, any applicable index formula, reset provisions, Issue Price, Stated Maturity, any Interest Payment Dates, any redemption and repayment provisions and certain other terms applicable to each Registered Note will be established at the date of issue of such Registered Note and set forth in a pricing supplement to this Prospectus Supplement (a "Pricing Supplement"). Unless otherwise specified in the applicable Pricing Supplement, interest on Fixed Rate Notes, other than in the case of Original Issue Discount Notes, will be payable each February 15 and August 15 and at Maturity. Interest on Floating Rate Notes will be payable on the dates determined at the time of issuance and set forth in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, Registered Notes will be issued only in minimum denominations of $100,000 and any larger amount that is an integral multiple of $1,000 or, in the case of a Registered Note having a Specified Currency other than U.S. dollars, in the minimum denominations set forth in the applicable Pricing Supplement. Each Registered Note will be represented either by a Global Security registered in the name of a nominee of The Depository Trust Company, as Depositary (a "Book-Entry Note"), or by a certificate issued in temporary or definitive form (a "Certificated Note"), as set forth in the applicable Pricing Supplement. Beneficial interests in Global Securities representing Book-Entry Notes will be shown on, and transfers thereof will be effected only through, records maintained by the Depositary's participants. Book-Entry Notes will not be issuable as Certificated Notes except under the circumstances described herein. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - - ------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------
PRICE TO PUBLIC(1) AGENTS' COMMISSION(2) PROCEEDS TO THE COMPANY(2)(3) - - ------------------------------------------------------------------------------------------------ Per Note................ 100% .125% to .750% 99.875% to 99.250% - - ------------------------------------------------------------------------------------------------ Total(4)................ $584,662,000 $730,828 to $4,384,965 $583,931,173 to $580,277,035 - - ------------------------------------------------------------------------------------------------ - - ------------------------------------------------------------------------------------------------
(1) The Notes will be issued at 100% of their principal or, in the case of Principal Indexed Notes, face amount, unless otherwise specified in the applicable Pricing Supplement. (2) The Company will pay a commission to Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, PaineWebber Incorporated or Salomon Brothers Inc or others, each as agent (collectively the "Agents"), in the form of a discount, ranging from .125% to .750%, depending upon the Stated Maturity of the Note, of the principal or, in the case of Principal Indexed Notes, face amount of any Note with a Stated Maturity of nine months to 30 years sold through such Agent. Commissions with respect to Notes with Stated Maturities in excess of 30 years which are sold through an Agent will be negotiated between the Company and such Agent at the time of such sale. The Company may also sell Notes to any Agent as principal. Unless otherwise indicated in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price to be agreed upon at the time of sale and may be resold by such Agent to one or more investors or other purchasers at a fixed public offering price or at varying prices relating to prevailing market prices at the time or times of resale to be determined by such Agent. (3) Before deducting expenses payable by the Company estimated to be $ , including reimbursement of certain of the Agents' expenses. (4) Or the equivalent thereof in foreign currencies or composite currencies (including ECU). ---------- The Registered Notes are being offered on a continuous basis by the Company through the Agents, which have agreed to use their reasonable best efforts to solicit orders to purchase Registered Notes. The Company may sell Registered Notes at a discount to any Agent for its own account or for resale to one or more investors at a fixed public offering price or at varying prices relating to prevailing market prices at the time or times of resale, to be determined by such Agent. The Company also may arrange for such Registered Notes to be sold through any Agent acting as an underwriter or may sell Registered Notes directly to investors on its own behalf. It is not currently anticipated that any Registered Notes will be listed on any securities exchange, and there can be no assurance that the maximum amount of Registered Notes offered by this Prospectus Supplement will be sold or that there will be a secondary market for any Registered Notes. The Company reserves the right to withdraw, cancel or modify the offer made hereby without notice. The Company or any Agent may reject any order to purchase Registered Notes, whether or not solicited, in whole or in part. See "Plan of Distribution." MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. J.P. MORGAN SECURITIES INC. MORGAN STANLEY & CO. INCORPORATED PAINEWEBBER INCORPORATED SALOMON BROTHERS INC ---------- The date of this Prospectus Supplement is , 1995. IMPORTANT CURRENCY INFORMATION Purchasers are required to pay for each Registered Note in the Specified Currency for such Note. Currently, there are limited facilities in the United States for conversion of U.S. dollars into foreign currencies and vice versa. If requested by a prospective purchaser of a Registered Note denominated in a Specified Currency other than U.S. dollars, the Agent which solicited the offer to purchase such Note will use its reasonable best efforts to arrange for the exchange of U.S. dollars into such Specified Currency to enable the purchaser to pay for such Note. Such request must be made on or before the fifth Business Day (as defined below) preceding the date of delivery of such Note or by such later date as is determined by such Agent. Each such exchange will be made by the relevant Agent on such terms and subject to such conditions, limitations and charges as such Agent may from time to time establish in accordance with its regular foreign exchange practice. All costs of exchange will be borne by the purchaser. References herein to "U.S. dollars" or "$" are to the lawful currency of the United States of America. DESCRIPTION OF REGISTERED NOTES The following description of the particular terms of the Registered Notes (to the extent not superseded in the applicable Pricing Supplement) supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Debt Securities set forth in the Prospectus, to which description reference is hereby made. GENERAL The Notes are to be issued as a series of Debt Securities under the Indenture limited to an aggregate initial public offering price or purchase price of $584,662,000 or the equivalent thereof in one or more foreign or composite currencies, including ECU, subject to reduction as a result of the sale of other Debt Securities. The U.S. dollar equivalent of the public offering price or purchase price of a Registered Note denominated in a Specified Currency other than U.S. dollars will be determined by an agent designated by the Company, which initially shall be The First National Bank of Chicago (the "Paying Agent"), on the basis of the noon buying rate in The City of New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") for such Specified Currency on the date the Company agrees to sell such Notes; provided, however, that in the case of ECU, the Market Exchange Rate shall be the rate of exchange determined by the Commission of the European Communities (or any successor thereof) as published in the Official Journal of the European Communities, or any successor publication, on the Business Day immediately preceding the applicable issue date. The Notes will consist of Registered Notes and Bearer Notes, each of which will be offered on a continuous basis. Registered Notes will be issued in fully registered form only, without coupons. Registered Notes may not be exchanged for Bearer Notes. A separate Prospectus Supplement will describe the terms of any such Bearer Notes. Each Registered Note will be issued initially as either a Book-Entry Note or a Certificated Note. Except as set forth in the Prospectus under "Description of Debt Securities--Global Securities," Book-Entry Notes will not be issuable as Certificated Notes. See "Book-Entry System" below. Unless otherwise specified in the applicable Pricing Supplement, in the case of Book-Entry Notes, the authorized denominations of Registered Notes denominated in U.S. dollars will be $100,000 and any larger amount that is an integral multiple of $1,000. The authorized denominations of Registered Notes denominated in a Specified Currency other than U.S. dollars will be set forth in the applicable Pricing Supplement. S-2 Each Registered Note will mature on any day from nine months to 60 years from its date of issue, as selected by the purchaser and agreed to by the Company. Each Registered Note may also be subject to redemption at the option of the Company or to repayment at the option of the Holder, prior to its Stated Maturity (as defined below). Each Registered Note whose Specified Currency is Japanese yen will have a Stated Maturity of not less than one year from its Original Issue Date and will not be subject to optional redemption or repayment prior to such time. Unless otherwise specified in the applicable Pricing Supplement, each Floating Rate Note will mature on an Interest Payment Date for such Note. The Pricing Supplement relating to a Registered Note will describe the following terms: (i) the Specified Currency for such Note (and, if the Specified Currency is other than U.S. dollars, certain other terms relating to such Note and such Specified Currency, including the authorized denominations of such Note); (ii) whether such Note is a Fixed Rate Note, a Floating Rate Note or an Indexed Note; (iii) the price (expressed as a percentage of the aggregate principal (or, in the case of Principal Indexed Notes, face) amount thereof) at which such Note will be issued (the "Issue Price"); (iv) the date on which such Note will be issued (the "Original Issue Date"); (v) the date on which such Note will mature (the "Stated Maturity"); (vi) if such Note is a Fixed Rate Note, the rate per annum at which such Note will bear interest, if any, and the dates on which interest will be payable if other than February 15 and August 15; (vii) if such Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the Interest Reset Period, the Interest Payment Dates, the Index Maturity, the Maximum Interest Rate, if any, the Minimum Interest Rate, if any, the Spread and/or Spread Multiplier, if any (all as defined below), and any other terms relating to the particular method of calculating the interest rate for such Note; (viii) whether such Note is an Original Issue Discount Note (as defined below); (ix) if such Note is an Indexed Note, the manner in which the principal amount of such Note payable at Stated Maturity will be determined; (x) whether such Note may be redeemed at the option of the Company, or repaid at the option of the Holder, prior to Stated Maturity as described under "Optional Redemption, Repayment and Repurchase" below, and, if so, the provisions relating to such redemption or repayment, including, in the case of an Original Issue Discount Note or Indexed Note, the information necessary to determine the amount due upon redemption or repayment; and (xi) any other terms of such Note not inconsistent with the provisions of the Indenture under which such Note will be issued. "Business Day" with respect to any Registered Note means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of New York, (b) the City of Chicago or (c) if the Specified Currency for such Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg); (ii) if the Specified Currency for such Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made) and (iii) if such Note is a LIBOR Note (as defined below), a London Business Day (as defined below). "London Business Day" means any day (i) if the Index Currency (as defined below) is other than ECU, on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). "Maturity," when used with respect to any Note, means the date on which the principal of such Note or an installment of principal becomes due and payable as provided therein or in the Indenture, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Original Issue Discount Note" means (i) a Registered Note, including any such Registered Note whose interest rate is zero, that has a stated redemption price at Stated Maturity that exceeds its Issue Price by at least 0.25% of its aggregate principal amount, multiplied by the number of full years from the Original Issue Date to the Stated Maturity for such Registered Note and (ii) any other Registered Note designated by the Company as issued with original issue discount for United States federal income tax purposes. S-3 PAYMENT OF PRINCIPAL AND INTEREST The principal of and any premium and interest on each Registered Note are payable by the Company in the Specified Currency for such Note. If the Specified Currency for a Registered Note is other than U.S. dollars, the Company or the Paying Agent will (unless otherwise specified in the applicable Pricing Supplement) arrange to convert all payments in respect of such Note into U.S. dollars in the manner described in the following paragraph. The Holder of a Registered Note denominated in a Specified Currency other than U.S. dollars may (if the applicable Pricing Supplement and such Note so indicate) elect to receive all payments in respect of such Note in the Specified Currency by delivery of a written notice to the Paying Agent not later than fifteen calendar days prior to the applicable payment date, except under the circumstances described in "Currency Risks--Payment Currency" below. Such election will remain in effect until revoked by written notice to the Paying Agent received not later than fifteen calendar days prior to the applicable payment date. In the case of a Registered Note denominated in a Specified Currency other than U.S. dollars, the amount of any U.S. dollar payment in respect of such Registered Note will be determined by the Paying Agent based on the highest firm bid quotation expressed in U.S. dollars received by the Paying Agent at approximately 11:00 a.m., New York City time, on the second Business Day preceding the applicable payment date (or, if no such rate is quoted on such date, the last preceding date on which such rate was quoted) from three (or, if three are not available, then two) recognized foreign exchange dealers in The City of New York (which may include the Agents, or affiliates thereof, or the Paying Agent) selected by the Paying Agent, for the purchase by the quoting dealer, for settlement on such payment date, of the aggregate amount of such Specified Currency payable on such payment date in respect of all Registered Notes denominated in such Specified Currency. All currency exchange costs will be borne by the Holders of such Notes by deductions from such U.S. dollar payments. If no such bid quotations are available, such payments will be made in such Specified Currency, unless such Specified Currency is unavailable due to the imposition of exchange controls or to other circumstances beyond the Company's control, in which case such payments will be made as described under "Currency Risks--Payment Currency" below. Unless otherwise specified in the applicable Pricing Supplement, U.S. dollar payments of interest on Registered Notes (other than interest payable at Maturity) will be made, except as provided below, by check mailed to the Registered Holders of such Notes as shown on the Debt Security Register at the close of business on the related record date (which, in the case of Global Securities representing Book-Entry Notes, will be a nominee of the Depositary); provided, however, that in the case of a Registered Note issued between a record date and the related Interest Payment Date (unless otherwise specified in the related Pricing Supplement), interest for the period beginning on the Original Issue Date for such Note and ending on such Interest Payment Date shall be paid on the next succeeding Interest Payment Date to the Registered Holder of such Note on the related record date. A Holder of $10,000,000 (or the equivalent thereof in a Specified Currency other than U.S. dollars) or more in aggregate principal (or, in the case of Principal Indexed Notes, face) amount of Registered Notes of like tenor and term shall be entitled to receive such U.S. dollar payments by wire transfer of immediately available funds, but only if appropriate wire transfer instructions have been received in writing by the Paying Agent not later than fifteen calendar days prior to the applicable Interest Payment Date. Simultaneously with the election by any Holder to receive payments in a Specified Currency other than U.S. dollars (as provided above), such Holder shall provide appropriate wire transfer instructions to the Paying Agent, and all payments to be made in the Specified Currency will be made by wire transfer in immediately available funds to an account maintained by the payee with a bank located outside the United States. Unless otherwise specified in the applicable Pricing Supplement, principal and any premium and interest payable at the Maturity of a Registered Note will be paid in immediately available funds upon surrender of such Note at the corporate trust office or an agency of the Paying Agent, which office or agency is located in the City of Chicago. The corporate trust office of The First National Bank of Chicago is located at One First National Bank Plaza, Chicago, Illinois. S-4 Any payment of principal, premium (if any) or interest required to be made in respect of a Fixed Rate Note on a date that is not a Business Day for such Note need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date, and no additional interest shall accrue as a result of such delayed payment. Unless otherwise specified in the applicable Pricing Supplement, if the principal of any Original Issue Discount Note is declared to be due and payable immediately as described under "Description of Debt Securities--Events of Default" in the Prospectus, the amount of principal due and payable with respect to such Note shall be limited to the aggregate principal amount of such Note multiplied by the sum of its Issue Price (expressed as a percentage of the aggregate principal amount) plus the original issue discount amortized from the Original Issue Date to the date of declaration, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of declaration). The record date with respect to any Interest Payment Date for a Floating Rate Note shall be the date (whether or not a Business Day) fifteen calendar days immediately preceding such Interest Payment Date, and for a Fixed Rate Note (unless otherwise specified in the applicable Pricing Supplement) shall be the February 1 or August 1 (whether or not a Business Day) immediately preceding such Interest Payment Date or Maturity, as the case may be. Interest payments in respect of Registered Notes will equal the amount of interest accrued from and including the immediately preceding Interest Payment Date in respect of which interest has been paid or duly made available for payment (or from and including the date of issue, if no interest has been paid with respect to the applicable Note) to but excluding the related Interest Payment Date or Maturity, as the case may be. FIXED RATE NOTES Each Fixed Rate Note will bear interest from its Original Issue Date at the rate per annum stated on the face thereof until the principal amount thereof is paid or made available for payment. Unless otherwise set forth in the applicable Pricing Supplement, interest on each Fixed Rate Note will be payable semiannually in arrears on each February 15 and August 15 and at maturity. Each payment of interest in respect of an Interest Payment Date shall include interest accrued through the day before such Interest Payment Date. Interest on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30- day months. FLOATING RATE NOTES Each Floating Rate Note will bear interest from its Original Issue Date to the first Interest Reset Date (as defined below) for such Note at the initial interest rate set forth on the face thereof and in the applicable Pricing Supplement (the "Initial Interest Rate"). Thereafter, the interest rate on such Note for each Interest Reset Period (as defined below) will be determined by reference to an interest rate basis (the "Base Rate"), plus or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one basis point equals one one- hundredth of a percentage point) that may be specified in the applicable Pricing Supplement as being applicable to such Note, and the "Spread Multiplier" is the percentage that may be specified in the applicable Pricing Supplement as being applicable to such Note. The applicable Pricing Supplement will designate one or more of the following Base Rates as applicable to a Floating Rate Note: (i) the CD Rate (a "CD Rate Note"), (ii) the CMT Rate (a "CMT Rate Note"), (iii) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (iv) the Federal Funds Rate (a "Federal Funds Rate Note"), (v) LIBOR (a "LIBOR Note"), (vi) the Prime Rate (a "Prime Rate Note"), (vii) the Treasury Rate (a "Treasury Rate Note") or (viii) such other Base Rate or formula as is set forth in such Pricing Supplement and in such Note. The "Index Maturity" for any Note is the period of maturity of the instrument, obligation or index from which the Base Rate is calculated. S-5 As specified in the applicable Pricing Supplement, a Floating Rate Note may also have either or both of the following (in each case expressed as a rate per annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the rate at which interest may accrue during any interest period ("Maximum Interest Rate") and (ii) a minimum limitation, or floor, on the rate at which interest may accrue during any interest period ("Minimum Interest Rate"). Notwithstanding any Maximum Interest Rate that may be applicable to any Floating Rate Note, the interest rate on a Floating Rate Note will in no event be higher than the maximum rate permitted by applicable law, as the same may be modified by United States law of general application. The Notes will be governed by the law of the State of New York and, under such law, the maximum rate of interest, with certain exceptions, is 25% per annum on a simple interest basis. The Company will appoint, and enter into agreements with, agents (each a "Calculation Agent") to calculate interest rates on Floating Rate Notes. All determinations of interest rates by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on Holders of the Floating Rate Notes. Unless otherwise specified in a Pricing Supplement, the Paying Agent shall be the Calculation Agent for each Registered Note. The interest rate on each Floating Rate Note will be reset daily, weekly, monthly, quarterly, semiannually or annually (such period being the "Interest Reset Period" for such Note, and the first day of each Interest Reset Period being an "Interest Reset Date"), as specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the Interest Reset Dates will be, in the case of Floating Rate Notes that reset daily, each Business Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided below under "Treasury Rate Notes"); in the case of Floating Rate Notes that reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes that reset quarterly, the third Wednesday of March, June, September and December of each year; in the case of Floating Rate Notes that reset semiannually, the third Wednesday of each of the two months of each year specified in the applicable Pricing Supplement; and, in the case of Floating Rate Notes that reset annually, the third Wednesday of one month of each year specified in the applicable Pricing Supplement. If an Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that, in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Unless otherwise specified in the applicable Pricing Supplement, interest payable in respect of Floating Rate Notes shall be the accrued interest from and including the Original Issue Date or the last date to which interest has been paid or duly provided for, as the case may be, to but excluding the applicable Interest Payment Date or Maturity, as the case may be. Unless otherwise specified in the applicable Pricing Supplement, with respect to a Floating Rate Note, accrued interest shall be calculated by multiplying the principal amount of such Note (or, in the case of an Indexed Note, unless otherwise specified in the applicable Pricing Supplement, the face amount of such Indexed Note) by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which accrued interest is being calculated. Unless otherwise stated in the applicable Pricing Supplement, the interest factor (expressed as a decimal calculated to seven decimal places without rounding) for each such day shall be computed by dividing the interest rate in effect on such day by 360, in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual number of days in the year, in the case of Treasury Rate Notes or CMT Rate Notes. For purposes of making the foregoing calculation, the interest rate in effect on any Interest Reset Date will be the applicable rate as reset on such date. Unless otherwise specified in the applicable Pricing Supplement, all percentages resulting from any calculation of the rate of interest on a Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage point rounded upward, and all currency S-6 amounts used in or resulting from such calculation on Floating Rate Notes will be rounded to the nearest one-hundredth of a unit (with .005 of a unit being rounded upward). Unless otherwise indicated in the applicable Pricing Supplement and except as provided below, interest will be payable, in the case of Floating Rate Notes that reset daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified in the applicable Pricing Supplement; in the case of Floating Rate Notes that reset quarterly, on the third Wednesday of March, June, September, and December of each year; in the case of Floating Rate Notes that reset semiannually, on the third Wednesday of each of two months of each year specified in the applicable Pricing Supplement; and, in the case of Floating Rate Notes that reset annually, on the third Wednesday of one month of each year specified in the applicable Pricing Supplement (each such day being an "Interest Payment Date") and, in each case, at Maturity. If an Interest Payment Date (other than at Maturity) with respect to any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Payment Date shall be postponed to the next succeeding Business Day, except that, in the case of a LIBOR Note, if such Business Day would fall in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity of a Floating Rate Note falls on a day that is not a Business Day, the required payment of principal, premium (if any) and/or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest shall accrue on such payment for the period from and after Maturity to the date of such payment on the next succeeding Business Day. Upon the request of the Holder of any Floating Rate Note, the Calculation Agent for such Note will provide to such Holder the interest rate then in effect, and, if determined, the interest rate that will become effective on the next Interest Reset Date, with respect to such Floating Rate Note. "H.15(519)" means the publication entitled "Statistical Release H.15(519), Selected Interest Rates", or any successor publication, published by the Board of Governors of the Federal Reserve System. "Composite Quotations" means the daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities" published by the Federal Reserve Bank of New York. CD Rate Notes Each CD Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "CD Rate" for each Interest Reset Period, as determined by the Calculation Agent for such CD Rate Note, shall be the rate as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate Determination Date") for negotiable certificates of deposit having the Index Maturity designated in the applicable Pricing Supplement, as published in H.15(519) under the heading "CDs (Secondary Market)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CD Rate Determination Date, then the "CD Rate" for such Interest Reset Period will be the rate on such CD Rate Determination Date for negotiable certificates of deposit of the Index Maturity designated in the applicable Pricing Supplement as published in Composite Quotations under the heading "Certificates of Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest Reset Period will be calculated by the Calculation Agent for such CD Rate Note and will be the arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date, of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for such CD Rate Note for negotiable certificates of deposit of major money market banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the S-7 Index Maturity designated in the Pricing Supplement in a denomination of $5,000,000; provided, however, that if the three dealers selected as aforesaid by such Calculation Agent are not quoting offered rates as mentioned in this sentence, the "CD Rate" for such Interest Reset Period will be the CD Rate in effect on such CD Rate Determination Date, or, if none, the Initial Interest Rate. The "Calculation Date" pertaining to any CD Rate Determination Date shall be the earlier of (i) the tenth calendar day after such CD Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Commercial Paper Rate Notes Each Commercial Paper Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Commercial Paper Rate" for each Interest Reset Period will be determined by the Calculation Agent for such Commercial Paper Rate Note as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Commercial Paper Rate Determination Date") and shall be the Money Market Yield (as defined below) on such Commercial Paper Rate Determination Date of the rate for commercial paper having the Index Maturity specified in the applicable Pricing Supplement, as such rate shall be published in H.15(519) under the heading "Commercial Paper". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Commercial Paper Rate Determination Date, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield on such Commercial Paper Rate Determination Date of the rate for commercial paper of the specified Index Maturity as published in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 a.m., New York City time, on such Commercial Paper Rate Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for such Commercial Paper Rate Note for commercial paper of the specified Index Maturity placed for an industrial issuer whose bonds are rated "AA" or the equivalent by a nationally recognized statistical rating agency; provided, however, that if the three dealers selected as aforesaid by such Calculation Agent are not quoting offered rates as mentioned in this sentence, the "Commercial Paper Rate" for such Interest Reset Period will be the Commercial Paper Rate in effect on such Commercial Paper Rate Determination Date, or, if none, the Initial Interest Rate. "Money Market Yield" shall be a yield calculated in accordance with the following formula: D X 360 Money Market Yield = --------------------- X 100 360 - (D X M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the period for which accrued interest is being calculated. The "Calculation Date" pertaining to any Commercial Paper Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Commercial Paper Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. S-8 Federal Funds Rate Notes Each Federal Funds Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Federal Funds Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Federal Funds Rate" for each Interest Reset Period shall be the effective rate on the second Business Day immediately prior to the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination Date") for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such Interest Reset Period shall be the rate on such Federal Funds Rate Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall be the arithmetic mean of the rate, as of 9:00 a.m., New York City time, on the Federal Funds Rate Determination Date for the last transaction of not less than $5,000,000 in overnight federal funds arranged by each of three leading brokers of federal funds transactions in the City of New York selected by the Calculation Agent for such Federal Funds Rate Note; provided, however, that if the brokers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the "Federal Funds Rate" for such Interest Reset Period will be the Federal Funds Rate in effect on such Federal Funds Rate Determination Date, or, if none, the Initial Interest Rate. The "Calculation Date" pertaining to any Federal Funds Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Federal Funds Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. LIBOR Notes Each LIBOR Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for each Interest Reset Period as determined by the Calculation Agent for such LIBOR Notes shall be as follows: (i) On the second London Business Day prior to the Interest Reset Date for such Interest Reset Period (a "LIBOR Interest Determination Date"), the Calculation Agent for such LIBOR Note will determine (a) if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity designated in the applicable Pricing Supplement, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, that appear on the Designated LIBOR Page specified in the applicable Pricing Supplement as of 11:00 a.m., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the rate for deposits in the Index Currency having the Index Maturity designated in the applicable Pricing Supplement commencing on the second London Business Day immediately following such LIBOR Interest Determination Date that appears on the Designated LIBOR Page specified in the applicable Pricing Supplement as of 11:00 a.m., London time, on such LIBOR Interest Determination Date. If fewer than two such offered rates appear, or if no such rate appears, as applicable, LIBOR in respect of the related LIBOR Interest Determination Date will be determined in accordance with the provisions described in clause (ii) below. S-9 (ii) With respect to a LIBOR Note and an Interest Reset Period to which this clause (ii) applies, the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated in the applicable Pricing Supplement, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in the applicable Principal Financial Center, on such LIBOR Interest Determination Date by three major banks in such Principal Financial Center selected by the Calculation Agent for loans in the Index Currency to leading European banks, having the Index Maturity designated in the applicable Pricing Supplement commencing on the second London Business Day immediately following such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR Interest Determination Date. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. "Index Currency" means the currency (including composite currencies) specified in the applicable Pricing Supplement as the currency for which LIBOR shall be calculated. If no such currency is specified in the applicable Pricing Supplement, the Index Currency shall be U.S. dollars. "Principal Financial Center" will generally be the capital city of the country of the specified Index Currency, except that with respect to U.S. dollars, Italian lire and ECU, the Principal Financial Center shall be The City of New York, Milan and Luxembourg, respectively. Treasury Rate Notes Each Treasury Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Treasury Rate" for each Interest Reset Period will be the rate for the auction held on the Treasury Rate Determination Date (as defined below) for such Interest Reset Period of direct obligations of the United States ("Treasury bills") having the Index Maturity specified in the applicable Pricing Supplement, as such rate shall be published in H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction average (investment)" or, in the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Treasury Rate Determination Date, the auction average rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) on such Treasury Rate Determination Date as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the specified Index Maturity are not published or reported as provided above by 3:00 p.m., New York City time, on such Calculation Date, or if no such auction is held on such Treasury Rate Determination Date, then the "Treasury Rate" for such Interest Reset Period shall be calculated by the Calculation Agent for such Treasury Rate Note and shall be S-10 a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate Determination Date, of three leading primary United States government securities dealers selected by such Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the specified Index Maturity; provided, however, that if the dealers selected as aforesaid by such Calculation Agent are not quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for such Interest Reset Period will be the Treasury Rate in effect on such Treasury Rate Determination Date, or, if none, the Initial Interest Rate. The "Treasury Rate Determination Date" for each Interest Reset Period will be the day of the week in which the Interest Reset Date for such Interest Reset Period falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Rate Determination Date pertaining to the Interest Reset Period commencing in the next succeeding week. If an auction date shall fall on any day that would otherwise be an Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead be the Business Day immediately following such auction date. The "Calculation Date" pertaining to any Treasury Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Treasury Rate Determination Date or, if such a day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Prime Rate Notes Each Prime Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Prime Rate" for each Interest Reset Period will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Prime Rate Determination Date") and shall be the rate published in H.15(519) under the heading "Bank Prime Loan." In the event that such rate is not published prior to 9 a.m., New York City time, on the Calculation Date (as defined below), then the "Prime Rate" for such Interest Reset Period shall be determined by the Calculation Agent and shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base lending rate as in effect for that Prime Rate Determination Date. If fewer than four such rates but more than one such rate appear on the Reuters Screen NYMF Page for the Prime Rate Determination Date, the "Prime Rate" will be determined by the Calculation Agent and will be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Determination Date by four major money center banks in The City of New York selected by the Calculation Agent. If fewer than two such rates appear on the Reuters Screen NYMF Page, the Prime Rate will be determined by the Calculation Agent on the basis of the rates furnished in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of at least U.S. $500,000,000 and being subject to supervision or examination by Federal or State authority, selected by the Calculation Agent to provide such rate or rates; provided, however, that if the banks selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate for such Interest Reset Period will be the Prime Rate in effect on such Prime Rate Determination Date, or, if none, the Initial Interest Rate. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace the NYMF page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). S-11 The "Calculation Date" pertaining to a Prime Rate Determination Date will be the earlier of (i) the tenth calendar day after such Prime Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. CMT Rate Notes Each CMT Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "CMT Rate" for each Interest Reset Period as determined by the Calculation Agent for such CMT Rate Note shall be the rate (i) in the case where the Designated CMT Telerate Page (as defined below) is 7055, as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CMT Determination Date") or (ii) in the case where the Designated CMT Telerate Page is 7052, for the week or the month, as specified in the applicable Pricing Supplement, ended immediately preceding the week in which the CMT Determination Date occurs, in either case, for the Index Maturity specified in the applicable Pricing Supplement, as displayed on the Designated CMT Telerate Page under the caption ". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M." If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified in the applicable Pricing Supplement as published in the relevant H.15(519) opposite the caption "U.S. Government Securities, Treasury Constant Maturities". If such rate is no longer published, or if not published by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified in the applicable Pricing Supplement (or other United States Treasury rate for such Index Maturity) as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for the Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York (which may include the Agents or their affiliates) selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Index Maturity specified in the applicable Pricing Supplement and a remaining term to maturity of not less than such Index Maturity minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the "CMT Rate" for such Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the Treasury Notes with an original maturity of the number of years that is the next highest to the Index Maturity specified in the applicable Pricing Supplement and a remaining term to maturity closest to the Index Maturity specified in the applicable Pricing Supplement and in an amount of at least $100 million. If three or four (and not five) of such Reference S-12 Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference Dealers selected by the Calculation Agent are quoting as described herein, the "CMT Rate" will be the CMT Rate in effect on such CMT Determination Date, or, if none, the Initial Interest Rate. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Index Maturity specified in the applicable Pricing Supplement, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated in the applicable Pricing Supplement (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified in the applicable Pricing Supplement, the Designated CMT Telerate Page shall be 7052, for the most recent week. The "Calculation Date" pertaining to any CMT Determination Date shall be the earlier of (i) the tenth calendar day after such CMT Determination Date or, if, such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. INDEXED NOTES The Company may from time to time offer Notes ("Indexed Notes") the principal amount payable at Stated Maturity of which (the "Indexed Principal Amount") or the interest amount payable on which is determined by reference to a measure (the "Index") which will be related to (i) the rate of exchange between the Specified Currency for such Note and the other currency or composite currency (the "Indexed Currency") specified in the applicable Pricing Supplement (such Indexed Notes, "Currency Indexed Notes"); (ii) the difference in the price of a specified commodity (the "Indexed Commodity") on specified dates (such Indexed Notes, "Commodity Indexed Notes"), (iii) the difference in the level of a specified stock index (the "Stock Index"), which may be based on U.S. or foreign stocks, on specified dates (such Indexed Notes, "Stock Indexed Notes") or (iv) such other objective price or economic measures as are described in the applicable Pricing Supplement. The manner of determining the Indexed Principal Amount of an Indexed Note, and historical and other information concerning the Indexed Currency, Indexed Commodity, Stock Index or other price or economic measures used in such determination, will be set forth in the applicable Pricing Supplement, together with information concerning tax consequences to the holders of such Indexed Notes. Unless otherwise specified in the applicable Pricing Supplement, interest on an Indexed Note will be payable by the Company based on the amount designated in the applicable Pricing Supplement as the "Face Amount" of such Indexed Note. The applicable Pricing Supplement will describe whether the principal amount of the related Indexed Note that would be payable upon redemption or repayment prior to Stated Maturity will be the Face Amount of such Indexed Note, the Indexed Principal Amount of such Indexed Note at the time of redemption or repayment, or another amount described in such Pricing Supplement. An investment in Indexed Notes entails significant risks that are not associated with similar investment in a conventional fixed-rate debt security. Indexation of the interest rate of such a Note may result in an interest rate that is less than that payable on a conventional fixed-rate debt security issued at the same time, including the possibility that no interest will be paid. Indexation of the principal of and/or premium on such a Note may result in an amount of principal and/or premium payable in respect thereof that is less than the original purchase price of such Note if allowed pursuant to the terms thereof, including the possibility that no such amount will be paid. The secondary market for such Notes will be affected by a number of factors, independent of the credit worthiness of the Company and the value of the Indexed Currency, the Indexed Commodity or the Stock Index, including the volatility of the Indexed Currency, the Indexed Commodity or the Stock Index, the time remaining to the maturity of such Notes, the amount outstanding of such Notes and market interest rates. The value of the Indexed Currency, the Indexed Commodity or the Stock Index S-13 depends on a number of interrelated factors, including economic, financial and political events, over which the Company has no control. Additionally, if the formula used to determine the amount of principal, premium and/or interest payable with respect to such Notes contains a multiple or leverage factor, the effect of any change in the Indexed Currency, the Indexed Commodity or the Stock Index will be increased. The historical experience of the relevant Indexed Currency, Indexed Commodity or Stock Index should not be taken as an indication of future performance of such Indexed Currency, Indexed Commodity or Stock Index during the term of any Indexed Note. The credit ratings assigned to the Company's medium-term note program are a reflection of the Company's credit status and are in no way a reflection of the potential impact of the factors discussed above, or any other factors, on the market value of Indexed Notes. Accordingly, prospective investors should consult their own financial and legal advisors as to the risks entailed by an investment in Indexed Notes and the suitability of such Notes in light of such prospective investors' particular circumstances. BOOK-ENTRY SYSTEM Upon issuance, all Notes having the same Original Issue Date and otherwise identical terms will be represented by a single Global Security. Each Global Security representing Book-Entry Notes will be deposited with, or on behalf of, The Depository Trust Company, New York, New York (the "Depositary"), and registered in the name of a nominee of the Depositary. Book-Entry Notes will not be exchangeable for Certificated Notes and, except under the limited circumstances described in the Prospectus under "Description of Debt Securities--Global Securities", will not otherwise be issuable as Certificated Notes. The Depositary has advised the Company and the Agents as follows: The Depositary is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. The Depositary was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depositary's participants include securities brokers and dealers (including the Agents), banks, trust companies, clearing corporations, and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. A further description of the Depositary's procedures with respect to Global Securities representing Book-Entry Notes is set forth in the Prospectus under "Description of Debt Securities--Global Securities". The Depositary has confirmed to the Company, the Agents and the Trustee that it intends to follow such procedures. OTHER PROVISIONS; ADDENDA Any provisions with respect to any Registered Note, including the determination of a Base Rate, the calculation of the interest rate applicable to a Floating Rate Note, and the specification of one or more Base Rates, the Interest Payment Dates, the Stated Maturity or any other variable term relating thereto, may be modified as specified under "Other Provisions" on the face of such Note or in an Addendum relating thereto, if so specified on the face of such Note and in the applicable Pricing Supplement. AMORTIZING NOTES The Company may from time to time offer Amortizing Notes. Unless otherwise specified in the applicable Pricing Supplement, interest on each Amortizing Note will be computed on the basis of a 360-day year of twelve 30-day months. Payments with respect to Amortizing Notes will be applied first to interest due and payable thereon and then to the reduction of the unpaid principal amount thereof. Further S-14 information concerning additional terms and provisions of Amortizing Notes will be specified in the applicable Pricing Supplement. A table setting forth repayment information in respect of each Amortizing Note will be included in the applicable Pricing Supplement and set forth in each such Note. OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE The Pricing Supplement relating to each Registered Note will indicate either that such Note cannot be redeemed prior to Stated Maturity or that such Note will be redeemable at the option of the Company, in whole or in part, and the date or dates (each an "Optional Redemption Date") on which such Note may be redeemed and the price (the "Redemption Price") at which (together with accrued interest to such Optional Redemption Date) such Note may be redeemed on each such Optional Redemption Date. The Company may exercise such option with respect to a Registered Note by notifying the Trustee and the Paying Agent for such Note at least 45 days prior to any Optional Redemption Date. At least 30 but not more than 60 days prior to the Optional Redemption Date, the Trustee shall mail notice or cause the Paying Agent to mail notice of such redemption, first class, postage prepaid, to the record Holder of such Registered Note. In the event of redemption of a Registered Note in part only, a new Note or Notes for the unredeemed portion thereof shall be issued to the Holder thereof upon the cancellation thereof. Unless otherwise specified in the applicable Pricing Supplement, the Registered Notes will not be subject to any sinking fund. The Pricing Supplement relating to each Registered Note will also indicate whether the Holder of such Note will have the option to elect repayment of such Note by the Company prior to its Stated Maturity, and, if so, such Pricing Supplement will specify the date or dates on which such Note may be repaid (each an "Optional Repayment Date") and the price (the "Optional Repayment Price") at which (together with accrued interest to such Optional Repayment Date) such Note may be repaid on each such Optional Repayment Date. In order for a Registered Note to be repaid, the Paying Agent for such Registered Note must receive, at least 30 but not more than 45 days prior to an Optional Repayment Date (i) such Registered Note with the form entitled "Option to Elect Repayment" on the reverse thereof duly completed, or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States setting forth the name of the Holder of such Registered Note, the principal amount of such Registered Note to be repaid, the certificate number or a description of the tenor and terms of such Registered Note, a statement that the option to elect repayment is being exercised thereby and a guarantee that the Registered Note to be repaid with the form entitled "Option to Elect Repayment" on the reverse of the Registered Note duly completed will be received by such Paying Agent not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter. If the procedure described in clause (ii) of the preceding sentence is followed, then such Registered Note and form duly completed must be received by such Paying Agent by such fifth Business Day. Any tender of a Registered Note by the Holder for repayment shall be irrevocable. The repayment option may be exercised by the Holder of a Registered Note for less than the entire principal amount of such Note, provided that the principal amount of such Note remaining outstanding after repayment is an authorized denomination. Upon such partial repayment, such Registered Note shall be cancelled and a new Note or Notes for the remaining principal amount thereof shall be issued in the name of the Holder of such repaid Note. If a Registered Note is represented by a Global Security, the Depositary's nominee will be the Holder of such Note and therefore will be the only entity that can exercise a right to repayment. In order to ensure that the Depositary's nominee will timely exercise a right to repayment with respect to a particular Registered Note, the beneficial owner of such Note must instruct the broker or other direct or indirect participant through which such beneficial owner holds an interest in such Note to notify the Depositary of its desire to exercise a right to repayment. Cut-off times for accepting instructions from their customers are established on an individual basis by each such broker or participant and, accordingly, each beneficial owner should consult the broker or such participant through which such beneficial owner holds an interest in a Registered S-15 Note in order to ascertain the cut-off time by which such an instruction must be given in order for timely notice to be delivered to the Depositary. Notwithstanding anything in this Prospectus Supplement to the contrary, if a Registered Note is an Original Issue Discount Note (other than an Indexed Note), the amount payable on such Note in the event of redemption or repayment prior to its Stated Maturity shall be the Amortized Face Amount of such Note as of the date of redemption or the date of repayment, as the case may be. The "Amortized Face Amount" of an Original Issue Discount Note shall be the amount equal to (i) the Issue Price set forth in the applicable Pricing Supplement plus (ii) that portion of the difference between the Issue Price and the principal amount of such Note that has accrued at the Yield to Maturity set forth in the Pricing Supplement (computed in accordance with generally accepted United States bond yield computation principles) by such date of redemption or repayment, but in no event shall the Amortized Face Amount of an Original Issue Discount Note exceed its principal amount. The Company may at any time purchase Registered Notes at any price in the open market or otherwise. Registered Notes so purchased by the Company may, at the discretion of the Company, be held or resold or surrendered to the Trustee for cancellation. CURRENCY RISKS EXCHANGE RATES AND EXCHANGE CONTROLS An investment in a Registered Note having a Specified Currency other than U.S. dollars entails significant risks that are not associated with a similar investment in a security denominated in U.S. dollars. Such risks include, without limitation, the possibility of significant changes in rates of exchange between the U.S. dollar and such Specified Currency and the possibility of the imposition or modification of foreign exchange controls with respect to such Specified Currency by either the United States or foreign governments. Such risks generally depend on factors over which the Company has no control, such as economic and political events and the supply of and demand for the relevant currencies. In recent years, rates of exchange between the U.S. dollar and certain currencies have been highly volatile, and such volatility may occur in the future. Fluctuations in any particular exchange rate that have occurred in the past, however, are not necessarily indicative of fluctuations in the rate that may occur during the term of any Registered Note. Depreciation of the Specified Currency for a Registered Note against the U.S. dollar would result in a decrease in the effective yield of such Note (on a U.S. dollar basis) below its coupon rate and, in certain circumstances, could result in a loss to the investor on a U.S. dollar basis. Governments have from time to time imposed, and may in the future impose, exchange controls that could affect exchange rates as well as the availability of a Specified Currency for making payments in respect of Registered Notes denominated in such currency. At present, the Company has identified the following currencies in which payments of principal, premium and/or interest on Registered Notes may be made: Australian dollars, Canadian dollars, Danish kroner, Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and ECU. However, the Company may determine at any time to issue Registered Notes with Specified Currencies other than those listed. There can be no assurances that exchange controls will not restrict or prohibit payments of principal, premium and/or interest in any Specified Currency. Even if there are no actual exchange controls, it is possible that, on a payment date with respect to any particular Registered Note, the currency in which amounts then due in respect of such Note are payable would not be available to the Company. In that event, the Company will pay such amounts in the manner set forth under "Description of Registered Notes--Payment of Principal and Interest" above. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN REGISTERED NOTES DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY S-16 AN INVESTMENT IN REGISTERED NOTES DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS. The information set forth in this Prospectus Supplement is directed to prospective purchasers of Registered Notes who are United States residents, and the Company disclaims any responsibility to advise prospective purchasers who are residents of countries other than the United States with respect to any matters that may affect the purchase or holding of, or receipt of payments of principal, premium and/or interest in respect of, Registered Notes. Such persons should consult their own legal and financial advisors with regard to such matters. Any Pricing Supplement relating to Registered Notes having a Specified Currency other than U.S. dollars will contain information concerning historical exchange rates for such currency against the U.S. dollar, a brief description of such currency and any exchange controls affecting such currency, and any other required information concerning such currency. PAYMENT CURRENCY Except as set forth below, if payment in respect of a Registered Note is required to be made in a Specified Currency other than U.S. dollars and such currency is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of such Note shall be made in U.S. dollars until such currency is again available to the Company or so used. The amounts so payable on any date in such currency shall be converted into U.S. dollars on the basis of the most recently available Market Exchange Rate for such currency or as otherwise indicated in the applicable Pricing Supplement. Any payment in respect of such Note made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture under which such Note shall have been issued. Notwithstanding the foregoing, if a Specified Currency is unavailable to the Company solely because such currency no longer constitutes legal tender because it has been replaced by the ECU or the new single currency of the European Union once monetary union takes effect pursuant to Article 109l of the Treaty establishing the European Community, the amounts so payable in respect of such Note shall, beginning with the date such replacement becomes effective, be made in the relevant new single currency of the European Union; the amounts so payable on any date shall be converted into such single currency on the basis of the conversion officially in effect in the European Union on the effective date of such replacement. If payment in respect of a Registered Note is required to be made in ECU and ECU are unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or are no longer used in the European Monetary System, then all payments in respect of such Note shall be made in U.S. dollars until ECU are again available to the Company or so used. The amount of each payment in U.S. dollars shall be computed on the basis of the equivalent of the ECU in U.S. dollars, determined as described below, as of the second Business Day prior to the date on which such payment is due. The equivalent of the ECU in U.S. dollars as of any date (the "Day of Valuation") shall be determined by the Paying Agent on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU as of the last date on which the ECU was used in the European Monetary System. The equivalent of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Components. The U.S. dollar equivalent of each of the Components shall be determined by the Paying Agent on the basis of the most recently available Market Exchange Rates for such Components or as otherwise indicated in the applicable Pricing Supplement. If the official unit of any component currency is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If S-17 two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall be equal to the amount of the former component currency divided by the number of currencies into which that currency was divided. All determinations referred to above made by the Paying Agent shall be at its sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on holders of Registered Notes. FOREIGN CURRENCY JUDGMENTS The Notes will be governed by and construed in accordance with the law of the State of New York. Courts in the United States customarily have not rendered judgments for money damages denominated in any currency other than the U.S. dollar. A 1987 amendment to the Judiciary Law of the State of New York provides, however, that an action based upon an obligation denominated in a currency other than U.S. dollars will be rendered in the foreign currency of the underlying obligation and converted into U.S. dollars at the rate of exchange prevailing on the date of the entry of the judgment or decree. UNITED STATES TAX CONSIDERATIONS The following is a summary of certain United States federal income tax considerations that may be relevant to a Holder of a Registered Note that is a U.S. Person (as defined in the Prospectus) or that otherwise is subject to United States federal income taxation on a net income basis in respect of a Registered Note (a "United States holder"). This summary is based on laws, regulations, rulings and decisions now in effect, all of which are subject to change which change could apply retroactively and could affect the continued validity of this summary. This summary deals only with United States holders that will hold Registered Notes as capital assets, and does not address tax considerations applicable to investors that may be subject to special tax rules, such as banks, insurance companies, dealers in securities or currencies, persons that will hold Registered Notes as part of an integrated investment (including a "straddle"), tax exempt organizations or persons that have a "functional currency" other than the U.S. dollar. Investors should consult their own tax advisors in determining the tax consequences to them of holding Registered Notes, including the application to their particular situation of the tax considerations discussed below, as well as the application of state, local or other tax laws. PAYMENTS OR ACCRUALS OF INTEREST Payments of or accruals of "qualified stated interest" (as defined below under "Original Issue Discount") on a Registered Note will be taxable to a United States holder as ordinary interest income at the time that such amounts are accrued or received (in accordance with the United States holder's method of tax accounting). If a United States holder elects to receive payments of interest pursuant to the terms of a Registered Note in a currency or currency unit other than U.S. dollars (a "foreign currency"), the amount of interest income realized by the United States holder will be the U.S. dollar value of the foreign currency payment based on the exchange rate in effect on the date of receipt regardless of whether the payment in fact is converted into U.S. dollars. In the case of an accrual basis United States holder, the amount of interest income will be based on the average exchange rate in effect during the interest accrual period (or with respect to an interest accrual period that spans two taxable years, at the average exchange rate for the partial period within the taxable year). Alternatively, such United States holder may elect to translate all interest income on foreign currency-denominated Registered Notes at the spot rate on the last day of the accrual period (or the last day of the taxable year, in the case of an accrual period that spans more than one taxable year) or on the date the interest payment is received if such date is within five business days of the end of the accrual S-18 period. A United States holder that makes such an election must apply it consistently to all debt instruments from year to year and cannot change the election without the consent of the Internal Revenue Service (the "IRS"). A United States holder that uses the accrual method of accounting for tax purposes will recognize foreign currency gain or loss, as the case may be, on the receipt of a foreign currency interest payment if the exchange rate in effect on the date the payment is received differs from the rate applicable to a previous accrual of that interest income. This foreign currency gain or loss will be treated as ordinary income or loss but generally will not be treated as an adjustment to interest income received on the Registered Note. PURCHASE, SALE AND RETIREMENT OF REGISTERED NOTES A United States holder's tax basis in a Registered Note generally will equal the cost of such Note to such holder, increased by any amounts includible in income by such holder as original issue discount and market discount and reduced by any amortized premium (each as described below) and any payments other than qualified stated interest made on such Note. In the case of a Registered Note denominated in a currency other than the U.S. dollar (a "Foreign Currency Registered Note"), the cost of such Note to a United States holder will be the U.S. dollar value of the foreign currency purchase price on the date of purchase calculated at the exchange rate in effect on the date of purchase. In the case of a Foreign Currency Registered Note that is traded on an established securities market, a cash-basis United States holder (or, if it so elects, an accrual-basis United States holder) will determine the U.S. dollar value of the cost of such Foreign Currency Registered Note by translating the amount paid at the spot rate of exchange on the settlement date of the purchase. The amount of any subsequent adjustments to a United States holder's tax basis in a Registered Note in respect of foreign currency- denominated original issue discount, market discount and premium will be determined in the manner described below for such adjustments. The conversion of U.S. dollars to a foreign currency and the immediate use of that currency to purchase a Registered Note generally will not result in taxable gain or loss for a United States holder. Upon the sale, exchange or retirement of a Registered Note, a United States holder generally will recognize gain or loss equal to the difference between the amount realized on the sale, exchange or retirement (less any accrued qualified stated interest, which will be taxable as such) and the United States holder's tax basis in the Registered Note. If a United States holder elects to receive foreign currency in respect of the sale, exchange or retirement of a Foreign Currency Registered Note, the amount realized generally will be the dollar value of the foreign currency received calculated at the exchange rate in effect on the date the Foreign Currency Registered Note is disposed of or retired. In the case of a Foreign Currency Registered Note that is traded on an established securities market, a cash-basis United States holder (or, if it so elects, an accrual-basis United States holder) will determine the U.S. dollar value of the amount realized by translating such amount at the spot rate of exchange on the settlement date of the sale, exchange or retirement. The election available to accrual-basis United States holders in respect of the purchase and sale of Foreign Currency Registered Notes traded on an established securities market, which is discussed in the two preceding paragraphs, must be applied consistently to all debt instruments from year to year and cannot be changed without the consent of the IRS. Except as discussed below with respect to market discount and foreign currency gain or loss, gain or loss recognized by a United States holder on the sale, exchange or retirement of a Registered Note generally will be long-term capital gain or loss if the United States holder has held the Note for more than one year at the time of disposition. The Internal Revenue Code of 1986, as amended (the "Code"), provides preferential treatment under certain circumstances for net long-term capital gains realized by individual investors. The ability of United States holders to offset capital losses against ordinary income is limited. Notwithstanding the foregoing, gain or loss recognized by a United States holder on the sale, exchange or retirement of a Foreign Currency Registered Note generally will be treated as ordinary income or loss to the extent that the gain or loss is attributable to changes in exchange rates during the period in which such S-19 holder held such Note. This foreign currency gain or loss will not be treated as an adjustment to interest income on the Note. ORIGINAL ISSUE DISCOUNT United States holders of Original Issue Discount Notes generally will be subject to the special tax accounting rules for original issue discount obligations provided by the Code and certain Treasury regulations thereunder (the "OID Regulations"). United States holders of such Notes should be aware that, as described in greater detail below, they generally must include original issue discount in ordinary gross income for United States federal income tax purposes as it accrues, in advance of the receipt of cash attributable to that income. Registered Notes issued with original issue discount for U.S. tax purposes include (i) any Registered Note where the difference between (x) the first price at which a substantial amount of the Registered Notes that are part of the same issue is sold for money (other than to an underwriter, placement agent or wholesaler) (the "Issue Price") and (y) the stated redemption price at maturity of the Registered Note is at least 0.25% of that stated redemption price multiplied by the number of full years from the issue date of the Registered Note until its maturity and (ii) any other Registered Notes designated by the Company as issued with original issue discount for U.S. federal income tax purposes. All such Registered Notes are referred to herein as Discount Notes. The stated redemption price at maturity of a Discount Note is the total of all payments to be made under the Discount Note other than payments of "qualified stated interest." The term "qualified stated interest" generally means stated interest that is unconditionally payable in cash or property (other than debt instruments issued by the Company) at least annually during the entire term of a Discount Note at a single fixed rate of interest or, subject to certain conditions, based on one or more interest indices. In general, each United States holder of a Discount Note having a maturity in excess of one year, whether such United States holder uses the cash or the accrual method of tax accounting, will be required to include in ordinary gross income the sum of the "daily portions" of original issue discount on that Note for all days during the taxable year that the United States holder owns the Note. The daily portions of original issue discount on a Discount Note are determined by allocating to each day in any accrual period a ratable portion of the original issue discount allocable to that accrual period. Accrual periods may be any length and may vary in length over the term of a Discount Note, provided that each accrual period is no longer than one year and each scheduled payment of principal or interest occurs on the final day or on the first day of an accrual period. In the case of an initial holder, the amount of original issue discount on a Discount Note allocable to each accrual period is determined by (i) multiplying the "adjusted issue price" (as defined below) of the Note at the beginning of the accrual period by a fraction, the numerator of which is the annual yield to maturity of the Note and the denominator of which is the number of accrual periods in a year and (ii) subtracting from that product the amount (if any) payable as qualified stated interest allocable to that accrual period. In the case of a Discount Note that is a Floating Rate Note, both the "annual yield to maturity" and the "qualified stated interest" will be determined for these purposes as though the Note will bear interest in all periods at a fixed rate generally equal to the rate that would be applicable to interest payments on the Note on its date of issue or, in the case of certain Floating Rate Notes, the rate that reflects the yield that is reasonably expected for the Note. (Additional rules may apply if interest on a Floating Rate Note is based on more than one interest index.) The "adjusted issue price" of a Discount Note at the beginning of any accrual period will generally be the sum of its Issue Price (including accrued interest, if any) and the amount of original issue discount allocable to all prior accrual periods, reduced by the amount of all payments other than qualified stated interest payments (if any) made with respect to such Note in all prior accrual periods. All payments on a Discount Note (other than qualified stated interest) will generally be viewed first as payments of previously accrued original issue discount (to the extent thereof), with payments considered made from the earliest accrual periods first, and then as a payment of principal. The "annual yield to maturity" of a Note is the discount rate (appropriately adjusted to reflect the length of accrual periods) that causes the present value on the issue date of all payments on the Note to equal the Issue Price. As a result of S-20 this "constant yield" method of including original issue discount income, the amounts so includible in gross income by a United States holder in respect of a Discount Note denominated in U.S. dollars are lesser in the early years and greater in the later years than amounts that would be includible on a straight- line basis. A United States holder generally may make an irrevocable election to include in its income its entire return on a Note (i.e., the excess of all remaining payments to be received on the Note, including payments of qualified stated interest, over the amount paid by such United States holder for such Note) under the constant yield method described above. For Notes purchased at a premium or bearing market discount in the hands of the United States holder, the United States holder making such election will also be deemed to have made the election (discussed below in "Premium and Market Discount") to amortize premium or to accrue market discount in income currently on a constant yield basis. In the case of a Discount Note that is also a Foreign Currency Registered Note, a United States holder should determine the U.S. dollar amount includible as original issue discount for each accrual period by (i) calculating the amount of original issue discount allocable to each accrual period in the foreign currency using the constant yield method described above, and (ii) translating the foreign currency amount so received at the average exchange rate in effect during that accrual period (or, with respect to an interest accrual period that spans two taxable years, at the average exchange rate for the partial period within the United States holder's taxable year). Alternatively, such holder may translate the foreign currency amount so derived at the spot rate of exchange on the last day of the accrual period (or the last day of the taxable year, in the case of an accrual period that includes more than one taxable year) provided that the United States holder has made an election as described under "Payments of Interest" above. Because exchange rates may fluctuate, a United States holder of a Discount Note that is also a Foreign Currency Registered Note may recognize a different amount of original issue discount income in each accrual period than would the holder of an otherwise similar Discount Note denominated in U.S. dollars. Upon the receipt of an amount attributable to original issue discount (whether in connection with a payment of an amount that is not qualified stated interest or the sale or retirement of the Discount Note), a United States holder will recognize ordinary income or loss measured by the difference between the amount received (translated into U.S. dollars at the exchange rate in effect on the date of receipt or on the date of disposition of the Discount Note, as the case may be) and the amount accrued (using the exchange rate applicable to such previous accrual). A subsequent United States holder of a Discount Note that purchases the Note at a cost less than its remaining redemption amount (as defined below) also generally will be required to include in gross income the daily portions of original issue discount, calculated as described above. However, if the subsequent United States holder acquires the Discount Note at a price greater than its adjusted issue price, the subsequent United States holder may reduce its periodic inclusions of original issue discount income to reflect the premium paid over the adjusted issue price. The "remaining redemption amount" for a Discount Note is the total of all future payments to be made on the Note other than payments of qualified stated interest. Certain of the Discount Notes may be redeemed prior to their Maturity Date, either at the option of the Company or at the option of the holder. Discount Notes containing such features may be subject to rules that differ from the general rules discussed above. Investors that purchase Discount Notes with such features should carefully examine the applicable Pricing Supplement and should consult their own tax advisers with respect to such features since the tax consequences with respect to original issue discount will depend, in part, on the particular terms and features of the purchased Discount Notes. SHORT-TERM NOTES The rules set forth above will also generally apply to Discount Notes having maturities of not more than one year ("Short-Term Notes"), but with certain modifications. First, the OID Regulations provide that no payments of interest on a Short- Term Note will be considered to be qualified stated interest, but rather treat such interest payments as part of the Short-Term Note's stated S-21 redemption price at maturity, thereby giving rise to original issue discount. Thus, all Short-Term Notes will be Discount Notes. Except as noted below, a cash-basis United States holder of a Short-Term Note that does not identify the Short-Term Note as part of a hedging transaction will generally not be required to accrue original issue discount currently, but such United States holder will be required to treat any gain realized on a sale, exchange or retirement of the Short-Term Note as ordinary income to the extent such gain does not exceed the original issue discount accrued with respect to the Short-Term Note during the period the United States holder held the Short-Term Note. Such a United States holder may not be allowed to deduct all of the interest paid or accrued on any indebtedness incurred or maintained to purchase or carry such Note until the Maturity of the Note or its earlier disposition in a taxable transaction. Notwithstanding the foregoing, a cash-basis United States holder of a Short- Term Note may elect to accrue original issue discount into income on a current basis (in which case the limitation on the deductibility of interest described above will not apply). A United States holder using the accrual method of tax accounting and certain cash method United States holders (including banks, securities dealers, regulated investment companies and certain trust funds) generally will be required to include original issue discount on a Short-Term Note in gross income on a current basis. Original issue discount will be treated as accruing for these purposes on a ratable basis or, at the election of the United States holder, on a constant yield basis based on daily compounding. Second, any United States holder of a Short-Term Note (whether a cash- or accrual-basis holder) can elect to accrue the "acquisition discount," if any, with respect to the Note on a current basis. Acquisition discount is the excess of the remaining redemption amount of the Note at the time of acquisition over the purchase price. Acquisition discount will be treated as accruing ratably or, at the election of the holder, under a constant yield method based on daily compounding. If the election to accrue acquisition discount is made, the original issue discount rules will not apply with respect to the Short-Term Note. Finally, the market discount rules described below will not apply to Short- Term Notes. As described above, certain of the Registered Notes may be subject to special redemption features. These features may affect the determination of whether a Registered Note has a maturity of not more than one year and thus is a Short- Term Note. Investors that purchase Registered Notes with such features should carefully examine the applicable Pricing Supplement, and should consult their own tax advisers with respect to such features. PREMIUM AND MARKET DISCOUNT A United States holder of a Registered Note that purchases the Note at a cost greater than its principal amount will be considered to have purchased the Note at a premium, and may elect to amortize such premium as an offset to interest income, using a constant yield method, over the remaining term of the Notes. Such election, once made, generally applies to all debt instruments held or subsequently acquired by such United States holder during or after the first taxable year to which the election applies and may not be revoked without the consent of the IRS. A United States holder that elects to amortize such premium must reduce its tax basis in a Registered Note by the amount of the premium amortized during its holding period. Discount Notes purchased at a premium will not be subject to the original issue discount rules described above. In the case of a premium in respect of a Foreign Currency Registered Note, a United States holder should calculate that amortization of the premium in the foreign currency. Amortization deductions attributable to a period reduce interest payments in respect of that period, and therefore are translated into U.S. dollars at the rate used by the United States holder for such interest payments. Exchange gain or loss will be realized with respect to amortized premium on a Foreign Currency Note based on the difference between the exchange rate computed as described above and the exchange rate on the date on which the United States holder acquired the Note. With respect to a United States holder that does not elect to amortize premium, the amount of premium will be included in the United States holder's tax basis when the Note matures or is disposed of by the United States holder. Therefore, a United States holder that does not elect to amortize such premium will generally be required to treat the premium as capital loss when the Note matures. S-22 If a United States holder of a Registered Note purchases such Note at a price that is lower than its remaining redemption amount, or in the case of a Discount Note, its adjusted issue price, by 0.25% or more of its remaining redemption amount, (or adjusted issue price) multiplied by the number of remaining whole years to maturity, the Registered Note will be considered to bear "market discount" in the hands of such United States holder. In such case, gain realized by the United States holder on the disposition of the Registered Note generally will be treated as ordinary interest income to the extent of the market discount that accrued on such Note while held by such United States holder. In addition, such United States holder could be required to defer the deduction of a portion of the interest paid on any indebtedness incurred or continued to purchase or carry the Registered Note. In general terms, market discount on a Registered Note will be treated as accruing ratably over the term of such Note, or, at the election of such United States holder, under a constant yield method. Market discount on a Foreign Currency Note will be accrued by a United States holder in the Specified Currency. The amount includible in income by a United States holder in respect of such accrued market discount will be the U.S. dollar value of the amount accrued, generally calculated at the exchange rate in effect on the date that the Note is disposed of by the United States holder. A United States holder may elect to include market discount in gross income currently as it accrues (on either a ratable or constant yield basis), in lieu of treating a portion of any gain realized on a sale of a Note as ordinary income. If a United States holder elects to include market discount on a current basis, the interest deduction deferral rule described above will not apply. Such election, once made, applies to all market discount debt instruments acquired by the United States holder on or after the first day of the first taxable year to which such election applies, and may not be revoked without the consent of the IRS. Any accrued market discount on a Foreign Currency Registered Note that is currently includible in income will be translated into U.S. dollars at the average exchange rate for the accrual period (or portion thereof within the United States holder's taxable year). INDEXED NOTES AND OTHER CONTINGENT PAYMENT NOTES The tax treatment of a United States holder of an Indexed Note will depend on factors including the specific index or indices used to determine indexed payments on the Note and the amount and timing of any noncontingent payments of principal and interest. Tax considerations relevant to holders of Indexed Notes and other Notes providing for contingent payments will be discussed in the applicable Pricing Supplement. INFORMATION REPORTING AND BACKUP WITHHOLDING The Paying Agent will be required to file information returns with the IRS with respect to payments made to certain United States holders of Notes. In addition, certain United States holders may be subject to a 31 percent backup withholding tax in respect of such payments if they do not provide their taxpayer identification numbers to the Paying Agent. Persons holding Notes who are not United States holders may be required to comply with applicable certification procedures to establish that they are not United States holders in order to avoid the application of such information reporting requirements and backup withholding tax. PLAN OF DISTRIBUTION The Registered Notes are being offered on a continuous basis by the Company through the Agents, which have agreed to use their reasonable best efforts to solicit orders to purchase Registered Notes. Initial purchasers may propose certain terms of the Registered Notes, but the Company will have the right to accept orders to purchase Registered Notes and may reject proposed purchases in whole or in part. The Agents shall have the right, in their discretion reasonably exercised, to reject any proposed purchase of Registered Notes in whole or in part. The Company will pay any Agent a commission of from .125% to .750% of the principal amount of Registered Notes with a Stated Maturity of nine months to 30 years sold through it, depending upon Stated Maturity. Commissions with respect to Notes with Stated Maturities in excess of 30 years which are sold through an Agent will be negotiated between the Company and such Agent at the time of such sale. S-23 The Company may arrange for Registered Notes to be sold through any Agent acting as underwriter or may sell Registered Notes directly to investors on its own behalf. In the case of sales made directly by the Company, no commission or discount in lieu thereof will be paid or allowed. The Company also may sell Registered Notes to any Agent as principal for its own account at a price to be agreed upon at the time of sale. Such Notes may be resold by such Agent to one or more investors at a fixed public offering price or at prevailing market prices, or at prices related thereto, at the time of such resale, as determined by such Agent. Unless otherwise specified in the applicable Pricing Supplement, any Registered Note sold to an Agent as principal will be purchased by such agent at a price equal to 100% of the principal amount thereof less a percentage of the principal amount equal to the commission applicable to an agency sale (as described below) of a Note of identical maturity. Any Agent may sell Registered Notes it has purchased from the Company as principal to other dealers for resale to investors and other purchasers, and may allow any portion of the discount received in connection with such purchase from the Company to such dealers. After the initial public offering of Registered Notes, the public offering price (in the case of Registered Notes to be resold at a fixed public offering price), the concession and the discount may be changed. No Registered Note will have an established trading market when issued. The Registered Notes will not be listed on any securities exchange. The Agents may make a market in the Registered Notes, but the Agents are not obligated to do so and may discontinue any market-making at any time without notice. There can be no assurance of a secondary market for any Registered Notes, or that any Registered Notes will be sold. The Agents, whether acting as agent or principal, may be deemed to be "underwriters" within the meaning of the Securities Act. The Company has agreed to indemnify the Agents against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Agents may be required to make in respect thereof. The Registered Notes have not been and will not be registered under the Securities and Exchange Law of Japan. The Company and the Agents will agree not to offer or sell any Registered Note directly or indirectly in Japan or to residents of Japan or for the benefit of any Japanese person (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale directly or indirectly in Japan or to any Japanese person except in circumstances that result in compliance with any applicable laws, regulations and ministerial guidelines of Japan taken as a whole. In addition to the Registered Notes being offered through the Agents as described herein, Bearer Notes that may have terms identical or similar to the terms of the Registered Notes may be concurrently offered by the Company on a continuous basis outside the United States (as defined in the Prospectus) pursuant to a distribution agreement with affiliates of the Agents. Pursuant to such distribution agreement, such affiliates may also purchase Bearer Notes as principal for their own accounts or for resale, and the Company may make direct sales of Bearer Notes on its own behalf. Any Bearer Notes so offered and sold will reduce correspondingly the maximum aggregate principal amount of Registered Notes that may be offered by this Prospectus Supplement and the accompanying Prospectus. In the ordinary course of their respective businesses, affiliates of J.P. Morgan Securities Inc. have engaged, and will in the future engage, in normal commercial banking transactions with the Company and certain of its subsidiaries. S-24 ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS + +SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY + +NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH + +OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR + +QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JULY 13, 1995 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED JULY , 1995) U.S.$584,662,000 MCDONALD'S CORPORATION MEDIUM-TERM NOTES, SERIES E DUE FROM 184 DAYS TO 60 YEARS FROM DATE OF ISSUE ---------- McDonald's Corporation (the "Company" or "McDonald's") may from time to time offer its Medium-Term Notes, Series E (the "Notes") with an aggregate initial public offering price or purchase price of up to $584,662,000, or the equivalent thereof in one or more other currencies or composite currencies including European Currency Units ("ECU"), subject to reduction as a result of the sale of other Debt Securities. In addition to the Notes in bearer form ("Bearer Notes") being offered hereby outside the United States, the Company may from time to time offer Notes in registered form ("Registered Notes") in the United States. A separate Prospectus Supplement will be used for any such offering of Registered Notes. Any Registered Notes sold will reduce correspondingly the principal amount of Bearer Notes that may be sold hereunder. See "Plan of Distribution." Each Bearer Note will not, in connection with its original issuance, or during the period of 40 days after its Original Issue Date, be offered, sold or delivered, directly or indirectly, within the United States or to U.S. Persons, except to the extent permitted under U.S. Treasury regulations. See "Plan of Distribution." All Bearer Notes that have the same Original Issue Date and otherwise identical terms will be represented initially by a Temporary Global Note to be delivered to a common depositary outside the United States for Euroclear and Cedel. Beneficial interests in a Temporary Global Note will be exchangeable for beneficial interests in a Permanent Global Note or for individual Bearer Notes only in the manner and upon compliance with the procedures described under "Description of Bearer Notes--Denomination, Form and Transfer." Payments in respect of Bearer Notes will be made without deduction for United States withholding taxes to the extent described herein. Each Bearer Note may be redeemed in whole, at the redemption price thereof, if certain events occur involving United States withholding taxes or information reporting requirements. See "Tax Redemption" and "Special Tax Redemption" under "Description of Bearer Notes." Each Bearer Note will mature on any day 184 days from its Original Issue Date and may be subject to redemption at the option of the Company, or to repayment at the option of the Holder, prior to Stated Maturity. Each Bearer Note will be denominated in the currency designated by the Company (the "Specified Currency"). See "Currency Risks." Each Bearer Note will bear interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case of certain Original Issue Discount Notes, or at a floating rate (a "Floating Rate Note") determined by reference to the CD Rate, the CMT Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Prime Rate, the Treasury Rate or any other Base Rate, as selected by the initial purchaser and agreed to by the Company, adjusted by the Spread and/or Spread Multiplier, if any, applicable to such Note. A Bearer Note may be issued as an indexed note (an "Indexed Note") the interest amount (an "Interest Indexed Note") or principal amount (a "Principal Indexed Note" and, together with Interest Indexed Notes, "Indexed Notes") payable at Maturity of which will be determined by reference to a designated stock, currency, commodity or other index or will otherwise be determined by application of a formula. See "Description of Bearer Notes-- Indexed Notes." The Specified Currency, any applicable interest rate or interest rate formula, any applicable index formula, reset provisions, Issue Price, Stated Maturity, any Interest Payment Dates, any redemption and repayment provisions and certain other terms applicable to each Bearer Note will be established at the Original Issue Date of such Bearer Note and set forth in a pricing supplement to this Prospectus Supplement (a "Pricing Supplement"). Unless otherwise specified in the applicable Pricing Supplement, interest on Fixed Rate Notes, other than in the case of Original Issue Discount Notes, will be payable each February 15 and August 15 and at Maturity. Interest on Floating Rate Notes will be payable on the dates determined at the time of issuance and set forth in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, Bearer Notes will be issued only in minimum denominations of U.S.$25,000 and any larger amount that is an integral multiple of U.S.$5,000 or, in the case of a Bearer Note having a Specified Currency other than U.S. dollars, in the minimum denominations set forth in the applicable Pricing Supplement. Application has been made to list the Bearer Notes on the Luxembourg Stock Exchange. Unlisted Bearer Notes may also be issued as indicated in the applicable Pricing Supplement. ---------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OF- FENSE. - - -------------------------------------------------------------------------------- - - --------------------------------------------------------------------------------
PRICE TO PUBLIC(1) AGENTS' COMMISSION(2) PROCEEDS TO THE COMPANY(2)(3) - - --------------------------------------------------------------------------------------------------------------- Per Note................ 100% .125% to .750% 99.875% to 99.250% - - --------------------------------------------------------------------------------------------------------------- Total(4)................ U.S.$584,662,000 U.S.$730,828 to U.S.$4,384,965 U.S.$583,931,173 to U.S.$580,277,035 - - ---------------------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------- (1) The Notes will be issued at 100% of their principal or, in the case of Principal Indexed Notes, face amount, unless otherwise specified in the applicable Pricing Supplement. (2) The Company will pay a commission to Merrill Lynch International Limited, Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley & Co. International Limited or Salomon Brothers International Limited or others, each as agent (collectively the "Agents"), in the form of a discount, ranging from .125% to .750%, depending upon the Stated Maturity of the Note, of the principal or, in the case of Principal Indexed Notes, face amount of any Note with a Stated Maturity of 184 days to 30 years sold through such Agent. Commissions with respect to Notes with Stated Maturities in excess of 30 years which are sold through an Agent will be negotiated between the Company and such Agent at the time of such sale. The Company may also sell Notes to any Agent as principal. Unless otherwise indicated in the applicable Pricing Supplement, any Note sold to an Agent as principal will be purchased by such Agent at a price to be agreed upon at the time of sale and may be resold by such Agent to one or more investors and other purchasers at a fixed public offering price or at varying prices relating to prevailing market prices at the time or times of resale to be determined by such Agent. (3) Before deducting expenses payable by the Company estimated to be $ , including reimbursement of certain of the Agents' expenses. (4) Or the equivalent thereof in other currencies or composite currencies (including ECU). ---------- The Bearer Notes are being offered on a continuous basis by the Company through the Agents, which have agreed to use their reasonable best efforts to solicit orders to purchase Bearer Notes. The Company may sell Bearer Notes at a discount to any Agent for its own account or for resale to one or more investors at a fixed public offering price or at varying prices relating to prevailing market prices at the time or times of resale, to be determined by such Agent. The Company also may arrange for such Bearer Notes to be sold through any Agent acting as an underwriter or may sell Bearer Notes directly to investors on its own behalf. There can be no assurance that the maximum amount of Bearer Notes offered by this Prospectus Supplement will be sold or that there will be a secondary market for any Bearer Notes. The Company reserves the right to withdraw, cancel or modify the offer made hereby without notice. The Company or any Agent may reject any order to purchase Bearer Notes, whether or not solicited, in whole or in part. See "Plan of Distribution." ---------- MERRILL LYNCH INTERNATIONAL LIMITED GOLDMAN SACHS INTERNATIONAL J.P. MORGAN SECURITIES LTD. MORGAN STANLEY & CO. INTERNATIONAL SALOMON BROTHERS INTERNATIONAL LIMITED ---------- The date of this Prospectus Supplement is July , 1995. No dealer, salesman or other person has been authorized to give any information or to make any representation not contained in this Prospectus Supplement (including the accompanying Pricing Supplement) or the Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or any underwriter or agent. This Prospectus Supplement (including the accompanying Pricing Supplement) and the Prospectus do not constitute an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. The delivery of this Prospectus Supplement (including the accompanying Pricing Supplement) or the Prospectus does not imply that the information herein or therein is correct as of any time subsequent to their respective dates. Investors are advised to read this Prospectus Supplement (including the accompanying Pricing Supplement) together with the Prospectus and the documents incorporated by reference herein and therein. References herein to "U.S. dollars" or "$" are to the lawful currency of the United States of America. TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT PAGE --------------------- ---- Incorporation of Certain Documents by Reference...................... S-2 McDonald's Corporation............. S-3 Summary Consolidated Financial Data.............................. S-4 Capitalization of McDonald's Corporation....................... S-5 Description of Bearer Notes........ S-6 Currency Risks..................... S-23 Taxation in the United States...... S-26 Plan of Distribution............... S-27 General Information................ S-29
PROSPECTUS PAGE ---------- ---- Available Information.............. 2 Incorporation of Certain Documents by Reference...................... 2 McDonald's Corporation............. 3 Use of Proceeds.................... 3 Ratio of Earnings to Fixed Charges. 3 Description of Debt Securities..... 4 Limitations on Issuance of Bearer Securities........................ 11 Plan of Distribution............... 12 Legal Matters...................... 13 Experts............................ 13
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the United States Securities and Exchange Commission (the "Commission") pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated herein by reference: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as amended by the Company's Form 10-K/A filed on June 27, 1995; and (b) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act ((which include the Company's annual reports on Form 10-K (including the portions of the Company's annual report to shareholders incorporated by reference therein) and quarterly reports on Form 10-Q) subsequent to the date of the Prospectus and prior to the termination of the offering of the Debt Securities (including the Notes)) referred to in the Prospectus shall be deemed to be incorporated by reference herein. Any statement contained in the Prospectus, this Prospectus Supplement or a document incorporated or deemed incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained in this Prospectus Supplement or the Prospectus or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part hereof. S-2 Copies of any documents incorporated herein by reference will be available without charge at the office of Banque Generale du Luxembourg S.A. (the "Listing Agent"), 27 Avenue Monterey, L-2951, Luxembourg, Luxembourg. Any person receiving a copy of this Prospectus Supplement may obtain, without charge, upon written or oral request, a copy of any document incorporated by reference herein, except for the exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). Written or telephone requests for any such document should be directed to Merrill Lynch International Limited, Ropemaker Place, 25 Ropemaker Street, London, England EC2Y 9LY, telephone: 876-3995. This Prospectus Supplement may be used for the offer, sale and listing of Bearer Notes with an aggregate initial offering price of up to U.S.$584,662,000, or the equivalent thereof in other currencies, subject to reduction as a result of the sale of other Debt Securities. Pursuant to the Euro Distribution Agreement, the Company will represent to the Agents that as of the Original Issue Date of any Bearer Note, neither the Prospectus nor any amendment thereof or supplement thereto will contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company has undertaken in connection with the listing of the Bearer Notes on the Luxembourg Stock Exchange that, so long as any Bearer Notes remain outstanding and listed on such Exchange, in the event of any material adverse change in the business or financial condition of the Company that is not reflected in the Prospectus as then amended or supplemented, the Company will prepare an amendment or supplement to the Prospectus or publish a new Prospectus for use in connection with any subsequent offering and listing by the Company of Bearer Notes. MCDONALD'S CORPORATION McDonald's Corporation and its subsidiaries develop, operate, franchise and service a worldwide system of restaurants which prepare, assemble, package and sell a limited menu of value-priced foods. These restaurants are operated by the Company and its subsidiaries or, under the terms of franchise agreements, by franchisees who are independent third parties, or by affiliates operating under joint venture agreements between the Company or its subsidiaries and local businesspeople. McDonald's restaurants offer a substantially uniform menu consisting of hamburgers and cheeseburgers, including the Big Mac and Quarter Pounder with Cheese sandwiches, the Filet-O-Fish, McGrilled Chicken and McChicken sandwiches, french fries, Chicken McNuggets, salads, shakes, sundaes and cones made with low fat frozen yogurt, pies, cookies and a limited number of soft drinks and other beverages. In addition, the restaurants sell a variety of products during limited promotional time periods. McDonald's restaurants operating in the United States are open during breakfast hours and offer a full breakfast menu including the Egg McMuffin and the Sausage McMuffin with Egg sandwiches, hotcakes and sausage; three varieties of biscuit sandwiches; Apple- Bran muffins; and cereals. McDonald's restaurants in many countries around the world offer many of these same products as well as other products and limited breakfast menus. The Company tests new products on an ongoing basis. McDonald's restaurants are located in all fifty of the United States and the District of Columbia, and in many foreign locations, principally Japan, Canada, Germany, England, Australia and France. At March 31, 1995, there were 15,370 restaurants worldwide, of which 9,795 were located in the United States and 5,575 in 78 other countries. An additional 327 restaurants were under construction at March 31, 1995, including 228 outside the United States. At March 31, 1995, 68% of McDonald's restaurants were operated by independent franchisees, 21% were operated by the Company and its subsidiaries and 11% were operated by affiliates (entities in which the Company and/or its subsidiaries have an equity interest of 50% or less and in which the remaining equity interest generally is owned by a local resident). The Company's principal executive offices are located at One McDonald's Plaza, Oak Brook, Illinois 60521, telephone: (708) 575-3000. S-3 MCDONALD'S CORPORATION SUMMARY CONSOLIDATED FINANCIAL DATA(1)
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, ----------------- ------------------------------------------------- 1995(2) 1994(2) 1994 1993 1992 1991 1990 -------- -------- --------- --------- --------- --------- --------- (U.S. DOLLARS IN MILLIONS, EXCEPT PER SHARE OF COMMON STOCK DATA) Systemwide sales (unaudited)(3)......... $6,671.6 $5,709.2 $25,987.4 $23,586.9 $21,885.4 $19,928.2 $18,758.9 ======== ======== ========= ========= ========= ========= ========= Income statement data: Sales by Company- operated restaurants. 1,511.6 1,244.7 5,792.6 5,157.2 5,102.5 4,908.5 5,018.9 Revenues from franchised restaurants.......... 649.7 551.3 2,528.2 2,250.9 2,030.8 1,786.5 1,620.7 -------- -------- --------- --------- --------- --------- --------- Total revenues........ 2,161.3 1,796.0 8,320.8 7,408.1 7,133.3 6,695.0 6,639.6 Income before provision for income taxes................ 435.1 377.4 1,886.6 1,675.7 1,448.1 1,299.4 1,246.3 Net income............ 280.7 243.4 1,224.4 1,082.5 958.6 859.6 802.3 ======== ======== ========= ========= ========= ========= ========= Balance sheet data: Shareholders' equity at end of period..... $7,246.6 $6,462.8 $ 6,885.4 $ 6,274.1 $ 5,892.4 $ 4,835.1 $ 4,182.3 Long-term debt at end of period............ 3,986.4 3,560.0 2,935.4 3,489.4 3,176.4 4,267.4 4,428.7 Total assets at end of period............... 14,213.5 12,183.1 13,591.9 12,035.2 11,681.2 11,349.1 10,667.5 ======== ======== ========= ========= ========= ========= ========= Per share of Common Stock:(4).............. Net income............ $ 0.39 $ 0.33 $ 1.68 $ 1.45 $ 1.30 $ 1.17 $ 1.10 Dividends declared.... 0.06 0.05 0.23 0.21 0.20 0.18 0.17 ======== ======== ========= ========= ========= ========= ========= Other data: Ratio of earnings to fixed charges(5)..... 4.66 4.70 5.26 4.86 3.96 3.53 3.48 ======== ======== ========= ========= ========= ========= ========= Number of restaurants at end of period: Operated by franchisees........ 10,477 9,886 10,458 9,832 9,237 8,735 8,131 Operated by the Company............ 3,143 2,741 3,083 2,699 2,551 2,547 2,643 Operated by affiliates......... 1,750 1,491 1,664 1,462 1,305 1,136 1,029 -------- -------- --------- --------- --------- --------- --------- Total restaurants. 15,370 14,118 15,205 13,993 13,093 12,418 11,803 ======== ======== ========= ========= ========= ========= =========
- - -------- (1) The summary Income statement data, Balance sheet data and Number of restaurants data should be read in conjunction with the audited consolidated financial statements and accompanying Financial comments and the unaudited condensed consolidated financial statements and accompanying Financial comments of the Company in the documents incorporated by reference herein. See "Incorporation of Certain Documents by Reference." (2) The financial information presented for the three months ended March 31, 1995 and 1994 is unaudited. In the opinion of the Company, all adjustments (consisting of normal recurring accruals) necessary for a fair presentation have been included. (3) Systemwide sales represent sales by all Company-operated, franchised and affiliated restaurants. (4) Per share of Common Stock data has been restated to reflect a two-for-one Common Stock split which was effected in the form of a stock dividend distributed on June 24, 1994, to common shareholders of record on June 7, 1994. (5) The ratios of earnings to fixed charges shown above have been computed on a total enterprise basis. Earnings represent income before provision for income taxes and fixed charges. Fixed charges consist of interest on all indebtedness, amortization of debt issuance costs and discount or premium relating to any indebtedness, and such portion of rental charges (after reduction for related sublease income) considered to be representative of the interest component in the particular case. S-4 CAPITALIZATION OF MCDONALD'S CORPORATION The following table sets forth the capitalization of the Company and its consolidated subsidiaries at March 31, 1995 and as adjusted to give effect to the issuance on June 13, 1995 of bonds totaling DM125 million and the application of the proceeds of that issuance.
MARCH 31, 1995 --------------------- AS OUTSTANDING ADJUSTED ----------- --------- (IN MILLIONS) Short-term debt, including current portion of long- term debt............................................ $ 499.8 $ 499.8 Long-term debt, less current portion.................. 3,986.4 3,910.3(1) DM125,000,000 bonds, 3.25% due 2000................... -- 80.9(2) Shareholders' equity(3)............................... 7,246.6 7,246.6 --------- --------- Total capitalization(3)(4)............................ $11,732.8 $11,737.6 ========= =========
- - -------- (1) Reflects the application of the net proceeds of U.S.$76.1 million from the issuance of DM125 million bonds. (2) Principal less unamortized discount translated at June 27, 1995 foreign exchange rate. There has not been a material change in this rate subsequent to June 27, 1995. (3) At March 31, 1995, the Company had 1.25 billion authorized shares of Common Stock, without par value, of which 830.3 million were issued and 694.8 million were outstanding. In addition, at March 31, 1995 the Company had 165.0 million authorized shares of preferred stock, without par value, of which 11.2 million were issued and outstanding. There has been no material change in the consolidated capitalization of the Company since March 31, 1995. (4) The capitalization table presented above does not reflect the exchange offer of the Company's Preferred Stock, Series E for 8.35% subordinated deferrable interest debentures due 2025. The exchange offer was completed on June 30, 1995 and was effective as of July 1, 1995. The transaction will be recorded as an increase in debt and a reduction in Shareholders' equity of approximately $129 million. The transaction has no effect on the consolidated capitalization of the Company. S-5 DESCRIPTION OF BEARER NOTES The following description of the particular terms of the Bearer Notes (to the extent not superseded in the applicable Pricing Supplement) supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Debt Securities set forth in the Prospectus, to which description reference is hereby made. GENERAL The Notes are to be issued as a series of Debt Securities under the Indenture limited to an aggregate initial public offering price or purchase price of $584,662,000 or the equivalent thereof in one or more foreign or composite currencies, including ECU, subject to reduction as a result of the sale of other Debt Securities. The U.S. dollar equivalent of the public offering price or purchase price of a Bearer Note denominated in a Specified Currency other than U.S. dollars will be determined by an agent designated by the Company, which initially shall be Morgan Guaranty Trust Company of New York, 60 Victoria Embankment, London, England EC4Y-OJP (the "Principal Paying Agent"), on the basis of the noon buying rate in The City of New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") for such Specified Currency on the Business Day (as defined below) immediately prior to the applicable issue date; provided, however, that in the case of ECU, the Market Exchange Rate shall be the rate of exchange determined by the Commission of the European Communities (or any successor thereof) as published in the Official Journal of the European Communities, or any successor publication, on the Business Day immediately preceding the applicable issue date. The Notes will consist of Bearer Notes and Registered Notes, each of which will be offered on a continuous basis. In connection with their original issuance and during the period of 40 days after their Original Issue Dates, Bearer Notes will not be offered, sold or delivered, directly or indirectly, to a U.S. Person or to any person within the United States, except to the extent permitted under U.S. Treasury regulations, as more fully set forth under "Plan of Distribution." As used herein, "United States" means the United States of America and its possessions, and "U.S. Person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States, or an estate or trust the income of which is subject to United States federal income taxation regardless of its source. A separate Prospectus Supplement will describe the terms of any such Registered Notes. Payments in respect of Bearer Notes will be made without deduction for United States withholding taxes to the extent described under "Payment of Additional Amounts" below. Each Bearer Note may be redeemed at the Redemption Price applicable thereto, if certain events occur involving United States withholding taxes or information reporting requirements. See "Tax Redemption" and "Special Tax Redemption" below. Other than in such event, Bearer Notes may not be redeemed by the Company prior to Stated Maturity (as defined below) unless otherwise specified in the applicable Pricing Supplement. See "Optional Redemption, Repayment and Repurchase" below. Unless otherwise specified in the applicable Pricing Supplement, the Bearer Notes will not be subject to any sinking fund. Each Bearer Note will mature at par (unless otherwise specified in the applicable Pricing Supplement) on any day from 184 days to 60 years from its Original Issue Date (as defined below), as selected by the purchaser and agreed to by the Company. Each Bearer Note whose Specified Currency is Japanese yen will have a Stated Maturity of not less than one year from its Original Issue Date, and will not be subject to optional redemption or repayment prior to such time. Each Bearer Note may also be subject to redemption at the option of the Company, or to repayment at the option of the Holder, at a price specified in the applicable Pricing Supplement prior to its Stated Maturity. Each Floating Rate Note will mature on an Interest Payment Date for such Note. The Pricing Supplement relating to a Bearer Note will describe the following terms: (i) the Specified Currency for such Note (and, if the Specified Currency is other than U.S. dollars, certain other terms relating S-6 to such Note and such Specified Currency, including the authorized denominations of such Note); (ii) whether such Note is a Fixed Rate Note, a Floating Rate Note or an Indexed Note; (iii) the price (expressed as a percentage of the aggregate principal (or, in the case of a Principal Indexed Note, face) amount thereof) at which such Note will be issued (the "Issue Price"); (iv) the date on which such Note will be issued (the "Original Issue Date"); (v) the date on which such Note will mature (the "Stated Maturity"); (vi) if such Note is a Fixed Rate Note, the rate per annum at which such Note will bear interest, if any, and the dates on which interest will be payable if other than February 15 and August 15; (vii) if such Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the Interest Reset Period, the Interest Payment Dates, the Index Maturity, the Maximum Interest Rate, if any, the Minimum Interest Rate, if any, the Spread and/or Spread Multiplier, if any (all as defined below), and any other terms relating to the particular method of calculating the interest rate for such Note; (viii) whether such Note is an Original Issue Discount Note (as defined below); (ix) if such Note is an Indexed Note, the manner in which the principal amount of such Note payable at Stated Maturity will be determined; (x) whether such Note may be redeemed at the option of the Company, or repaid at the option of the Holder, prior to Stated Maturity as described under "Optional Redemption, Repayment and Repurchase" below, and, if so, the provisions relating to such redemption or repayment, including, in the case of an Original Issue Discount Note or Indexed Note, the information necessary to determine the amount due upon redemption or repayment; and (xi) any other terms of such Note not inconsistent with the provisions of the Indenture under which such Note will be issued. "Business Day" with respect to any Bearer Note means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to be close in (a) The City of New York, (b) the City of Chicago, (c) London, England, (d) the place in which such Note or any coupon relating thereto is presented for payment or (e) if the Specified Currency for such Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg); (ii) if the Specified Currency for such Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made) and (iii) if such Note is a LIBOR Note (as defined below), a London Business Day (as defined below). "London Business Day" means any day (i) if the Index Currency (as defined below) is other than ECU, on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). "Maturity," when used with respect to any Note, means the date on which the principal of such Note or an installment of principal becomes due and payable as provided therein or in the Indenture, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. "Original Issue Discount Note" means (i) a Bearer Note, including any such Bearer Note whose interest rate is zero, that has a stated redemption price at Stated Maturity that exceeds its Issue Price by at least 0.25% of its aggregate principal amount, multiplied by the number of full years from the Original Issue Date to the Stated Maturity for such Bearer Note and (ii) any other Bearer Note designated by the Company as issued with original issue discount for United States federal income tax purposes. DENOMINATION, FORM AND TRANSFER The minimum aggregate principal amount of Bearer Notes that may be purchased is U.S.$25,000 (or, unless otherwise set forth in the applicable Pricing Supplement, the approximate equivalent thereof in other currencies). Unless otherwise specified in the applicable Pricing Supplement, the authorized denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000 and any larger amount that is an integral multiple of U.S.$5,000. The authorized denominations of Bearer Notes having a Specified Currency other than U.S. dollars will be set forth in the applicable Pricing Supplement. S-7 All Bearer Notes that have the same Original Issue Date and otherwise identical terms will be represented initially by interests in a temporary Global Security in bearer form, without coupons (a "Temporary Global Note"), to be deposited with a common depositary in London (the "Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel"), for credit to the accounts designated by or on behalf of the purchasers thereof. On or after the 40th day following the issuance of a Temporary Global Note (the "Exchange Date"), and subject to the receipt of a Certificate of Non-U.S. Beneficial Ownership, beneficial interests in that Temporary Global Note will be exchangeable for interests in a definitive Global Security in bearer form, without coupons (a "Permanent Global Note"), in a denomination equal to the aggregate principal amount of all interests in the Temporary Global Note so exchanged. A "Certificate of Non-U.S. Beneficial Ownership" is a certificate, delivered on the Exchange Date or on any Interest Payment Date prior to the Exchange Date, to the effect that the beneficial interest to which the certificate relates is owned by a person that is not a U.S. Person or is owned by or through a financial institution in compliance with applicable U.S. Treasury regulations. Each Permanent Global Note will be deposited with the Depositary for credit to the account or accounts designated by or on behalf of the beneficial owner or owners thereof. If the beneficial owner of a Bearer Note represented by an interest in a Permanent Global Note gives 30 days' notice to the Principal Paying Agent for such Note through either Euroclear or Cedel, such Permanent Global Note shall be exchanged in its entirety, at no expense to the beneficial owners of interests therein, for definitive individual Bearer Notes, with appropriate coupons attached, in any authorized denomination or denominations. No Bearer Note will be delivered in or to the United States. References herein to "Bearer Notes" shall, except where otherwise indicated, include interests in a Temporary or Permanent Global Note as well as individual Bearer Notes and any appurtenant coupons. Transfers of interests in a Temporary or Permanent Global Note will be made by Euroclear or Cedel in accordance with their customary operating procedures. Title to individual Bearer Notes and coupons will pass by physical delivery. The bearer of each coupon, whether or not the coupon is attached to an individual Bearer Note, shall be subject to and bound by all the provisions contained in the individual Bearer Note to which such coupon relates. The bearer of any individual Bearer Note and any coupon may, to the fullest extent permitted by applicable law, be treated at all times by all persons and for all purposes as the absolute owner of such Note or coupon, as the case may be, regardless of any notice of ownership, theft or loss or of any writing thereon. The following legend will appear on each Permanent Global Note and on all individual Bearer Notes and any coupons: "Any United States Person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code." The sections referred to in the legend provide that, with certain exceptions, a United States taxpayer that holds an interest in a Global Security or an individual Bearer Note or coupon will not be permitted to deduct any loss, and will not be eligible for capital gain treatment with respect to any gain, realized on a sale, exchange, redemption or other disposition of an interest in such Global Security or such individual Bearer Note or coupon. See "Limitations on Issuance of Bearer Securities" in the accompanying Prospectus. Bearer Notes may not be exchanged for Registered Notes. PAYMENTS AND PAYING AGENTS Unless otherwise specified in the applicable Pricing Supplement and except, under certain circumstances, for Bearer Notes having Specified Currencies other than U.S. dollars, payments of the principal of and any premium and interest on a Bearer Note will be made only in the Specified Currency for such Note. See "Currency Risks" below. S-8 Principal or interest on each Temporary Global Note will be paid to each of Euroclear and Cedel with respect to that portion of such temporary Global Note held for its account, but only upon receipt as of the relevant Interest Payment Date of a Certificate of Non-U.S. Beneficial Ownership and upon notation thereon of such payment. Each of Euroclear and Cedel will undertake in such circumstances to credit such interest received by it to the respective accounts having an interest in such Temporary Global Note. The principal of and any premium or interest on each Permanent Global Note will be paid to each of Euroclear and Cedel with respect to that portion of such Permanent Global Note held for its account upon notation thereon of such payment. Each of Euroclear and Cedel will undertake in such circumstances to credit such principal, premium and interest received by it to the respective accounts having an interest in such Permanent Global Note. All such payments will be made to Euroclear and Cedel in immediately available funds. A payment in respect of an individual Bearer Note or any coupon will be made only against surrender of such Note or coupon at the offices of such Paying Agents (as defined below) outside the United States as the Company may from time to time appoint. At the direction of the Holder of such a Note or coupon, and subject to applicable laws and regulations, such payments will be made by check drawn on a bank in The City of New York mailed to an address outside the United States furnished by such Holder or, at the option of such Holder, by wire transfer (pursuant to written instructions supplied by such Holder) to an account maintained by the payee with a bank located outside the United States. No payment in respect of an individual Bearer Note or coupon will be made upon presentation of such Note or coupon at any office or agency of the Trustee or any other paying agency maintained by the Company in the United States, nor will any such payment be made by transfer to an account, or mailed to an address, in the United States. Notwithstanding the foregoing, if U.S. dollar payments in respect of Bearer Notes or any coupons at the offices of all Paying Agents outside the United States become illegal or are effectively precluded because of the imposition of exchange controls or similar restrictions on the full payment or receipt of such amounts in U.S. dollars, the Company will appoint an office or agency (which may be the Trustee) in the United States at which such payments may be made. Payments of principal, premium (if any) and interest (if any) with respect to Notes denominated and payable in ECU will be made at the specified office of a Paying Agent outside the United States by credit or transfer to an ECU account specified by the payee. Payments in a component currency (if required, as set forth under "Currency Risks--Payment Currency" below) will be made in the Payment Currency (as defined below) at the specified office of a Paying Agent in the country of the Payment Currency or, if none or at the option of the holder, at the specified office of any Paying Agent outside the United States either by a check drawn on, or by transfer to an account specified by the payee with, a bank in the financial center of the country of the Payment Currency. Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto, but without prejudice to the provisions regarding taxation discussed below. The specified office of the Trustee and the names and offices of the initial paying agents (each, including its successors, a "Paying Agent") are set forth on the back cover of this Prospectus Supplement. The Company reserves the right at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents and to approve any change in the office through which any Paying Agent acts, provided that there will at all times be a Paying Agent (which may be the Trustee) in at least one city in Europe, which, so long as the Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of the exchange so require, shall include (or be) Luxembourg. Notice of any such termination or appointment and of any changes in the specified offices of a Trustee or any Paying Agent will be given to the Holders of Bearer Notes in accordance with "Notices" below. Unless otherwise specified in the applicable Pricing Supplement, if the principal of any Original Issue Discount Note is declared to be due and payable immediately as described under "Description of Debt Securities--Events of Default" in the Prospectus, the amount of principal due and payable with respect to such Note shall be limited to the aggregate principal amount of such Note multiplied by the sum of its Issue S-9 Price (expressed as a percentage of the aggregate principal amount) plus the original issue discount amortized from the Original Issue Date to the date of declaration, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of declaration). Interest payments in respect of Bearer Notes will equal the amount of interest accrued from and including the immediately preceding Interest Payment Date in respect of which interest has been paid or duly made available for payment (or from and including the date of issue, if no interest has been paid with respect to the applicable Note) to but excluding the related Interest Payment Date or Maturity, as the case may be. FIXED RATE NOTES Each Fixed Rate Note will bear interest from its Original Issue Date at the rate per annum stated on the face thereof and in the applicable Pricing Supplement until the principal amount thereof is paid or made available for payment. Unless otherwise set forth in the applicable Pricing Supplement, interest on each Fixed Rate Note will be payable semiannually in arrears on each February 15 and August 15 and at Maturity. Each payment of interest in respect of an Interest Payment Date shall include interest accrued through the day before such Interest Payment Date. Interest on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve 30-day months. Any payment of principal, premium or interest required to be made in respect of a Fixed Rate Note on a date that is not a Business Day for such Note need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date, and no additional interest shall accrue as a result of such delayed payment. FLOATING RATE NOTES Each Floating Rate Note will bear interest from its Original Issue Date to the first Interest Reset Date (as defined below) for such Note at the initial interest rate set forth on the face thereof and in the applicable Pricing Supplement (the "Initial Interest Rate"). Thereafter, the interest rate on such Note for each Interest Reset Period (as defined below) will be determined by reference to an interest rate basis (the "Base Rate"), plus or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one basis point equals one one- hundredth of a percentage point) that may be specified in the applicable Pricing Supplement as being applicable to such Note, and the "Spread Multiplier" is the percentage that may be specified in the applicable Pricing Supplement as being applicable to such Note. The applicable Pricing Supplement will designate one or more of the following Base Rates as applicable to a Floating Rate Note: (i) the CD Rate (a "CD Rate Note"), (ii) the CMT Rate (a "CMT Rate Note"), (iii) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (iv) the Federal Funds Rate (a "Federal Funds Rate Note"), (v) LIBOR (a "LIBOR Note"), (vi) the Prime Rate (a "Prime Rate Note"), (vii) the Treasury Rate (a "Treasury Rate Note") or (viii) such other Base Rate or formula as is set forth in such Pricing Supplement and in such Note. The "Index Maturity" for any Note is the period of maturity of the instrument, obligation or index from which the Base Rate is calculated. As specified in the applicable Pricing Supplement, a Floating Rate Note may also have either or both of the following (in each case expressed as a rate per annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the rate at which interest may accrue during any interest period ("Maximum Interest Rate") and (ii) a minimum limitation, or floor, on the rate at which interest may accrue during any interest period ("Minimum Interest Rate"). Notwithstanding any Maximum Interest Rate that may be applicable to any Floating Rate Note, the interest rate on a Floating Rate Note will in no event be higher than the maximum rate permitted by applicable law, as the same may be modified by United States law of general application. The Notes will be governed by the law of the State of New York and, under such law, the maximum rate of interest, with certain exceptions, is 25% per annum on a simple interest basis. S-10 The Company will appoint, and enter into agreements with, agents (each a "Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless otherwise specified in a Pricing Supplement, the Principal Paying Agent shall be the Calculation Agent for each Bearer Note. The interest rate on each Floating Rate Note will be reset daily, weekly, monthly, quarterly, semiannually or annually (such period being the "Interest Reset Period" for such Note, and the first day of each Interest Reset Period being an "Interest Reset Date"), as specified in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the Interest Reset Dates will be, in the case of Floating Rate Notes that reset daily, each Business Day; in the case of Floating Rate Notes (other than Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided below under "Treasury Rate Notes"); in the case of Floating Rate Notes that reset monthly, the third Wednesday of each month; in the case of Floating Rate Notes that reset quarterly, the third Wednesday of March, June, September and December of each year; in the case of Floating Rate Notes that reset semiannually, the third Wednesday of each of the two months of each year specified in the applicable Pricing Supplement; and, in the case of Floating Rate Notes that reset annually, the third Wednesday of one month of each year specified in the applicable Pricing Supplement. If an Interest Reset Date for any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that, in the case of a LIBOR Note, if such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Unless otherwise specified in the applicable Pricing Supplement, interest payable in respect of Floating Rate Notes shall be the accrued interest from and including the Original Issue Date or the last date to which interest has been paid or duly provided for, as the case may be, to but excluding the applicable Interest Payment Date or Maturity, as the case may be. Unless otherwise specified in the applicable Pricing Supplement, with respect to a Floating Rate Note, accrued interest shall be calculated by multiplying the principal amount of such Note (or, in the case of an Indexed Note, unless otherwise specified in the applicable Pricing Supplement, the face amount of such Indexed Note) by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which accrued interest is being calculated. Unless otherwise specified in the applicable Pricing Supplement, the interest factor (expressed as a decimal calculated to seven decimal places without rounding) for each such day shall be computed by dividing the interest rate in effect on such day by 360, in the case of CD Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes, or by the actual number of days in the year, in the case of Treasury Rate Notes or CMT Rate Notes. For purposes of making the foregoing calculation, the interest rate in effect on any Interest Reset Date will be the applicable rate as reset on such date. Unless otherwise specified in the applicable Pricing Supplement, all percentages resulting from any calculation of the rate of interest on a Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage point rounded upward, and all currency amounts used in or resulting from such calculation on Floating Rate Notes will be rounded to the nearest one-hundredth of a unit (with .005 of a unit being rounded upward). Unless otherwise indicated in the applicable Pricing Supplement and except as provided below, interest will be payable, in the case of Floating Rate Notes that reset daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified in the applicable Pricing Supplement; in the case of Floating Rate Notes that reset quarterly, on the third Wednesday of March, June, September, and December of each year; in the case of Floating Rate Notes that reset semiannually, on the third Wednesday of each of two months of each year specified in the applicable Pricing Supplement; and, in the case of Floating Rate Notes that reset annually, on the third Wednesday of one month of each year specified in the applicable Pricing Supplement (each such day being S-11 an "Interest Payment Date") and, in each case, at Maturity. If an Interest Payment Date (other than at Maturity) with respect to any Floating Rate Note would otherwise be a day that is not a Business Day, such Interest Payment Date shall be postponed to the next succeeding Business Day, except that, in the case of a LIBOR Note, if such Business Day would fall in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity of a Floating Rate Note falls on a day that is not a Business Day, the required payment of principal, premium (if any) and/or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest shall accrue on such payment for the period from and after Maturity to the date of such payment on the next succeeding Business Day. Upon the request of the Holder of any Floating Rate Note, the Calculation Agent for such Note will provide to such Holder the interest rate then in effect, and, if determined, the interest rate that will become effective on the next Interest Reset Date, with respect to such Floating Rate Note. In addition, such information will be communicated to the Luxembourg Stock Exchange and will be made available at the offices of the Principal Paying Agent in London and at the Luxembourg Stock Exchange. "H.15(519)" means the publication entitled "Statistical Release H.15(519), Selected Interest Rates", or any successor publication, published by the Board of Governors of the Federal Reserve System. "Composite Quotations" means the daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities" published by the Federal Reserve Bank of New York. CD RATE NOTES Each CD Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "CD Rate" for each Interest Reset Period, as determined by the Calculation Agent for such CD Rate Note, shall be the rate as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate Determination Date") for negotiable certificates of deposit having the Index Maturity designated in the applicable Pricing Supplement, as published in H.15(519) under the heading "CDs (Secondary Market)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CD Rate Determination Date, then the "CD Rate" for such Interest Reset Period will be the rate on such CD Rate Determination Date for negotiable certificates of deposit of the Index Maturity designated in the applicable Pricing Supplement as published in Composite Quotations under the heading "Certificates of Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest Reset Period will be calculated by the Calculation Agent for such CD Rate Note and will be the arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date, of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for such CD Rate Note for negotiable certificates of deposit of major money market banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity designated in the Pricing Supplement in a denomination of $5,000,000; provided, however, that if the three dealers selected as aforesaid by such Calculation Agent are not quoting offered rates as mentioned in this sentence, the "CD Rate" for such Interest Reset Period will be the CD Rate in effect on such CD Rate Determination Date, or, if none, the Initial Interest Rate. The "Calculation Date" pertaining to any CD Rate Determination Date shall be the earlier of (i) the tenth calendar day after such CD Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. S-12 COMMERCIAL PAPER RATE NOTES Each Commercial Paper Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Commercial Paper Rate" for each Interest Reset Period will be determined by the Calculation Agent for such Commercial Paper Rate Note as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Commercial Paper Rate Determination Date") and shall be the Money Market Yield (as defined below) on such Commercial Paper Rate Determination Date of the rate for commercial paper having the Index Maturity specified in the applicable Pricing Supplement, as such rate shall be published in H.15(519) under the heading "Commercial Paper". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Commercial Paper Rate Determination Date, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield on such Commercial Paper Rate Determination Date of the rate for commercial paper of the specified Index Maturity as published in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 a.m., New York City time, on such Commercial Paper Rate Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for such Commercial Paper Rate Note for commercial paper of the specified Index Maturity placed for an industrial issuer whose bonds are rated "AA" or the equivalent by a nationally recognized statistical rating agency; provided, however, that if the three dealers selected as aforesaid by such Calculation Agent are not quoting offered rates as mentioned in this sentence, the "Commercial Paper Rate" for such Interest Reset Period will be the Commercial Paper Rate in effect on such Commercial Paper Rate Determination Date, or, if none, the Initial Interest Rate. "Money Market Yield" shall be a yield calculated in accordance with the following formula: D X 360 Money Market Yield = ----------------------- X 100 360 - (D X M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the period for which accrued interest is being calculated. The "Calculation Date" pertaining to any Commercial Paper Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Commercial Paper Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. FEDERAL FUNDS RATE NOTES Each Federal Funds Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Federal Funds Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Federal Funds Rate" for each Interest Reset Period shall be the effective rate on the second Business Day immediately prior to the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination Date") for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to S-13 such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such Interest Reset Period shall be the rate on such Federal Funds Rate Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall be the arithmetic mean of the rate, as of 9:00 a.m., New York City time, on the Federal Funds Rate Determination Date for the last transaction of not less than $5,000,000 in overnight federal funds arranged by each of three leading brokers of federal funds transactions in the City of New York selected by the Calculation Agent for such Federal Funds Rate Note; provided, however, that if the brokers selected as aforesaid by the Calculation Agent are not quoting as set forth above, the "Federal Funds Rate" for such Interest Reset Period will be the Federal Funds Rate in effect on such Federal Funds Rate Determination Date, or, if none, the Initial Interest Rate. The "Calculation Date" pertaining to any Federal Funds Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Federal Funds Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. LIBOR NOTES Each LIBOR Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, "LIBOR" for each Interest Reset Period will be determined by the Calculation Agent for such LIBOR Note as follows: (i) On the second London Business Day prior to the Interest Reset Date for such Interest Reset Period (a "LIBOR Interest Determination Date"), the Calculation Agent for such LIBOR Note will determine (a) if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity designated in the applicable Pricing Supplement, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, that appear on the Designated LIBOR Page specified in the applicable Pricing Supplement as of 11:00 a.m., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the rate for deposits in the Index Currency having the Index Maturity designated in the applicable Pricing Supplement commencing on the second London Business Day immediately following such LIBOR Interest Determination Date that appears on the Designated LIBOR Page specified in the applicable Pricing Supplement as of 11:00 a.m., London time, on such LIBOR Interest Determination Date. If fewer than two such offered rates appear, or if no such rate appears, as applicable, LIBOR in respect of the related LIBOR Determination Date will be determined in accordance with the provisions described in clause (ii) below. (ii) With respect to a LIBOR Note and an Interest Reset Period to which this clause (ii) applies, the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated in the applicable Pricing Supplement, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such S-14 LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in the applicable Principal Financial Center, on such LIBOR Interest Determination Date by three major banks in such Principal Financial Center selected by the Calculation Agent for loans in the Index Currency to leading European banks, having the Index Maturity designated in the applicable Pricing Supplement commencing on the second London Business Day immediately following such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the banks so selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR Interest Determination Date. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is specified in the applicable Pricing Supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. "Index Currency" means the currency (including composite currencies) specified in the applicable Pricing Supplement as the currency for which LIBOR shall be calculated. If no such currency is specified in the applicable Pricing Supplement, the Index Currency shall be U.S. dollars. "Principal Financial Center" will generally be the capital city of the country of the specified Index Currency, except that with respect to U.S. dollars, Italian lire and ECU, the Principal Financial Center shall be The City of New York, Milan and Luxembourg, respectively. TREASURY RATE NOTES Each Treasury Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Treasury Rate" for each Interest Reset Period will be the rate for the auction held on the Treasury Rate Determination Date (as defined below) for such Interest Reset Period of direct obligations of the United States ("Treasury bills") having the Index Maturity specified in the applicable Pricing Supplement, as such rate shall be published in H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction average (investment)" or, in the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Treasury Rate Determination Date, the auction average rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) on such Treasury Rate Determination Date as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the specified Index Maturity are not published or reported as provided above by 3:00 p.m., New York City time, on such Calculation Date, or if no such auction is held on such Treasury Rate Determination Date, then the "Treasury Rate" for such Interest Reset Period shall be calculated by the Calculation Agent for such Treasury Rate Note and shall be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate Determination Date, of three leading primary United States government securities dealers selected by such Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the specified Index Maturity; provided, however, that if the dealers selected as aforesaid by such Calculation Agent are not quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for such Interest Reset Period will be the Treasury Rate in effect on such Treasury Rate Determination Date, or, if none, the Initial Interest Rate. S-15 The "Treasury Rate Determination Date" for each Interest Reset Period will be the day of the week in which the Interest Reset Date for such Interest Reset Period falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Rate Determination Date pertaining to the Interest Reset Period commencing in the next succeeding week. If an auction date shall fall on any day that would otherwise be an Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead be the Business Day immediately following such auction date. The "Calculation Date" pertaining to any Treasury Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Treasury Rate Determination Date or, if such a day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. PRIME RATE NOTES Each Prime Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. Unless otherwise specified in the applicable Pricing Supplement, the "Prime Rate" for each Interest Reset Period will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Prime Rate Determination Date") and shall be the rate published in H.15(519) under the heading "Bank Prime Loan." In the event that such rate is not published prior to 9 a.m., New York City time, on the Calculation Date (as defined below), then the "Prime Rate" for such Interest Reset Period shall be determined by the Calculation Agent and shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base lending rate as in effect for that Prime Rate Determination Date. If fewer than four such rates but more than one such rate appear on the Reuters Screen NYMF Page for the Prime Rate Determination Date, the "Prime Rate" will be determined by the Calculation Agent and will be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Determination Date by four major money center banks in The City of New York selected by the Calculation Agent. If fewer than two such rates appear on the Reuters Screen NYMF Page, the Prime Rate will be determined by the Calculation Agent on the basis of the rates furnished in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of at least U.S. $500,000,000 and being subject to supervision or examination by Federal or State authority, selected by the Calculation Agent to provide such rate or rates; provided, however, that if the banks selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate for such Interest Reset Period will be the Prime Rate in effect on such Prime Rate Determination Date, or, if none, the Initial Interest Rate. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace the NYMF page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). The "Calculation Date" pertaining to a Prime Rate Determination Date will be the earlier of (i) the tenth calendar day after such Prime Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity as the case may be. CMT RATE NOTES Each CMT Rate Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, specified in such Note and in the applicable Pricing Supplement. S-16 Unless otherwise specified in the applicable Pricing Supplement, the "CMT Rate" for each Interest Reset Period as determined by the Calculation Agent for such CMT Rate Note shall be the rate (i) in the case where the Designated CMT Telerate Page (as defined below) is 7055, as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CMT Determination Date") or (ii) in the case where the Designated CMT Telerate Page is 7052, for the week or the month, as specified in the applicable Pricing Supplement, ended immediately preceding the week in which the CMT Determination Date occurs, in either case, for the Index Maturity specified in the applicable Pricing Supplement, as displayed on the Designated CMT Telerate Page under the caption ". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M." If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified in the applicable Pricing Supplement as published in the relevant H.15(519) opposite the caption "U.S. Government Securities, Treasury Constant Maturities". If such rate is no longer published, or if not published by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified in the applicable Pricing Supplement (or other United States Treasury rate for such Index Maturity) as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for the Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York (which may include the Agents or their affiliates) selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the higher quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Index Maturity specified in the applicable Pricing Supplement and a remaining term to maturity of not less than such Index Maturity minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the "CMT Rate" for such Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the Treasury Notes with an original maturity of the number of years that is the next highest to the Index Maturity specified in the applicable Pricing Supplement and a remaining term to maturity closest to the Index Maturity specified in the applicable Pricing Supplement and in an amount of at least $100 million. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference Dealers selected by the Calculation Agent are quoting as described herein, the "CMT Rate" will be the CMT Rate in effect on such CMT Determination Date, or, if none, the Initial Interest Rate. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Index Maturity specified in the applicable Pricing Supplement, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated in the applicable Pricing Supplement (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of S-17 displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified in the applicable Pricing Supplement, the Designated CMT Telerate Page shall be 7052, for the most recent week. The "Calculation Date" pertaining to any CMT Determination Date shall be the earlier of (i) the tenth calendar day after such CMT Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. INDEXED NOTES The Company may from time to time offer Notes ("Indexed Notes") the principal amount payable at Stated Maturity of which (the "Indexed Principal Amount") or the interest amount payable on which is determined by reference to a measure (the "Index") which will be related to (i) the rate of exchange between the Specified Currency for such Note and the other currency or composite currency (the "Indexed Currency") specified in the applicable Pricing Supplement (such Indexed Notes, "Currency Indexed Notes"); (ii) the difference in the price of a specified commodity (the "Indexed Commodity") on specified dates (such Indexed Notes, "Commodity Indexed Notes"), (iii) the difference in the level of a specified stock index (the "Stock Index"), which may be based on U.S. or foreign stocks, on specified dates (such Indexed Notes, "Stock Indexed Notes") or (iv) such other objective price or economic measures as are described in the applicable Pricing Supplement. The manner of determining the Indexed Principal Amount of an Indexed Note, and historical and other information concerning the Indexed Currency, Indexed Commodity, Stock Index or other price or economic measures used in such determination, will be set forth in the applicable Pricing Supplement, together with information concerning tax consequences to the holders of such Indexed Notes. Unless otherwise specified in the applicable Pricing Supplement, interest on an Indexed Note will be payable by the Company based on the amount designated in the applicable Pricing Supplement as the "Face Amount" of such Indexed Note. The applicable Pricing Supplement will describe whether the principal amount of the related Indexed Note that would be payable upon redemption or repayment prior to Stated Maturity will be the Face Amount of such Indexed Note, the Indexed Principal Amount of such Indexed Note at the time of redemption or repayment, or another amount described in such Pricing Supplement. An investment in Indexed Notes entails significant risks that are not associated with similar investment in a conventional fixed-rate debt security. Indexation of the interest rate of such a Note may result in an interest rate that is less than that payable on a conventional fixed-rate debt security issued at the same time, including the possibility that no interest will be paid. Indexation of the principal of and/or premium on such a Note may result in an amount of principal and/or premium payable in respect thereof that is less than the original purchase price of such Note if allowed pursuant to the terms thereof, including the possibility that no such amount will be paid. The secondary market for such Notes will be affected by a number of factors, independent of the credit worthiness of the Company and the value of the Indexed Currency, the Indexed Commodity or the Stock Index, including the volatility of the Indexed Currency, the Indexed Commodity or the Stock Index, the time remaining to the maturity of such Notes, the amount outstanding of such Notes and market interest rates. The value of the Indexed Currency, the Indexed Commodity or the Stock Index depends on a number of interrelated factors, including economic, financial and political events, over which the Company has no control. Additionally, if the formula used to determine the amount of principal, premium and/or interest payable with respect to such Notes contains a multiple or leverage factor, the effect of any change in the Indexed Currency, the Indexed Commodity or the Stock Index will be increased. The historical experience of the relevant Indexed Currency, Indexed Commodity or Stock Index should not be taken as an indication of future performance of such Indexed Currency, Indexed Commodity or Stock Index during the term of any Indexed Note. The credit ratings assigned to the Company's medium-term note program are a reflection of the Company's credit status and are in no way a reflection of the potential impact of the factors discussed above, or any other factors, on the market value of Indexed Notes. Accordingly, prospective investors should consult their own financial and legal advisors as to the risks entailed by an investment in Indexed Notes and the suitability of such Notes in light of such prospective investors' particular circumstances. S-18 OTHER PROVISIONS; ADDENDA Any provisions with respect to any Bearer Note, including the determination of a Base Rate, the calculation of the interest rate applicable to a Floating Rate Note, and the specification of one or more Base Rates, the Interest Payment Dates, the Stated Maturity or any other variable term relating thereto, may be modified as specified under "Other Provisions" on the face of such Note or in an Addendum relating thereto, if so specified on the face of such Note and in the applicable Pricing Supplement. AMORTIZING NOTES The Company may from time to time offer Amortizing Notes. Unless otherwise specified in the applicable Pricing Supplement, interest on each Amortizing Note will be computed on the basis of a 360-day year of twelve 30-day months. Payments with respect to Amortizing Notes will be applied first to interest due and payable thereon and then to the reduction of the unpaid principal amount thereof. Further information concerning additional terms and provisions of Amortizing Notes will be specified in the applicable Pricing Supplement. A table setting forth repayment information in respect of each Amortizing Note will be included in the applicable Pricing Supplement and set forth in each such Note. OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE The Pricing Supplement relating to each Bearer Note will indicate either that such Note cannot be redeemed (other than as provided under "Tax Redemption" and "Special Tax Redemption" below) prior to Stated Maturity or that such Note will be redeemable at the option of the Company, in whole or in part, and the date or dates (each an "Optional Redemption Date") on which such Note may be redeemed and the price (the "Redemption Price") at which (together with accrued interest to such Optional Redemption Date) such Note may be redeemed on each such Optional Redemption Date. The Company may exercise such option with respect to a Bearer Note by notifying the Trustee and the Principal Paying Agent for such Note at least 45 days prior to any Optional Redemption Date. At least 30 but not more than 60 days prior to Optional Redemption Date, the Trustee or the Principal Paying Agent shall provide notice of such redemption to the record Holder of such Bearer Note in accordance with "Notices" below. In the event of redemption of a Bearer Note in part only, a new Note or Notes for the unredeemed portion thereof shall be issued to the record Holder thereof upon the cancellation thereof. Bearer Notes redeemed prior to Stated Maturity must be presented for payment together with all unmatured coupons, if any, appertaining thereto, failing which the amount of any missing unmatured coupon will be deducted from the sum due for payment. Unless otherwise specified in the applicable Pricing Supplement, the Bearer Notes will not be subject to any sinking fund. The Pricing Supplement relating to each Bearer Note will also indicate whether the Holder of such Note will have the option to elect repayment of such Note by the Company prior to its Stated Maturity, and, if so, such Pricing Supplement will specify the date or dates on which such Note may be repaid (each an "Optional Repayment Date") and the price (the "Optional Repayment Price") at which (together with accrued interest to such Optional Repayment Date) such Note may be repaid on each such Optional Repayment Date. In order for a Bearer Note to be repaid, the Principal Paying Agent must receive the Bearer Note at least 30 but not more than 45 days prior to an Optional Repayment Date. Any tender of a Bearer Note for repayment shall be irrevocable. The repayment option may be exercised by the Holder of a Bearer Note for less than the entire principal amount of such Note, provided that the principal amount of such Note remaining outstanding after repayment is an authorized denomination. Upon such partial repayment, such Bearer Note shall be cancelled and a new Note or Notes for the remaining principal amount thereof shall be issued to the Holder of such repaid Note. S-19 TAX REDEMPTION If the Company determines that, as a result of any change in or amendment to the laws (or any regulations or rulings promulgated thereunder) of the United States or of any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings, which change or amendment is enacted or becomes effective (regardless of when announced) on or after the applicable Original Issue Date, the Company has or will become obligated to pay Additional Amounts (as defined below) with respect to the Bearer Notes as described herein under "Payment of Additional Amounts", and such obligation cannot be avoided by the Company taking reasonable measures available to it, then the Company may, at its option, redeem the Bearer Notes, as a whole but not in part, at any time prior to maturity, upon the giving of a notice of redemption as described below, at a redemption price (the "Redemption Price"), calculated without premium, equal to 100% of the principal amount of the Bearer Notes, together with accrued interest to the date fixed for redemption; provided, however, that if the Bearer Notes are Original Issue Discount Notes, the Redemption Price for each such Bearer Note shall be limited to the sum of (i) the aggregate principal amount of such Note multiplied by its Issue Price (expressed as a percentage of the aggregate principal amount) and (ii) the original issue discount accrued on such Note from the Original Issue Date to the date fixed for redemption, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of notice of redemption). Notice of redemption will be given by the Company not less than 30 nor more than 60 days prior to the date fixed for redemption, which date and the Redemption Price will be specified in such notice. SPECIAL TAX REDEMPTION If the Company shall determine that any payment made outside the United States by the Company or any of its Paying Agents in respect of any Bearer Note of a series or coupon appertaining thereto (an "Affected Security") would, under any present or future laws or regulations of the United States, be subject to any certification, identification, documentation, information or other reporting requirement of any kind, the effect of which requirement is the disclosure to the Company, any paying agent or any governmental authority of the nationality, residence or identity of a beneficial owner of such Affected Security that is a United States Alien (as defined herein under "Payment of Additional Amounts") (other than such a requirement (a) that would not be applicable to a payment made by the Company or any of its Paying Agents (i) directly to the beneficial owner or (ii) to a custodian, nominee or other agent of the beneficial owner, or (b) that can be satisfied by such custodian, nominee or other agent certifying to the effect that such beneficial owner is a United States Alien, provided that in each case referred to in clauses (a)(ii) and (b) payment by such custodian, nominee or agent to such beneficial owner is not otherwise subject to any such requirement), the Company shall, at its election, either redeem the Affected Securities, as a whole, at the Redemption Price, or, if the conditions of the second succeeding paragraph are satisfied, pay the Additional Amounts specified in such paragraph. The Company shall make such determination and election as soon as practicable and publish prompt notice thereof (the "Determination Notice") stating the effective date of such certification, documentation, identification, information or other reporting requirement, whether the Company has elected to redeem the Affected Securities or pay the Additional Amounts specified in the second succeeding paragraph and (if applicable) the last date by which the redemption of the Affected Securities must take place, as provided in the next succeeding sentence. If the Company elects to redeem the Affected Securities, such redemption shall take place on such date, not later than one year after the publication of the Determination Notice, as the Company shall elect by notice to the Principal Paying Agent at least 60 days prior to the date fixed for redemption. Notice of such redemption of the Affected Securities will be given to the Holders of the Affected Securities not more than 60 nor less than 30 days prior to the date fixed for redemption. Notwithstanding the foregoing, the Company will not so redeem the Affected Securities if the Company shall subsequently determine, not less than 30 days prior to the date fixed for redemption, that subsequent payments on the Affected Securities would not be subject to any such certification, identification, documentation, information or other reporting requirement, in which case the Company shall publish prompt notice of such determination and any earlier redemption notice shall be revoked and of no further effect. S-20 Each notice referred to in the preceding paragraphs shall be given in the manner described below under "Notices." If and so long as the certification, identification, documentation, information or other reporting requirement referred to in the second preceding paragraph would be fully satisfied by payment of a backup withholding tax or similar charge, the Company may elect to pay as Additional Amounts such amounts as may be necessary so that every net payment made outside the United States following the effective date of such requirement by the Company or any of its Paying Agents in respect of any Affected Security of which the beneficial owner is a United States Alien (but without any requirement that the nationality, residence or identity of such beneficial owner be disclosed to the Company, any Paying Agent or any governmental authority), after deduction or withholding for or on account of such backup withholding tax or similar charge will not be less than the amount provided for in such Affected Security to be then due and payable. However, the Company may elect not to pay such Additional Amounts in respect of any backup withholding tax or similar charge, which (a) would not be applicable to a payment of principal of or interest on any Affected Security made by the Company or any one of its Paying Agents (i) directly to the beneficial owner or to a custodian, nominee or other agent of the beneficial owner of such Affected Security or (ii) if such custodian, nominee or other agent were to certify to the effect that such beneficial owner is a United States Alien or (b) is imposed as a result of presentation of such Affected Security for payment more than 10 days after the date on which such payment became due and payable or on which payment thereof is duly provided for, whichever occurred later. In the event the Company elects to pay any Additional Amounts pursuant to this paragraph, the Company shall have the right to redeem the Affected Securities at any time pursuant to the applicable provisions of the second preceding paragraph, without reducing the Redemption Price for applicable withholding taxes. If the Company elects to pay Additional Amounts pursuant to this paragraph and the condition specified in the first sentence of this paragraph should no longer be satisfied, then the Company shall redeem the Affected Securities pursuant to the applicable provisions of the second preceding paragraph. Any redemption payments made by the Company pursuant to the two immediately preceding sentences shall be subject to the continuing obligation of the Company to pay additional interest pursuant to this paragraph. (Section 3.05) PAYMENT OF ADDITIONAL AMOUNTS The Company will, subject to the exceptions and limitations set forth below, pay such additional amounts (the "Additional Amounts") to the Holder of any Bearer Note or of any coupon that is a United States Alien as may be necessary in order that every net payment on such Bearer Note or coupon, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed by the United States (or any political subdivision or taxing authority thereof or therein) upon, or as a result of, such payment, will not be less than the amount provided for in such Bearer Note or coupon to be then due and payable. However, the Company will not be required to make any such payment of Additional Amounts to any such Holder for or on account of: (a) any tax, assessment or other governmental charge which would not have been so imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, a trust, a partnership or a corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been engaged in a trade or business or present therein or having, or having had, a permanent establishment therein or (ii) such Holder's past or present status as a personal holding company, foreign personal holding company, private foundation or other tax exempt organization in each case with respect to the United States or as a corporation that accumulates earnings to avoid United States federal income tax; (b) any estate, inheritance, gift, sales, transfer or personal property tax or any similar tax, assessment or other governmental charge; S-21 (c) any tax, assessment or other governmental charge imposed by reason of the presentation by the Holder of any such Bearer Note or coupon for payment on a date more than 10 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (d) any tax, assessment or other governmental charge that is payable otherwise than by withholding from payments on or in respect of any Bearer Note or coupon; (e) any tax, assessment or other governmental charge required to be withheld by any Paying Agent from any payment of principal of or interest on any Bearer Note or coupon, if such payment can be made without such withholding by any other Paying Agent in Western Europe; (f) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with any certification, identification, documentation, information or other reporting requirement concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of such Bearer Note or coupon if, without regard to any tax treaty, such compliance is required by statute or by regulation of the United States or of any political subdivision or taxing authority thereof or therein as a precondition to relief or exemption from such tax, assessment or other governmental charge; (g) any tax, assessment or other governmental charge imposed by reason of such Holder's past or present status as (i) a controlled foreign corporation that is related to the Company through stock ownership or (ii) the actual or constructive owner of 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote; or (h) any combination of items (a), (b), (c), (d), (e), (f) or (g); nor shall Additional Amounts be paid with respect to any payment in respect of a Bearer Note or coupon to a United States Alien Holder that is a fiduciary or partnership or other than the sole beneficial owner of such Bearer Note or coupon to the extent that a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to such Additional Amounts had such beneficiary, settlor, member or beneficial owner been the Holder of the Bearer Note or coupon. The term "United States Alien" means any Person that, for United States federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust or foreign partnership one or more of the members of which, for United States federal income tax purposes, is a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. (Section 4.13) REPLACEMENT OF BEARER NOTES AND COUPONS If an individual Bearer Note or coupon is mutilated, destroyed, stolen or lost it may be replaced at the specified office of the Principal Paying Agent in London; or, so long as the Bearer Notes are listed on the Luxembourg Stock Exchange, at the specified office of the Paying Agent in Luxembourg, upon payment by the claimant of such expenses as may be incurred in connection therewith and, in the case of destruction, theft or loss, on such terms as to evidence thereof and indemnity as the Company, the Trustee or any paying agent may reasonably require. Mutilated or defaced Bearer Notes or coupons must be surrendered before replacements will be issued. NOTICES All notices to Holders of Bearer Notes will be deemed to have been duly given if published on two Business Days in a leading London daily newspaper (which is expected to be the Financial Times) and, so S-22 long as the Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, in Luxembourg in a newspaper of general circulation in Luxembourg (which is expected to be the Luxemburger Wort). Such notices shall be deemed to have been given on the date of the first such publication. UNCLAIMED MONIES All monies paid by the Company to a Paying Agent for the payment of principal of or any premium or interest on any Bearer Note or for any coupon which remain unclaimed at the end of two years after such payments shall have become due and payable will be repaid to the Company, at its request, and the Holder of such Note or coupon will thereafter look only to the Company for payment, such payment to be made only outside the United States. GOVERNING LAW The Notes will be governed by, and construed in accordance with, the laws of the State of New York, without regard to the conflicts of law rules of such State. CURRENCY RISKS EXCHANGE RATES AND EXCHANGE CONTROLS An investment in a Bearer Note having a Specified Currency other than the currency of the country in which a purchaser is resident or the currency (including ECU and any other such composite currency) in which a purchaser conducts its business or activities (the "home currency") entails significant risks that are not associated with a similar investment in a security denominated in the home currency. Such risks include, without limitation, the possibility of significant changes in rates of exchange between the home currency and such Specified Currency and the possibility of the imposition or modification of foreign exchange controls with respect to such Specified Currency. Such risks generally depend on factors over which the Company has no control, such as economic and political events and the supply of and demand for the relevant currencies. In recent years, rates of exchange for certain currencies have been highly volatile, and such volatility may occur in the future. Fluctuations in any particular exchange rate that have occurred in the past, however, are not necessarily indicative of fluctuations in the rate that may occur during the term of any Bearer Note. Depreciation of the Specified Currency for a Bearer Note against the relevant home currency would result in a decrease in the effective yield (on a U.S. dollar basis) of such Note below its coupon rate and, in certain circumstances, could result in a loss to the investor on a home currency basis. Governments have from time to time imposed, and may in the future impose, exchange controls that could affect exchange rates as well as the availability of a Specified Currency for making payments in respect of Bearer Notes denominated in such currency. At present, the Company has identified the following currencies in which payments of principal, premium and/or interest on Bearer Notes may be made: Australian dollars, Canadian dollars, Danish kroner, Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and ECU. However, the Company may determine at any time to issue Bearer Notes with Specified Currencies other than those listed. There can be no assurances that exchange controls will not restrict or prohibit payments of principal, premium and/or interest in any Specified Currency. Even if there are no actual exchange controls, it is possible that, on a payment date with respect to any particular Bearer Note, the currency in which amounts then due in respect of such Note are payable would not be available to the Company. In that event, the Company will pay such amounts in the manner set forth under "Payment Currency" below. S-23 THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN BEARER NOTES DENOMINATED IN A CURRENCY OTHER THAN A PROSPECTIVE PURCHASER'S HOME CURRENCY. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN BEARER NOTES DENOMINATED IN A CURRENCY OTHER THAN THE PURCHASER'S HOME CURRENCY. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS. Any Pricing Supplement relating to Bearer Notes having a Specified Currency other than U.S. dollars will contain certain information concerning historical exchange rates for such currency against the U.S. dollar, a brief description of such currency and any material exchange controls affecting such currency, and any other material information concerning such currency. VALUE OF ECU Subject to the provisions set forth under "Payment Currency" below, the value of the ECU is equal to the value of the European Currency Unit that is at present used in the European Monetary System and which is at present valued on the basis of specified amounts of the currencies of twelve member countries of the European Communities (the "EC") as shown below. Pursuant to Council Regulation (EEC) No. 1971/89 dated June 19, 1989, the ECU is at present defined as the sum of the following components:
PERCENTAGES ----------- German mark........... 30.10 Pound sterling........ 13.00 French franc.......... 19.00 Italian lire.......... 10.15 Dutch guilder......... 9.40 Belgian franc......... 7.60
PERCENTAGES ----------- Luxembourg franc...... 0.30 Danish krone.......... 2.45 Irish pound........... 1.10 Greek drachma......... 0.80 Spanish peseta........ 5.30 Portuguese escudo..... 0.80
The EC may change this definition of the ECU, including by making changes in the foregoing components, which will cause the basis for the valuation of a Bearer Note denominated in ECU to change accordingly. PAYMENT CURRENCY Except as set forth below, if payment in respect of a Bearer Note is required to be made in a Specified Currency other than U.S. dollars and such currency is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments in respect of such Note shall be made in U.S. dollars until such currency is again available to the Company or so used. The amounts so payable on any date in such currency shall be converted into U.S. dollars on the basis of the most recently available Market Exchange Rate for such currency or as otherwise indicated in the applicable Pricing Supplement. Any payment in respect of such Note made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture under which such Note shall have been issued. Notwithstanding the foregoing, if a Specified Currency is unavailable to the Company solely because such currency no longer constitutes legal tender because it has been replaced by the ECU or the new single currency of the European Union once monetary union takes effect pursuant to Article 109l of the Treaty establishing the European Community, the amounts so payable in respect of such Note shall, beginning with the date such replacement becomes effective, be made in the relevant new single currency of the European Union; the amounts so S-24 payable on any date shall be converted into such single currency on the basis of the conversion officially in effect in the European Union on the effective date of such replacement. If payment in respect of a Bearer Note is required to be made in ECU and the ECU is not then used in the European Monetary System, then the Trustee for such Note shall, without liability on its part, choose a component currency (the "Payment Currency") of the ECU in which all payments in respect of such Note and any related coupons shall be made until the ECU is again so used. Notice of the Payment Currency selected by such Trustee shall be given in accordance with "Description of Bearer Notes--Notices" above. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of the fourth Luxembourg business day prior to the date on which such payment is due. Any payment in respect of such Note made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture under which such Note shall have been issued. Notwithstanding the foregoing, on the first Luxembourg business day on which the ECU is no longer used in the European Monetary System, each Trustee shall, without liability on its part, choose a Payment Currency in which all payments in respect of Bearer Notes and coupons for which such Trustee serves as Trustee denominated in ECU having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of such first Luxembourg business day. Any payment in respect of such Notes made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture under which such Notes shall have been issued. The equivalent of the ECU in the relevant Payment Currency as of any date (the "Day of Valuation") shall be determined by the Luxembourg Stock Exchange on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU when the ECU was most recently used in the European Monetary System or for the settlement of transactions by public institutions of or within the EC. The equivalent of the ECU in the Payment Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components, and then, using the rate used for determining the U.S. dollar equivalent of the Components in the Payment Currency as set forth below, calculating the equivalent in the Payment Currency of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of each of the Components for each series of Bearer Notes shall be determined by the Luxembourg Stock Exchange on the basis of the middle spot delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee for such Notes (with the approval of the Company), in the country of issue of the Component in question. If the official unit of any component currency of the ECU is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall be equal to the amount of the former component currency divided by the number of currencies into which that currency was divided. If no direct quotations are available for a Component on a Day of Valuation from any of the banks selected by the Trustee (with the approval of the Company) for this purpose, because foreign exchange markets are closed in the country of issue of that Component, or for any other reason, in computing the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall (except as provided below) use the most recent direct quotations for such Component obtained by it; provided that such most recent quotations may be used only if they were prevailing in the country of issue not more than two Luxembourg S-25 business days before such Day of Valuation. Beyond such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such Component and for the U.S. dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by such Trustee (with the approval of the Company), in a country other than the country of issue of such Component. Notwithstanding the foregoing, within such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if such Trustee and the Company judge that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated on the basis of such most recent direct quotations. Unless otherwise specified by such Trustee, if there is more than one market for dealing in any component currency by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a non-resident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. All determinations referred to above made by the Trustee or the Luxembourg Stock Exchange shall be at their respective sole discretion (except to the extent expressly provided herein that any determination made by a Trustee is subject to the approval of the Company) and shall, in the absence of manifest error, be conclusive for all purposes and binding on holders of Bearer Notes, and such Trustee shall have no liability therefor. FOREIGN CURRENCY JUDGMENTS The Notes will be governed by and construed in accordance with the law of the State of New York. Courts in the United States customarily have not rendered judgments for money damages denominated in any currency other than the U.S. dollar. A 1987 amendment to the Judiciary Law of the State of New York provides, however, that an action based upon an obligation denominated in a currency other than U.S. dollars will be rendered in the foreign currency of the underlying obligation and converted into U.S. dollars at the rate of exchange prevailing on the date of the entry of the judgment or decree. TAXATION IN THE UNITED STATES Under current United States federal income and estate tax law, (a) payment on a Bearer Note or coupon by the Company or any paying agent to a holder that is a United States Alien will not be subject to withholding of United States federal income tax, provided that, with respect to payments of interest, the holder does not actually or constructively own ten percent or more of the combined voting power of all classes of stock of the Company and is not a controlled foreign corporation related to the Company through stock ownership; (b) a holder of a Bearer Note or coupon that is a United States Alien will not be subject to United States federal income tax on gain realized on the sale, exchange or redemption of such Note or coupon, provided that such holder does not have a connection with or status with respect to the United States described in clause (a) under "Payment of Additional Amounts"; (c) a beneficial owner of a Bearer Note or coupon that is a United States Alien will not be required to disclose its nationality, residence or identity to the Company, a paying agent (acting in its capacity as such) or any United States governmental authority in order to receive payment on such Note or coupon from the Company or a paying agent outside the United States; and (d) a Bearer Note or coupon will not be subject to United States federal estate tax as a result of the death of a holder who is not a citizen or resident of the United States at the time of death, provided that such holder did not at the time of death actually or constructively own ten percent or more of the combined voting power of all classes of stock of the Company and, at the time of such holder's death, payments of interest on such Note or coupon would not have been effectively connected with the conduct by such holder of a trade or business in the United States. United States information reporting requirements and backup withholding tax will not apply to payments on a Bearer Note or coupon made outside the United States by the Company or any paying agent S-26 (acting in its capacity as such) to a holder that is a United States Alien. Information reporting requirements and backup withholding tax also will not apply to any payment on a Bearer Note or coupon outside the United States by a foreign office of a custodian, nominee or other agent of the beneficial owner of such Note or coupon, provided that such custodian, nominee or agent (i) is not a U.S. Person, (ii) derives less than 50% of its gross income for certain periods from the conduct of a trade or business in the United States and (iii) is not a controlled foreign corporation as to the United States (a person described in (i), (ii) and (iii) hereinafter a "foreign controlled person"). Payment in respect of a Bearer Note or coupon outside the United States to the beneficial owner thereof by a foreign office of any custodian, nominee or agent that is not a foreign controlled person will not be subject to backup withholding tax, but will be subject to information reporting requirements unless such custodian, nominee or agent has documentary evidence in its records that the beneficial owner is a United States Alien or the beneficial owner otherwise establishes an exemption. Information reporting requirements and backup withholding tax will not apply to any payment of the proceeds of the sale of a Bearer Note or coupon effected outside the United States by a foreign office of a "broker" (as defined in applicable Treasury regulations), provided that such broker is a foreign controlled person. Payment of the proceeds of the sale of a Bearer Note or coupon effected outside the United States by a foreign office of any broker that is not a foreign controlled person will not be subject to backup withholding tax, but will be subject to information reporting requirements unless such broker has documentary evidence in its records that the beneficial owner is a United States Alien and certain other conditions are met, or the beneficial owner otherwise establishes an exemption. These backup withholding and information reporting rules are under review by the United States Treasury, and their application to the Bearer Notes and coupons could be changed prospectively by future regulations. PLAN OF DISTRIBUTION The Bearer Notes are being offered on a continuous basis by the Company through the Agents, which have agreed to use their reasonable best efforts to solicit orders to purchase Bearer Notes. Initial purchasers may propose certain terms of the Bearer Notes, but the Company will have the right to accept orders to purchase Bearer Notes and may reject proposed purchases in whole or in part. The Agents shall have the right, in their discretion reasonably exercised, to reject any proposed purchase of Bearer Notes in whole or in part. The Company will pay any Agent a commission of from .125% to .750% of the principal amount of Bearer Notes with a Stated Maturity of 184 days to 30 years sold through such Agent, depending upon Stated Maturity. Commissions with respect to Notes with Stated Maturities in excess of 30 years which are sold through an Agent will be negotiated between the Company and such Agent at the time of such sale. The Company may arrange for Bearer Notes to be sold through any Agent acting as underwriter or may sell Bearer Notes directly to investors on its own behalf. In the case of sales made directly by the Company, no commission or discount in lieu thereof will be paid or allowed. The Company also may sell Bearer Notes to any Agent as principal for its own account at a price to be agreed upon at the time of sale. Such Notes may be resold by such Agent to one or more investors at a fixed public offering price or at prevailing market prices, or at prices related thereto, at the time of such resale, as determined by such Agent. Unless otherwise specified in the applicable Pricing Supplement, any Bearer Note sold to an Agent as principal will be purchased by such agent at a price equal to 100% of the principal amount thereof less a percentage of the principal amount equal to the commission applicable to an agency sale (as described below) of a Note of identical maturity. Any Agent may sell Bearer Notes it has purchased from the Company as principal to other dealers for resale to investors and other purchasers, and may allow any portion of the discount received in connection with such purchase from the Company to such dealers. After the initial public offering of Bearer Notes, the public offering price (in the case of Bearer Notes to be resold at a fixed public offering price), the concession and the discount may be changed. S-27 In compliance with United States federal income tax laws and regulations, the Company and the Agent have agreed that in connection with the original issuance of any Bearer Note or during the period of 40 days after the Original Issue Date of such Note they will not offer, sell or deliver such Note, directly or indirectly, to a U.S. Person or to any person within the United States, except to the extent permitted under U.S. Treasury regulations. Under those regulations, Bearer Notes may be offered and sold during that period to international organizations, foreign central banks and to foreign branches of U.S. financial institutions that satisfy requirements prescribed by the regulations. The Bearer Notes have not been and will not be registered under the Securities and Exchange Law of Japan. The Company and the Agents will agree not to offer or sell any Bearer Note directly or indirectly in Japan or to residents of Japan or for the benefit of any Japanese person (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale directly or indirectly in Japan or to any Japanese person except in circumstances that result in compliance with any applicable laws, regulations and ministerial guidelines of Japan taken as a whole. Each Agent will represent and agree that (i) it has not offered or sold and will not offer or sell, prior to the date six months after their date of issue, any Notes, having a maturity of one year or greater, to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their businesses or otherwise in circumstances that have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of any Notes to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such document may otherwise lawfully be issued or passed on. There can be no assurance as to the existence of a secondary market for any Bearer Notes, or that any Bearer Notes will be sold. The Agents, whether acting as agent or principal, may be deemed to be "underwriters" within the meaning of the Securities Act. The Company has agreed to indemnify the Agents against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the Agents may be required to make in respect thereof. In addition to the Bearer Notes being offered through the Agents as described herein, Registered Notes that may have terms identical or similar to the terms of the Bearer Notes may be concurrently offered by the Company on a continuous basis in the United States (as defined in the Prospectus) pursuant to a distribution agreement with affiliates of the Agents. Pursuant to such distribution agreement, such affiliates may also purchase Registered Notes as principal for their own account or for resale, and the Company may make direct sales of Registered Notes on its own behalf. Any Registered Notes so offered and sold will reduce correspondingly the maximum aggregate principal amount of Bearer Notes that may be offered by this Prospectus Supplement and the accompanying Prospectus. In the ordinary course of their respective businesses, affiliates of J.P. Morgan Securities Ltd. have engaged, and will in the future engage, in normal commercial banking transactions with the Company and certain of its subsidiaries. S-28 GENERAL INFORMATION Application has been made to list the Bearer Notes on the Luxembourg Stock Exchange. In connection with such listing, the Restated Certificate of Incorporation and By-Laws of the Company and a legal notice relating to the issuance of the Bearer Notes have been deposited with the Chief Registrar of the District Court of Luxembourg, where copies may be obtained upon request. The issuance of the Notes was authorized by actions of the Board of Directors of the Company on April 18, 1991, August 21, 1991 and November 15, 1994. So long as any Bearer Notes are listed on the Luxembourg Stock Exchange, copies of the Pricing Supplements for such Notes, the Registration Statement (and the documents incorporated by reference therein), the annual and quarterly reports of the Company, Restated Certificate of Incorporation and By-Laws of the Company, the Indenture for such series of Notes and the distribution agreement between the Company and the Agents will be available for inspection at the office of the Listing Agent or at the office of the Principal Paying Agent for such Notes in Luxembourg during the term of the Bearer Notes. In addition, copies of such annual and quarterly reports and such Pricing Supplements may be obtained at such offices. Except as otherwise disclosed herein, the Company is not involved in any litigation or arbitration proceedings relating to claims or amounts which it believes will be material in the context of the issue of the Bearer Notes and is not aware that any such litigation or arbitration proceedings are pending or threatened. As of the date of this Prospectus Supplement, there has been no material adverse change in the financial position of the Company since the date of the latest audited financial statements contained or incorporated by reference in the accompanying Prospectus. The Bearer Notes have been accepted for clearance through Euroclear and Cedel. S-29 PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY One McDonald's Plaza Oak Brook, Illinois 60521 AUDITORS TO THE COMPANY Ernst & Young LLP 233 S. Wacker Dr. Chicago, Illinois 60606 LEGAL ADVISERS To the Company To the Agents Shelby Yastrow Cleary, Gottlieb, Steen & Hamilton Senior Vice President, One Liberty Plaza General Counsel and Secretary New York, New York 10006 McDonald's Corporation One McDonald's Plaza Oak Brook, Illinois 60521 TRUSTEE First Fidelity Bank, National Association Broad and Walnut Streets Philadelphia, Pennsylvania 19109 PRINCIPAL PAYING AGENT Morgan Guaranty Trust Company of New York 60 Victoria Embankment London EC4Y OJP PAYING AGENT Banque Generale du Luxembourg S.A. 27 Avenue Monterey L-2951 Luxembourg Luxembourg LISTING AGENT Banque Generale du Luxembourg S.A. 27 Avenue Monterey L-2951 Luxembourg Luxembourg ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ +INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A + +REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE + +SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY + +OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT + +BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR + +THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE + +SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE + +UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF + +ANY SUCH STATE. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED JULY 13, 1995 PROSPECTUS $584,662,000 MCDONALD'S CORPORATION DEBT SECURITIES McDonald's Corporation (the "Company") intends to issue from time to time in one or more series its unsecured debt securities ("Debt Securities") with an aggregate initial public offering price or purchase price of up to $584,662,000, or the equivalent thereof in one or more foreign or composite currencies, including the European Currency Unit ("ECU"). Debt Securities of each series will be offered on terms to be determined at the time of sale. Debt Securities may be sold for U.S. dollars or for one or more foreign or composite currencies, and the principal of, premium, if any, and any interest on Debt Securities may be payable in U.S. dollars or in one or more foreign or composite currencies. Debt Securities of a series may be issuable as individual securities in registered form without coupons ("Registered Securities"), in bearer form with or without coupons attached ("Bearer Securities") or as one or more global securities in registered or bearer form (each a "Global Security"). The specific designation, aggregate principal (or, if principal payable is determined by reference to an index, face) amount, the currency in which the principal, premium, if any, and any interest are payable, the rate (or method of calculation) and the time and place of payment of any interest, authorized denominations, maturity, offering price, any redemption terms and any other specific terms of the Debt Securities in respect of which this Prospectus is being delivered will be set forth in an accompanying Prospectus Supplement (as supplemented with respect to Notes of any series by any pricing supplement relating thereto, a "Prospectus Supplement"). The Debt Securities may be sold by the Company directly, through agents designated from time to time, through dealers or one or more underwriters, or through a syndicate of underwriters managed by one or more underwriters. If underwriters or agents are involved in any offering of Debt Securities, the names of the underwriters or agents will be set forth in the applicable Prospectus Supplement. If an underwriter, agent or dealer is involved in any offering of Debt Securities, the underwriter's discount, agent's commission or dealer's purchase price will be set forth in, or may be calculated from the information set forth in, the applicable Prospectus Supplement, and the net proceeds to the Company from such offering will be the public offering price of such Debt Securities less such discount, in the case of an offering through an underwriter, or the purchase price of such Debt Securities less such commission, in the case of an offering through an agent, and less, in each case, the other expenses of the Company associated with the issuance and distribution of such Debt Securities. See "Plan of Distribution" for specific details. ----------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------- The date of this Prospectus is July , 1995. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in accordance therewith files reports and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy statements and other information filed by the Company with the Commission can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional Offices of the Commission: New York Regional Office, Seven World Trade Center, 13th Floor, New York, New York 10048 and Chicago Regional Office, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661; and copies of such material can be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such reports, proxy statements and other information can also be inspected at the offices of the New York Stock Exchange and Chicago Stock Exchange. The Company is not required to, and will not, provide an annual report or any other periodic report to any holder of its debt securities unless specifically requested by such holder. The Company has filed with the Commission a Registration Statement on Form S- 3 (such Registration Statement, together with all amendments and exhibits thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), relating to the Debt Securities. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted from this Prospectus in accordance with the rules and regulations of the Commission. For further information, reference is hereby made to the Registration Statement. A Company franchisee provides food services exclusively to United States government personnel stationed at the United States naval station in Guantanamo Bay, Cuba. This statement is made pursuant to the disclosure requirements of Florida law and is accurate as of the date of this Prospectus. Investors may obtain current information by contacting the Florida Department of Banking and Finance, The Capitol, Tallahassee, Florida 32399-0350, telephone: (904) 488- 9805. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed with the Commission (File No. 1-5231) pursuant to the Exchange Act and are incorporated herein by reference and made a part of this Prospectus: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, as amended by the Company's Form 10-K/A filed on June 27, 1995; and (b) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the termination of the offering of the Debt Securities shall be deemed to be incorporated herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein, in the accompanying Prospectus Supplement, in an applicable Pricing Supplement or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus. The Company will furnish without charge to each person to whom this Prospectus is delivered, upon request, a copy of any or all of the documents described above, other than certain exhibits to such documents. Written or telephone requests should be directed to: McDonald's Shareholder Services, McDonald's Corporation, Kroc Drive, Oak Brook, Illinois 60521, (708) 575-7428. ---------------- References herein to "U.S. dollars", "dollars" or "$" are to the lawful currency of the United States of America. 2 MCDONALD'S CORPORATION McDonald's Corporation and its subsidiaries develop, operate, franchise and service a worldwide system of restaurants which prepare, assemble, package and sell a limited menu of value-priced foods. These restaurants are operated by the Company and its subsidiaries or, under the terms of franchise agreements, by franchisees who are independent third parties, or by affiliates operating under joint venture agreements between the Company or its subsidiaries and local businesspeople. McDonald's restaurants offer a substantially uniform menu consisting of hamburgers and cheeseburgers, including the Big Mac and Quarter Pounder with Cheese sandwiches, the Filet-O-Fish, McGrilled Chicken and McChicken sandwiches, french fries, Chicken McNuggets, salads, shakes, sundaes and cones made with low fat frozen yogurt, pies, cookies and a limited number of soft drinks and other beverages. In addition, the restaurants sell a variety of products during limited promotional time periods. McDonald's restaurants operating in the United States are open during breakfast hours and offer a full breakfast menu including the Egg McMuffin and the Sausage McMuffin with Egg sandwiches, hotcakes and sausage; three varieties of biscuit sandwiches; Apple- Bran muffins; and cereals. McDonald's restaurants in many countries around the world offer many of these same products as well as other products and limited breakfast menus. The Company tests new products on an ongoing basis. McDonald's restaurants are located in all fifty of the United States and the District of Columbia, and in many foreign locations, principally Japan, Canada, Germany, England, Australia and France. At March 31, 1995, there were 15,370 restaurants worldwide, of which 9,795 were located in the United States and 5,575 in 78 other countries. An additional 327 restaurants were under construction at March 31, 1995, including 228 outside the United States. At March 31, 1995, 68% of McDonald's restaurants were operated by independent franchisees, 21% were operated by the Company and its subsidiaries and 11% were operated by affiliates (entities in which the Company and/or its subsidiaries have an equity interest of 50% or less and in which the remaining equity interest generally is owned by a local resident). The Company's principal executive offices are located at One McDonald's Plaza, Oak Brook, Illinois 60521, telephone: (708) 575-3000. USE OF PROCEEDS The Company intends to use the net proceeds from the sale of the Debt Securities for general corporate purposes, which may include debt refinancings and capital expenditures such as the acquisition and development of McDonald's restaurants. Specific allocations of net proceeds for such purposes have not been made at this time. The amount and timing of any such debt refinancings or capital expenditures will depend upon the Company's requirements and the availability of other funds to the Company. RATIO OF EARNINGS TO FIXED CHARGES
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, --------- ------------------------ 1995 1994 1994 1993 1992 1991 1990 ---- ---- ---- ---- ---- ---- ---- Ratio of Earnings to Fixed Charges........... 4.66 4.70 5.26 4.86 3.96 3.53 3.48
The ratios of earnings to fixed charges shown above have been computed on a total enterprise basis. Earnings represent income before provision for income taxes and fixed charges. Fixed charges consist of interest on all indebtedness, amortization of debt issuance costs and discount or premium relating to any indebtedness, and such portion of rental charges (after reduction for related sublease income) considered to be representative of the interest component in the particular case. 3 DESCRIPTION OF DEBT SECURITIES The Debt Securities are to be issued under an Indenture dated as of March 1, 1987, and any indentures supplemental thereto (collectively, the "Indenture"), between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as Trustee (the "Trustee"). The following statements with respect to the Debt Securities are summaries of the detailed provisions of the Indenture, a copy of which is filed as an exhibit to the Registration Statement. References in italics are to sections of the Indenture. Wherever particular provisions of the Indenture are referred to, such provisions are incorporated by reference as a part of the statements made, and the statements are qualified in their entirety by such reference. As used under this caption, the term "Debt Securities" includes the debt securities being offered by this Prospectus and all other debt securities issued from time to time by the Company under the Indenture. GENERAL The Debt Securities will be unsecured obligations of the Company, ranking equally with all other unsecured and unsubordinated indebtedness for borrowed money of the Company. Certain unsecured obligations of the Company may, however, under certain circumstances, become secured by mortgages pursuant to negative pledge covenants applicable to such obligations while the Debt Securities remain unsecured. Reference is made to the Prospectus Supplement for the terms of the series of Debt Securities being offered thereby, including, where applicable: (i) the title of such Debt Securities; (ii) the limit, if any, upon the aggregate principal amount of such Debt Securities; (iii) the date or dates on which the principal and premium, if any, of such Debt Securities is or are payable; (iv) the rate or rates and/or the method of determination thereof, at which such Debt Securities will bear interest, if any; the date or dates from which such interest will accrue; the interest payment dates on which such interest will be payable; and, in the case of Registered Securities, the record dates for the interest payable on such interest payment dates; (v) whether such Debt Securities are to be issued as Original Issue Discount Securities (as defined below) and the amount of discount with which such Debt Securities will be issued; (vi) the place or places where the principal of, and premium, if any, and any interest on such Debt Securities will be payable; (vii) the price or prices at which, the period or periods within which and the terms and conditions upon which such Debt Securities may be redeemed in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise; (viii) the obligation, if any, of the Company to redeem or purchase such Debt Securities pursuant to any sinking fund or analogous provisions or at the option of a Holder and the price or prices at which, the period or periods within which and the terms and conditions upon which such Debt Securities will be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation; (ix) if other than denominations of $1,000 and any integral multiple thereof, the denominations in which such Debt Securities will be issuable; (x) if other than the principal amount, the portion of the principal amount of such Debt Securities which will be payable upon declaration of acceleration of the maturity thereof pursuant to the Indenture; (xi) if other than U.S. dollars, the coin, currency or currencies in which payment of the principal of (and premium, if any) and interest, if any, on such Debt Securities will be payable; (xii) if the principal of (and premium, if any) or interest, if any, on such Debt Securities are to be payable, at the election of the Company or a Holder, in a coin, currency or currencies other than that in which the Debt Securities are stated to be payable, the period or periods within which, and the terms and conditions upon which, such election may be made; (xiii) if the amount of payments of principal of (and premium, if any) or interest, if any, on such Debt Securities may be determined with reference to an index based on a coin or currency or currencies other than that in which the Debt Securities are stated to be payable, the manner in which such amount will be determined; (xiv) any additional Events of Default provided for with respect to such Debt Securities; (xv) provisions, if any, for the defeasance of such Debt Securities; (xvi) whether such Debt Securities are to be issued in registered or bearer form, with or without coupons; (xvii) whether such Debt Securities are to be issued in whole or in part in the form of one or more Global Securities and, if so, the identity of the Depositary (as defined below) for such Global Security or Securities; (xviii) if any Debt Securities of the series are to be issued as Bearer Securities or as one or more Global Debt Securities 4 representing individual Bearer Securities of the series; and (xix) any other terms of such Debt Securities not inconsistent with the provisions of the Indenture. (Section 2.02) If Bearer Securities are issued, certain special considerations applicable to such Bearer Securities, including limitations on their issuance, will be described in the Prospectus Supplement relating thereto. If the principal of (and premium, if any) or any interest on Debt Securities of any series are payable in a foreign or composite currency, the restrictions, elections, federal income tax consequences, specific terms and other information with respect to such Debt Securities and such currency will be described in the Prospectus Supplement relating thereto. One or more series of Debt Securities may be sold at a discount below their stated principal amount, bearing no interest or interest at a rate that at the time of issuance is below market rates ("Original Issue Discount Securities"). Unless otherwise provided in the applicable Prospectus Supplement, the principal of (and premium, if any) and any interest on Registered Securities will be payable at the corporate trust office of the Trustee at Broad and Walnut Streets, Philadelphia, Pennsylvania 19019; provided, however, that payment of interest on Registered Securities may be made at the option of the Company by check mailed to the Registered Holders thereof or, if so provided in the applicable Prospectus Supplement, at the option of the Registered Holder by wire transfer to an account designated by such Registered Holder. Provisions with respect to the payment of principal of (and premium, if any) and any interest on Bearer Securities or Global Securities will be set forth in the applicable Prospectus Supplement. (Sections 2.02 and 4.01) Unless otherwise provided in the applicable Prospectus Supplement, Registered Securities may be transferred or exchanged at the office or agency maintained by the Company for such purpose, subject to the limitations provided in the Indenture, without the payment of any service charge, other than any tax or governmental charge payable in connection therewith. (Section 2.05) Bearer Securities will be transferable by delivery. Provisions with respect to the exchange of Bearer Securities will be described in the applicable Prospectus Supplement. All moneys paid by the Company to the Trustee for the payment of principal of (and premium, if any) or any interest on any Debt Security that remains unclaimed at the end of two years after such principal, premium or interest shall have become due and payable will be repaid to the Company on demand, and the Registered Holder of such Debt Security or any coupon appertaining thereto will thereafter look only to the Company for payment thereof. (Section 12.05) GLOBAL SECURITIES The Debt Securities of a series may be issued in whole or in part in the form of one or more Global Securities that will be deposited with, or on behalf of, a depositary (the "Depositary") identified in the Prospectus Supplement relating to such series. Global Securities may be issued in either registered or bearer form and in either temporary or definitive form. Unless and until it is exchanged in whole or in part for individual Debt Securities, a Global Security may not be transferred except as a whole by the Depositary for such Global Security to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor of such Depositary or a nominee of such successor. (Sections 2.03 and 2.05) The specific terms of the depositary arrangement with respect to any Debt Securities of a series will be described in the Prospectus Supplement relating to such series. The Company anticipates that the following provisions will apply to all depositary arrangements. Upon the issuance of a Global Security, the Depositary for such Global Security will credit, on its book-entry registration and transfer system, the respective principal (or, if the amount of principal payable is 5 determined by reference to an index (a "Principal Indexed Security"), face) amounts of the individual Debt Securities represented by such Global Security to the accounts of institutions that have accounts with such Depositary ("participants"). The accounts to be credited shall be designated by the underwriters of such Debt Securities or, if such Debt Securities are offered and sold directly by the Company or through one or more agents, by the Company or such agent or agents. Ownership of beneficial interests in a Global Security will be limited to participants or persons that may hold beneficial interests through participants. Ownership of beneficial interests in a Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary for such Global Security (with respect to participants' interests) and by participants or persons that hold through participants (with respect to beneficial owners' interests). The laws of some states require that certain purchasers of securities take physical delivery of such securities. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Security. So long as the Depositary for a Global Security, or its nominee, is the owner of such Global Security, such Depositary or such nominee, as the case may be, will be considered the Holder of the individual Debt Securities represented by such Global Security for all purposes under the Indenture governing such Debt Securities. Except as set forth below, owners of beneficial interests in a Global Security will not be entitled to have any of the individual Debt Securities represented by such Global Security registered in their names, will not receive or be entitled to receive physical delivery of any such Debt Securities and will not be considered the Holders thereof under the Indenture governing such Debt Securities. Subject to the restrictions discussed under "Limitations on Issuance of Bearer Securities" below, payments of principal of (and premium, if any) and any interest on the Debt Securities represented by a Global Security will be made to the Depositary or its nominee, as the case may be, as the Holder of such Global Security. None of the Company, the Trustee, any paying agent or transfer agent for such Debt Securities will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in such Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. (Section 8.03) The Company expects that the Depositary for Debt Securities of a series, upon receipt of any payment of principal of (and premium, if any) or interest on a definitive Global Security representing any of such Debt Securities, will credit immediately participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal (or, in the case of a Principal Indexed Security, face) amount of such Global Security as shown on the records of such Depositary. The Company also expects that payments by participants to owners of beneficial interests in such Global Security held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such participants. Receipt by owners of beneficial interests in a temporary Global Security of payments of principal of (and premium, if any) or interest on such Global Security will be subject to the restrictions discussed under "Limitations on Issuance of Bearer Securities" below. If a Depositary of Debt Securities of a series is at any time unwilling or unable to continue as Depositary and a successor Depositary is not appointed by the Company within ninety days, the Company will issue individual Debt Securities of such series in exchange for the Global Security or Securities representing such Debt Securities. In addition, the Company may at any time and in its sole discretion determine not to have any Debt Securities of a series represented by one or more Global Securities and, in such event, will issue individual Debt Securities of such series in exchange for the Global Security or Securities representing such series of Debt Securities. (Section 2.05) Further, if the Company so specifies with respect to the Debt Securities of a series, an owner of a beneficial interest in a Global Security representing Debt Securities of such series may, on terms acceptable to the Company and the Depositary for such Global Security, receive individual Debt Securities in exchange for such beneficial interest. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery of individual Debt Securities of the series represented by such Global Security 6 equal in principal (or, in the case of a Principal Indexed Security, face) amount to such beneficial interest and to have such Debt Securities registered in its name (if the Debt Securities of such series are issuable as Registered Securities). Individual Debt Securities of such series so issued will be issued (a) in registered form in authorized denominations if the Debt Securities of such series are issuable as Registered Securities, (b) in bearer form in authorized denominations, with or without coupons attached, if the Debt Securities of such series are issuable as Bearer Securities or (c) as either Registered or Bearer Securities, if the Debt Securities of such series are issuable in either form (Section 2.05). See, however, "Limitations on Issuance of Bearer Securities" below for a description of certain restrictions on the issuance of individual Bearer Securities in exchange for beneficial interests in a Global Security. CERTAIN COVENANTS OF THE COMPANY UNDER THE INDENTURE The Indenture contains certain covenants described below which are applicable to the Company with respect to any and all series of Debt Securities issued thereunder. Specific covenants, if any, peculiar to a particular series of Debt Securities to be offered hereby will be described in the Prospectus Supplement relating thereto. The Section 4.11 Covenant. The Company has agreed that (A) after the date of the Indenture neither the Company nor any Restricted Subsidiary will create, incur or assume any Real Property Mortgage, other than an Excepted Mortgage, as security for Indebtedness of the Company or any subsidiary unless the Debt Securities are equally and ratably secured with such Indebtedness, and (B) if any Negative Pledge Mortgage is created, incurred or assumed by the Company or any Restricted Subsidiary, the Company will, unless the "Section 4.11 Ratio" is satisfied, if required by the Trustee, within 60 days deliver First Mortgages on parcels of Real Property having a net book value of at least 125% of the then unpaid principal amount of Debt Securities. The "Section 4.11 Ratio" is satisfied if, after giving effect to the delivery of a Negative Pledge Mortgage, the sum of (1) the unpaid principal amount of all Indebtedness of the Company secured by Real Property Mortgages executed and delivered or assumed after December 15, 1977 (other than those Excepted Mortgages listed in clauses (ii), (iii), (iv) and (v) of the definition of Excepted Mortgage set forth below) and (2) the unpaid principal amount of Funded Debt of Restricted Subsidiaries incurred after December 15, 1977, does not exceed the greater of $250,000,000 or 15% of Consolidated Capitalization. (Section 4.11) The term "Consolidated Capitalization" means the total assets of the Company and its Restricted Subsidiaries determined on a consolidated basis (but exclusive of investments in, and loans and advances to, Unrestricted Subsidiaries) less the total current liabilities of the Company and its Restricted Subsidiaries determined on a consolidated basis. (Section 1.01) The term "Excepted Mortgage" means any Real Property Mortgage which: (i) secures Negative Pledge Debt; (ii) is assumed or given in favor of the seller of Real Property when the Company or any Restricted Subsidiary (or any predecessor thereof) acquires (or acquired, in the case of such a predecessor) the Real Property; (iii) must be created, incurred or assumed to permit the Company or any Restricted Subsidiary to perform or comply with any contract or subcontract made by it with, or at the request of, the United States of America, the District of Columbia, any state or territory of the United States of America, any political subdivision thereof, or any agency, department or instrumentality of any thereof; (iv) is a "Refunding Mortgage", that is, it secures Indebtedness ("Refunding Indebtedness") created, incurred or assumed in connection with any extension, renewal, replacement or refunding of any Indebtedness ("Refunded Indebtedness") secured by any Real Property Mortgage; provided that the Refunding Indebtedness shall not exceed the Refunded Indebtedness and that the Refunding Mortgage shall not create a mortgage on any Real Property other than that which secured the Refunded Indebtedness; 7 (v) is a "Replacement Mortgage", that is, it is given in replacement of another Real Property Mortgage ("Replaced Mortgage") to secure the same Indebtedness; provided that the net book value of the Real Property covered by the Replacement Mortgage does not exceed the net book value of the Real Property covered by the Replaced Mortgage; or (vi) secures Indebtedness (other than Indebtedness secured by an Excepted Mortgage described under any other clause of this definition of "Excepted Mortgage") which is created, incurred or assumed subsequent to December 15, 1977 if, immediately after giving effect thereto, the Section 4.11 Ratio is satisfied. (Section 4.11) The term "First Mortgages" means mortgages in recordable form securing the Debt Securities and naming the Trustee as mortgagee, beneficiary, grantee or secured party. First Mortgages shall be in form reasonably acceptable to the Trustee and shall afford a first lien (except for encumbrances permitted by the Indenture) on Real Property. At all times when First Mortgages are to be delivered to or held by the Trustee pursuant to the Indenture, no less than 50% of the net book value of the Real Property subject to such First Mortgages shall be attributable to Real Property consisting of land, and buildings and improvements located on land, owned in fee simple by the Company and/or its subsidiaries, and up to 50% of the net book value of the Real Property subject to such First Mortgages may be attributable to other Real Property. (Section 1.01) The term "Funded Debt" means Indebtedness, whether secured or unsecured, if such Indebtedness by its terms matures at, or is extendable or renewable at the option of the obligor to, a date more than 12 months after the date of determination of such Indebtedness. (Section 1.01) The term "Funded Debt of Restricted Subsidiaries" means, at the date of determination, the aggregate of Funded Debt of all Restricted Subsidiaries other than Funded Debt: (a) of any Restricted Subsidiary which is a guarantor of the Debt Securities ("Guarantor")*, pursuant to a guaranty delivered to the Trustee on or prior to such date of determination, provided such Funded Debt is not secured by a Real Property Mortgage; (b) which constitutes subordinated debt of Restricted Subsidiaries which, if guaranteed by the Company or any Guarantor, is guaranteed solely pursuant to a subordinated guaranty; or (c) of Restricted Subsidiaries which have been acquired by the Company after December 15, 1977, provided that such Funded Debt (i) is not guaranteed by the Company or any Guarantor, (ii) is guaranteed pursuant to a subordinated guaranty, or (iii) is Funded Debt of a Restricted Subsidiary which was acquired by the Company not more than 60 days prior to such date of determination. (Section 1.01) The term "Indebtedness" means any and all obligations (other than obligations of the Company to any Restricted Subsidiary or of any Restricted Subsidiary to the Company or to any other Restricted Subsidiary and other than deferred income taxes, security deposits by lessees and interim loans for construction) incurred either for money borrowed or in connection with the acquisition of any or all stock or assets of a corporation or other entity (whether by purchase, merger or otherwise). (Section 1.01) The term "Lease" means an original lease, a sublease or any lease under and subsequent to a sublease. (Section 1.01) The term "Mortgages" shall mean mortgages, deeds of trust, deeds to secure debt and other similar instruments pursuant to which a lien on Real Property is created in favor of, or title to Real Property is held by or transferred to a Person for the benefit of, a Person as security for Indebtedness. (Section 1.01) The term "Negative Pledge Debt" means Indebtedness of the Company or any Restricted Subsidiary which (a) is not secured by a Real Property Mortgage on the date of the Indenture or on the date of issuance - - -------- * The Company is not obligated to cause any Restricted Subsidiary to become a Guarantor, and does not presently intend to do so. 8 of such Indebtedness, and (b) is issued pursuant to an instrument which requires the Company, on the occurrence or nonoccurrence of an event specified therein, to secure such Indebtedness with a Real Property Mortgage. (Section 4.11) The term "Negative Pledge Mortgage" means any Real Property Mortgage delivered to secure Negative Pledge Debt pursuant to one of the requirements referred to in the definition of Negative Pledge Debt. (Section 4.11) The term "Real Property" means land, Leases, buildings and improvements on owned or leased land or leased premises, either owned in fee simple or leased by the Company or one of its subsidiaries. (Section 1.01) The term "Real Property Mortgage" shall mean a Mortgage upon or affecting Real Property. (Section 1.01) The term "Restricted Subsidiary" means any subsidiary which has not been designated as an Unrestricted Subsidiary by the Company. The Company may designate an Unrestricted Subsidiary as a Restricted Subsidiary at any time so long as such subsidiary has not been a Restricted Subsidiary within 12 months prior to such designation as a Restricted Subsidiary; provided, however, that such change of designation does not result in an Event of Default under the Indenture or an event which after notice or lapse of time, or both, would constitute an Event of Default under the Indenture. (Section 1.01) The term "Unrestricted Subsidiary" means any subsidiary which has been designated an Unrestricted Subsidiary by the Company. The Company may designate a Restricted Subsidiary as an Unrestricted Subsidiary at any time so long as (i) such subsidiary has not been an Unrestricted Subsidiary within 12 months prior to such designation as an Unrestricted Subsidiary, (ii) such change of designation does not result in an Event of Default under the Indenture or an event which after notice or lapse of time, or both, would constitute an Event of Default under the Indenture, and (iii) such subsidiary does not own any real property in the United States which is primarily used for the operation of a McDonald's restaurant. (Section 1.01) Other Covenants. The Indenture contains certain other covenants applicable to all series of Debt Securities issued thereunder, including covenants respecting the payment of taxes, maintenance of properties and other matters. (Article Four) MODIFICATION OF THE INDENTURE The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than 66 2/3% in principal amount of the Outstanding Debt Securities of all series issued under the Indenture which are affected by the modification or amendment (voting as one class), to execute supplemental indentures modifying the Indenture or any supplemental indenture, provided that, without the consent of all Holders of then Outstanding Debt Securities affected, no such modification shall extend the fixed maturity of any Debt Securities, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, or reduce any premium payable upon redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon acceleration of the Stated Maturity thereof, or change the aforesaid percentage of Debt Securities, the consent of Holders of which will be required for any such modification. (Section 10.02) Generally, the principal amount of the Debt Securities that is deemed "Outstanding" is the principal amount thereof, except (a) as to Original Issue Discount Securities, it is the portion of the principal amount thereof that then would be due and payable upon an acceleration of the Stated Maturity thereof pursuant to an Event of Default; and (b) as to Debt Securities denominated in a currency other than U.S. dollars, it is the amount of U.S. dollars that could be obtained for such principal amount on the basis of the spot rate of exchange for purchasing U.S. dollars with such currency at or about the date of determination. (Section 1.01) 9 EVENTS OF DEFAULT The Indenture defines an Event of Default with respect to any series of Debt Securities as being any one of the following events: (a) default for 30 days in any payment of interest on such series; (b) default in any payment of principal of (and premium, if any, on) such series when due; (c) default in the payment of any sinking fund installment when due; (d) default in the performance of a particular covenant applicable to that series after appropriate notice and opportunity to cure such default, if any; (e) default for 60 days, after appropriate notice, in the performance of any other covenants in the Indenture (other than the Section 4.11 covenant and any other covenant included in the Indenture solely for the benefit of a series of Debt Securities other than that series), provided that such default shall not be an Event of Default if it cannot with due diligence be cured within such 60-day period due to causes beyond the control of the Company, unless the Company shall fail to proceed promptly to cure such default and thereafter prosecute the curing of such default with diligence and continuity; (f) default for 120 days after appropriate notice in the performance of the Section 4.11 covenant; (g) a default under any other indenture or instrument (including an Event of Default with respect to a series of Debt Securities other than that series) under which the Company has outstanding at the date of such default an aggregate principal amount of Indebtedness in excess of 15% of Consolidated Capitalization, provided that such Indebtedness shall have been accelerated so that such Indebtedness shall be or become due and payable prior to the date on which the same would otherwise have become due and payable; (h) default in the payment at the maturity thereof of an aggregate principal amount of Indebtedness (including such a default with respect to a series of Debt Securities other than that series) in excess of 15% of Consolidated Capitalization; or (i) certain events of bankruptcy, insolvency or reorganization. An Event of Default with respect to a particular series of Debt Securities issued under the Indenture does not necessarily constitute an Event of Default with respect to any other series of Debt Securities issued thereunder. In case an Event of Default under clause (a), (b), (c) or (d) shall occur and be continuing with respect to any series of Debt Securities, the Trustee or the Holders of not less than 25% in aggregate principal amount of Debt Securities then Outstanding of such series may declare the entire principal (or, if the Debt Securities of such series are Original Issue Discount Securities, the portion of the principal amount specified in the terms of such series) of such series to be due and payable. In case an Event of Default under clause (e), (f), (g), (h) or (i) shall occur and be continuing, the Trustee or Holders of not less than 25% in aggregate principal amount of all the Outstanding Debt Securities may declare the entire principal (or, if any Debt Securities are Original Issue Discount Securities, the portion of the principal amount specified in the terms thereof) of Outstanding Debt Securities of all series to be due and payable. Any Event of Default with respect to a particular series of Debt Securities (or of all the Debt Securities, as the case may be) may be waived by the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of such series (or of all the Outstanding Debt Securities, as the case may be), except in each case a failure to pay principal or premium, if any, or interest on such Debt Securities. (Section 6.01; Section 6.06) The Indenture requires the Company to file with the Trustee an Officers' Certificate annually as to knowledge of any default under the terms of the Indenture. (Section 4.06) The Indenture provides that the Trustee may withhold notice to the Holders of the Debt Securities of any default (except in payment of principal or premium, if any, or interest) if the Trustee considers it in the interest of the Holders of the Debt Securities to do so. (Section 6.07) Subject to the provisions of the Indenture relating to the duties of the Trustee, the Indenture provides that the Trustee shall be under no obligation to exercise any of its rights or powers under the Indenture at the request, order or direction of the Holders of the Debt Securities unless such Holders shall have offered to the Trustee reasonable indemnity. (Sections 6.04, 7.01 and 7.02) Subject to such provisions regarding indemnification of and certain other rights of the Trustee, the Indenture provides that the Holders of a majority (voting as one class) in principal amount of the Outstanding Debt Securities of any or all series affected will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. (Section 6.06) The Indenture provides that notwithstanding any other provisions thereof, the right of any Holder to receive 10 payment of the principal of (and premium, if any) and interest on the Debt Securities or to institute suit for the enforcement thereof shall not be impaired or affected without such Holder's consent. (Section 6.04) DEFEASANCE Unless otherwise provided in the Prospectus Supplement with respect to any series of Debt Securities, the Company, at its option, (a) will be discharged from any and all obligations in respect of such Debt Securities (except in each case for certain obligations to register the transfer or exchange of such Debt Securities, replace stolen, lost or mutilated Debt Securities, maintain paying agencies and hold moneys for payment in trust) or (b) need not comply with certain restrictive covenants of the Indenture (including those described under "Certain Covenants of the Company Under the Indenture" above) and will not be limited by any restrictions with respect to merger, consolidation or sales of assets, in each case if the Company deposits with the Trustee, in trust, (x) money or (y) U.S. Government Obligations or a combination of (x) and (y) which, through the payment of interest thereon and principal thereof in accordance with their terms, will provide money in an amount sufficient to pay all the principal (including any mandatory sinking fund payments) of, if any, and premium, if any, and interest on, such Debt Securities on the dates such payments are due in accordance with the terms of such series. (Section 12.02) In order to avail itself of either of the foregoing options, the Company must provide to the Trustee an opinion of counsel or a ruling from, or published by, the Internal Revenue Service, to the effect that Holders of the Debt Securities of such series will not recognize income, gain or loss for Federal income tax purposes as a result of the Company's exercise of its option and will be subject to Federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised. (Section 12.02) "U.S. Government Obligations" means generally (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuer thereof. (Section 1.01) In addition, the Company can also obtain a discharge under the Indenture with respect to all the Debt Securities of a series by depositing with the Trustee, in trust, funds sufficient to pay at maturity or upon redemption all of the Debt Securities of such series, provided that all of the Debt Securities of such series are by their terms to become due and payable within one year or are to be called for redemption within one year. No such opinion of counsel or ruling from the Internal Revenue Service is required with respect to a discharge pursuant to the immediately preceding sentence. In the event of any discharge of Debt Securities pursuant to the terms of the Indenture described above, the Holders of such Debt Securities will thereafter be able to look solely to such trust fund, and not to the Company, for payments of principal, premium, if any, and interest, if any. (Sections 12.01 and 12.02) CONCERNING THE TRUSTEE The Company, its subsidiaries and affiliates maintain banking relationships (including the extension of credit) in the ordinary course of business with the Trustee. LIMITATIONS ON ISSUANCE OF BEARER SECURITIES In compliance with U.S. federal income tax laws and regulations, the Company and any underwriter, agent or dealer participating in the offering of any Bearer Security will agree, in connection with the original issuance of such Bearer Security and during the period of 40 days after the issue date of such Bearer Security, not to offer, sell or deliver such Bearer Security, directly or indirectly, to a U.S. Person or to any person within the United States, except to the extent permitted under U.S. Treasury regulations. Bearer Securities and any coupons attached thereto will bear a legend to the following effect: "Any United States Person who holds this obligation will be subject to limitations under the United States income 11 tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code." The sections referred to in the legend provide that, with certain exceptions, a United States taxpayer that holds Bearer Securities will not be allowed to deduct any loss, and will not be eligible for capital gain treatment with respect to any gain, realized on a sale, exchange, redemption or other disposition of such Bearer Securities. As used herein, "United States" means the United States of America and its possessions, and "U.S. Person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States, or an estate or trust the income of which is subject to United States federal income taxation regardless of its source. Pending the availability of a definitive Global Security in bearer form or individual Bearer Securities, as the case may be, Debt Securities that are issuable as Bearer Securities may initially be represented by a single temporary Global Security in bearer form, without interest coupons, to be deposited with a common depositary in London for Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System ("Euroclear"), and Cedel Bank, societe anonyme ("Cedel") for credit to the accounts designated by or on behalf of the purchasers thereof. Following the availability of a definitive Global Security in bearer form, without coupons attached, or individual Bearer Securities, with or without coupons, and subject to any further limitations described in the applicable Prospectus Supplement, the temporary Global Security will be exchangeable for interests in such definitive Global Security or for such individual Bearer Securities, respectively, only upon receipt of a Certificate of Non-U.S. Beneficial Ownership. A "Certificate of Non-U.S. Beneficial Ownership" is a certificate to the effect that a beneficial interest in a temporary Global Security is owned by a person that is not a U.S. Person or is owned by or through a financial institution in compliance with applicable U.S. Treasury regulations. No Bearer Security will be delivered in or to the United States. If so specified in the applicable Prospectus Supplement, interest on a temporary Global Security will be paid to each of Euroclear and Cedel with respect to that portion of such temporary Global Security held for its account, but only upon receipt as of the relevant interest payment date of a Certificate of Non-U.S. Beneficial Ownership. PLAN OF DISTRIBUTION The Company may sell Debt Securities in any of three ways: (i) through underwriters or dealers; (ii) directly to one or more purchasers; or (iii) through agents. The applicable Prospectus Supplement will set forth the terms of the offering of any Debt Securities, including the names of any underwriters or agents, the purchase price of such Debt Securities and the net proceeds to the Company from such sale, any underwriting discounts and other items constituting underwriters' compensation or agents' commission, any initial public offering price, any discounts or concessions allowed or reallowed or paid to dealers, any securities exchanges on which such Debt Securities may be listed and any restrictions on the sale and delivery of Debt Securities in bearer form. If underwriters or dealers are used in the sale, Debt Securities will be acquired by such underwriters or dealers for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Such Debt Securities may be offered to the public either through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate. Unless otherwise set forth in the applicable Prospectus Supplement, the obligations of the underwriters to purchase such Debt Securities will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all of such Debt Securities if any of such Debt Securities are purchased. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time. Debt Securities may also be sold directly by the Company or through agents designated by the Company from time to time. Any agent involved in the offer or sale of Debt Securities will be named, and any 12 commissions payable by the Company to such agent will be set forth, in the applicable Prospectus Supplement. Unless otherwise indicated in the applicable Prospectus Supplement, any such agent will act on a best efforts basis for the period of its appointment. Any underwriters, dealers or agents participating in the distribution of Debt Securities may be deemed to be underwriters and any discounts or commissions received by them on the sale or resale of Debt Securities may be deemed to be underwriting discounts and commissions under the Securities Act. Agents and underwriters may be entitled under agreements entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under the Securities Act, or to contribution with respect to payments that the agents or underwriters may be required to make in respect of such liabilities. Agents and underwriters may be customers of, engage in transactions with, or perform services for, the Company or its subsidiaries or affiliates in the ordinary course of business. If so indicated in the Prospectus Supplement, the Company will authorize agents and underwriters to solicit offers by certain institutions to purchase the Debt Securities being offered hereby from the Company at the public offering price set forth in the Prospectus Supplement pursuant to Delayed Delivery Contracts ("Contracts") providing for payment and delivery on the date or dates stated in the Prospectus Supplement. Each Contract will be for an amount not less than, and unless the Company otherwise agrees the aggregate principal (or face) amount of Debt Securities sold pursuant to Contracts shall be not less nor more than, the respective amounts stated in the Prospectus Supplement. Institutions with which Contracts, when authorized, may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions, but shall in all cases be subject to the approval of the Company. Contracts will not be subject to any conditions except that (i) the purchase by an institution of the Debt Securities covered by its Contract shall not at the time of delivery be prohibited under the laws of any jurisdiction in the United States to which such institution is subject, and (ii) if the Debt Securities being offered hereby are being sold to underwriters, the Company shall have sold to such underwriters the total principal (or face) amount of such Debt Securities less the principal amount thereof covered by the Contracts. LEGAL MATTERS The legality of the Debt Securities offered hereby will be passed upon for the Company by Shelby Yastrow, Senior Vice President, General Counsel and Secretary of the Company. Mr. Yastrow is a full-time employee of the Company and owns, and holds options to purchase, shares of the Company's Common Stock. Certain legal matters will be passed on for any underwriters or agents by Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York 10006. From time to time Cleary, Gottlieb, Steen & Hamilton provides legal services to the Company. EXPERTS The consolidated financial statements of the Company included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein, and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 13 - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTA- TIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY ACCOMPANYING PRICING SUPPLEMENT) OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHO- RIZED. THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY ACCOMPANYING PRICING SUPPLE- MENT) AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY PRICING SUPPLEMENT) OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SUCH SECURITIES IN ANY JURISDIC- TION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT (IN- CLUDING ANY ACCOMPANYING PRICING SUPPLEMENT) NOR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SINCE ITS DATE. ---------------- TABLE OF CONTENTS
PAGE ---- PROSPECTUS SUPPLEMENT Important Currency Information............................................. S-2 Description of Registered Notes............................................ S-2 Currency Risks............................................................. S-16 United States Tax Considerations........................................... S-18 Plan of Distribution....................................................... S-23 PROSPECTUS Available Information...................................................... 2 Incorporation of Certain Documents By Reference............................ 2 McDonald's Corporation..................................................... 3 Use of Proceeds............................................................ 3 Ratio of Earnings to Fixed Charges......................................... 3 Description of Debt Securities............................................. 4 Limitations on Issuance of Bearer Securities............................... 11 Plan of Distribution....................................................... 12 Legal Matters.............................................................. 13 Experts.................................................................... 13
- - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- $584,662,000 MCDONALD'S CORPORATION MEDIUM-TERM NOTES DUE FROM NINE MONTHS TO 60 YEARS FROM DATE OF ISSUE [LOGO] MCDONALDS ------------------ PROSPECTUS SUPPLEMENT ------------------ MERRILL LYNCH & CO. GOLDMAN, SACHS & CO. J.P. MORGAN SECURITIES INC. MORGAN STANLEY & CO. INCORPORATED PAINEWEBBER INCORPORATED SALOMON BROTHERS INC JULY , 1995 - - ------------------------------------------------------------------------------- - - ------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth all expenses in connection with the issuance and distribution of the Debt Securities being registered. All the amounts are estimated, except the Securities and Exchange Commission Registration fee. Securities and Exchange Commission Registration fee............. $172,414 Fees and expenses of accountants................................ 20,000 Fees and expenses of counsel.................................... 60,000 Blue Sky fees and expenses...................................... 15,000 Fees and expenses of Trustee and agents......................... 20,000 Printing expenses............................................... 50,000 Rating Agency fees.............................................. 70,000 Miscellaneous................................................... 17,586 -------- Total......................................................... $425,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law (the "GCL") provides for indemnification of directors and officers against any legal liability (other than liability arising from derivative suits) if the director or officer acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation. In criminal actions, the director or officer must also have had no reasonable cause to believe that his or her conduct was unlawful. A corporation may indemnify a director or officer in a derivative suit if the director or officer acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation unless the director or officer is found liable to the corporation (in which case a court may permit indemnity for such director or officer to the extent it deems proper). Article V of the Company's By-Laws provides that the Company shall indemnify and hold harmless each director and officer to the fullest extent permitted under the GCL, provided that the person seeking indemnification has met the applicable standard of conduct set forth in the By-Laws. Such indemnification could cover all expenses as well as liabilities and losses incurred by directors and officers. The Board of Directors has the authority by resolution to provide for other indemnification of directors and officers as it deems appropriate. The By-Laws further provide that the Company may maintain insurance at its expense to protect any director or officer against any expenses, liabilities or losses, whether or not the Company would have the power to indemnify such director or officer against such expenses, liabilities or losses under the GCL. Pursuant to this provision, the Company maintains insurance against any liability incurred by its directors and officers in defense of any action in which they are made parties by reason of their positions as directors and officers. ITEM 16. LIST OF EXHIBITS.
ITEM 601 OF REGULATION S-K EXHIBIT REFERENCE NUMBER ----------------- 1(a) Form of Underwriting Agreement.* (b) Form of U.S. Distribution Agreement. (c) Form of Euro Distribution Agreement.
II-1
ITEM 601 OF REGULATION S-K EXHIBIT REFERENCE NUMBER ----------------- 4(a) Form of Indenture dated as of March 1, 1987 between McDonald's Corporation and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as Trustee.** (b) Form of Supplemental Indenture No. 22 between McDonald's Corporation and First Fidelity Bank, National Association, as Trustee (Exhibits A through H to Supplemental Indenture No. 22 are included as Exhibits 4(c) through (j), respectively, of this Registration Statement). (c) Form of Series E Fixed Rate Registered Note. (d) Form of Series E Floating Rate Registered Note. (e) Form of Fixed Rate Temporary Global Note representing Medium-Term Notes, Series E. (f) Form of Floating Rate Temporary Global Note representing Medium-Term Notes, Series E. (g) Form of Fixed Rate Permanent Global Note representing Medium-Term Notes, Series E. (h) Form of Floating Rate Permanent Global Note representing Medium Term Notes, Series E. (i) Form of Series E Fixed Rate Bearer Note. (j) Form of Series E Floating Rate Bearer Note. (k) Form of Fixed/Floating Rate Note.** (l) Form of Sinking Fund Note.** (m) Form of Original Issue Discount Note.** (n) Form of Zero Coupon Note.** 5 Opinion and consent of Shelby Yastrow, Senior Vice President, General Counsel and Secretary of the Company. 12 Statement re: Computation of Ratios of Earnings to Fixed Charges.*** 23(a) Consent of Ernst & Young LLP, independent auditors. 23(b) Consent of Shelby Yastrow, Senior Vice President, General Counsel and Secretary of the Company, is included in Exhibit 5. 24 Powers of Attorney (set forth on page II-4 of this Registration Statement). 25 Statement of Eligibility and Qualification on Form T-1 of First Fidelity Bank, National Association, as Trustee.
- - -------- * Exhibit 1(a) was previously filed as Exhibit 1 to the Company's Registration Statement on Form S-3 (File No. 33-50025) and is incorporated herein by reference. **Exhibits 4(a), 4(k), 4(l), 4(m), and 4(n) above were previously filed as Exhibits 4(a), 4(b), 4(c), 4(d), and 4(e), respectively, to the Company's Registration Statement on Form S-3 (File No. 33-12364) and are incorporated herein by reference. ***Exhibit 12 above was previously filed as Exhibit 12 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 and is incorporated herein by reference. ITEM 17. UNDERTAKINGS. The undersigned Registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) II-2 of the Securities Act of 1933 if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that the undertakings set forth in clauses (i) and (ii) above do not apply if the information required to be included in a post- effective amendment by those clauses is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (b) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (d) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual reports pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (e) That, insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions referred to in Item 15 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3, AND HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE VILLAGE OF OAK BROOK, AND STATE OF ILLINOIS, ON THE 13TH DAY OF JULY. McDONALD'S CORPORATION /s/ Jack M. Greenberg By___________________________________ Jack M. Greenberg Vice Chairman, Chief Financial Officer and Director KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jack M. Greenberg, Michael L. Conley, Shelby Yastrow and Carleton D. Pearl, and each of them, his true and lawful attorneys- in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities indicated and on the 13th day of July.
SIGNATURE TITLE --------- ----- /s/ Hall Adams, Jr. Director ___________________________________________ Hall Adams, Jr. /s/ Robert M. Beavers, Jr. Senior Vice President and Director ___________________________________________ Robert M. Beavers, Jr. /s/ James R. Cantalupo President and Chief Executive Officer-- ___________________________________________ McDonald's International and Director James R. Cantalupo /s/ Gordon C. Gray Director ___________________________________________ Gordon C. Gray /s/ Jack M. Greenberg Vice Chairman, Chief Financial Officer and ___________________________________________ Director Jack M. Greenberg
II-4
SIGNATURE TITLE --------- ----- /s/ Donald R. Keough Director ___________________________________________ Donald R. Keough /s/ Donald G. Lubin Director ___________________________________________ Donald G. Lubin /s/ Andrew J. McKenna Director ___________________________________________ Andrew J. McKenna /s/ Michael R. Quinlan Chairman, Chief Executive Officer and ___________________________________________ Director Michael R. Quinlan /s/ Edward H. Rensi President and Chief Executive Officer-- ___________________________________________ McDonald's U.S.A. and Director Edward H. Rensi /s/ Terry Savage Director ___________________________________________ Terry Savage /s/ Paul D. Schrage Senior Executive Vice President, Chief ___________________________________________ Marketing Officer and Director Paul D. Schrage /s/ Ballard F. Smith Director ___________________________________________ Ballard F. Smith /s/ Roger W. Stone Director ___________________________________________ Roger W. Stone /s/ Robert N. Thurston Director ___________________________________________ Robert N. Thurston /s/ Fred L. Turner Senior Chairman and Director ___________________________________________ Fred L. Turner /s/ B. Blair Vedder, Jr. Director ___________________________________________ B. Blair Vedder, Jr. /s/ Michael L. Conley Senior Vice President and Controller ___________________________________________ Michael L. Conley
II-5 EXHIBIT INDEX
PAGE EXHIBIT NO. ------- ---- 1(a) Form of Underwriting Agreement.* (b) Form of U.S. Distribution Agreement. (c) Form of Euro Distribution Agreement. 4(a) Form of Indenture dated as of March 1, 1987 between McDonald's Corporation and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as Trustee.** (b) Form of Supplemental Indenture No. 22 between McDonald's Corporation and First Fidelity Bank, National Association, as Trustee (Exhibits A through H to Supplemental Indenture No. 22 are included as Exhibits 4(c) through (j), respectively, of this Registration Statement). (c) Form of Series E Fixed Rate Registered Note. (d) Form of Series E Floating Rate Registered Note. (e) Form of Fixed Rate Temporary Global Note representing Medium- Term Notes, Series E. (f) Form of Floating Rate Temporary Global Note representing Medium-Term Notes, Series E. (g) Form of Fixed Rate Permanent Global Note representing Medium- Term Notes, Series E. (h) Form of Floating Rate Permanent Global Note representing Medium Term Notes, Series E. (i) Form of Series E Fixed Rate Bearer Note. (j) Form of Series E Floating Rate Bearer Note. (k) Form of Fixed/Floating Rate Note.** (l) Form of Sinking Fund Note.** (m) Form of Original Issue Discount Note.** (n) Form of Zero Coupon Note.** 5 Opinion and consent of Shelby Yastrow, Senior Vice President, General Counsel and Secretary of the Company. 12 Statement re: Computation of Ratios of Earnings to Fixed Charges.*** 23(a) Consent of Ernst & Young LLP, independent auditors. 23(b) Consent of Shelby Yastrow, Senior Vice President, General Counsel and Secretary of the Company, is included in Exhibit 5. 24 Powers of Attorney (set forth on page II-4 of this Registration Statement). 25 Statement of Eligibility and Qualification on Form T-1 of First Fidelity Bank, National Association, as Trustee.
- - -------- * Exhibit 1(a) was previously filed as Exhibit 1 to the Company's Registration Statement on Form S-3 (File No. 33-50025) and is incorporated herein by reference. ** Exhibits 4(a), 4(k), 4(l), 4(m) and 4(n) above were previously filed as Exhibits 4(a), 4(b), 4(c), 4(d) and 4(e), respectively, to the Company's Registration Statement on Form S-3 (File No. 33-12364) and are incorporated herein by reference. *** Exhibit 12 above was previously filed as Exhibit 12 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 and is incorporated herein by reference. EX-1.(B) 2 U.S. DISTRIBUTION AGREEMENT Exhibit 1(b) Draft of 7/5/95 McDonald's Corporation U.S. $584,662,000 Medium-Term Notes, Series E Due from Nine Months to 60 Years from Date of Issue U.S. DISTRIBUTION AGREEMENT _________________, 1995 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Merrill Lynch World Headuarters North Tower, World Financial Center 23rd Floor New York, New York 10281 Goldman Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260 Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas New York, New York 10020 PaineWebber Incorporated 1285 Avenue of the Americas New York, New York 10019 Salomon Brothers Inc Seven World Trade Center New York, New York 10048 Ladies and Gentlemen: McDonald's Corporation, a Delaware corporation (the "Company"), confirms its agreement with you with respect to the issue and sale by the Company of its Medium-Term Notes, Series E due from nine months to 60 years from date of issue having an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or its equivalent in foreign currencies or currency units, including European Currency Units (the "Notes"). The Notes are to be issued under an indenture dated as of March 1, 1987 between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association) (the "Trustee") and any indentures supplemental thereto (collectively, the "Indenture"), will be issued in fully registered definitive form in denominations of $100,000 and integral multiples of $1,000 in excess thereof (or in such other denominations as shall be provided in a supplement to the Basic Prospectus referred to below). Notes may bear interest at fixed or floating rates to be provided in a supplement to the Basic Prospectus referred to below, and may, whether or not bearing interest, be issued with original issue discount. The Notes may be issued in amounts denominated in United States dollars or in amounts denominated in foreign currencies or in the European Currency Unit or other composite currencies. References herein to amounts stated in United States dollars shall be deemed to refer to the equivalent amount of foreign currency or European Currency Units or other composite currency to the extent applicable. Subject to the terms and conditions stated herein and subject to the reservation by the Company of the right to sell Notes directly to investors on its own behalf or through other agents, dealers or underwriters, the Company hereby appoints each of you (individually as "Agent" and collectively the "Agents") as an agent for the purpose of soliciting offers to purchase the Notes from the Company by others and agrees that if and whenever the Company determines to sell Notes directly to an Agent as principal for resale to others it will enter into a Terms Agreement relating to such sale in accordance with the provisions of Section 2(b) hereof. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, each Agent agrees, severally but not jointly, to use its reasonable best efforts to solicit offers to purchase Notes upon terms acceptable to the Company at such times and in such amounts as the Company shall from time to time specify. In acting under this Agreement and in connection with the sale of any Notes by the Company (other than Notes sold to an Agent as principal pursuant to a Terms Agreement), each Agent is acting solely as agent of the Company and does not assume any obligation towards or relationship of agency or trust with any purchaser of the Notes. 1. Representations and Warranties. The Company represents and warrants ------------------------------ to and agrees with each Agent as follows: (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"), and has filed with the Securities and Exchange Commission (the "Commission") a registration statement on such Form (Registration No. 33-_____) and such registration statement has become effective, for the registration under the Securities Act of the offering of the Notes. Such registration statement, including the exhibits thereto, as amended at the date of the sale of any Notes, is hereinafter called the "Registration Statement". The Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the Company has duly authorized the issuance of the Notes. The Registration - 2 - Statement, as amended at the date of this Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act and complies in all other material respects with said Rule. The Company proposes to file with the Commission from time to time, pursuant to Rule 424(b) under the Securities Act, supplements to the prospectus relating to the Notes included in the Registration Statement, which will describe certain terms of the Notes, and prior to any such filing will advise each Agent of all further information (financial and other) with respect to the Company to be set forth therein. Such prospectus in the form in which it appears in the Registration Statement is called the "Basic Prospectus". The term "Prospectus" means the Basic Prospectus together with the prospectus supplement or supplements specifically relating to any Notes sold pursuant to this Agreement (a "Prospectus Supplement"), as filed with, or transmitted for filing with, the Commission pursuant to Rule 424 under the Securities Act. Any reference herein to the Registration Statement, Basic Prospectus or Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which have been filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the rules and regulations thereunder, (ii) each part of the Registration Statement (including the documents incorporated by reference therein) filed with the Commission pursuant to the Securities Act relating to the Notes, when such part became effective or was incorporated by reference into the Registration Statement, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations thereunder and (iv) the Registration Statement and the Prospectus do not contain and, as further amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except that the representations and warranties set forth in this Section l(b) do not apply to (a) that part of the Registration Statement that consists of the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of First Fidelity Bank, National Association, as Trustee under the Indenture, or (b) statements or omissions in the Registration Statement or the Prospectus based upon information furnished to the Company in writing by an Agent, relating to such Agent, expressly for use therein. - 3 - 2. Solicitations as Agent; Purchases as Principal. ---------------------------------------------- (a) Solicitations as Agent. On the basis of the representations and ---------------------- warranties herein contained, but subject to the terms and conditions herein set forth, each Agent will use its reasonable best efforts to solicit offers to purchase the Notes upon the terms and conditions set forth in the Prospectus as then amended or supplemented; provided, -------- however, that each Agent hereby represents and agrees that it will not ------- make any representations or use any information other than that set forth in the Prospectus (as then amended or supplemented) or solicit any offer to purchase the Notes other than by means of such Prospectus as then amended or supplemented. The Company reserves the right, in its sole discretion, to instruct the Agents to suspend at any time, for any period of time or permanently, the solicitation of offers to purchase the Notes. Upon receipt of notice from the Company, each Agent will forthwith suspend solicitations of offers to purchase Notes from the Company until such time as the Company has advised the Agents that such solicitation may be resumed. During the period of time that this Agreement is suspended the Company shall not be required to deliver any certificates, opinions or letters in accordance with Sections 3(i), (j) and (k); provided, however, that no Agent shall be required to -------- ------- resume soliciting offers to purchase Notes until the Company has delivered such certificates, opinions or letters as requested by such Agent if any of the events described in Section 3(i), (j) or (k) have occurred during the period of suspension. The Company agrees to pay each Agent, as consideration for the sale of any Notes resulting from a solicitation made by it, a commission in the form of a discount from the principal amount of each Note sold by the Company hereunder as a result of such solicitation. With respect to Notes with a term of nine months to 30 years, such commission will be equal to the following percentage of the principal amount of such Note: Term Commission Rate ---- --------------- From 9 months to less than one year 0.125% From one year to less than 18 months 0.150% From 18 months to less than 2 years 0.200% From 2 years to less than 3 years 0.250% From 3 years to less than 4 years 0.350% From 4 years to less than 5 years 0.450% From 5 years to less than 6 years 0.500% From 6 years to less than 7 years 0.550% From 7 years to less than 10 years 0.600% From 10 years to less than 20 years 0.625% From 20 years to 30 years 0.750% - 4 - and with respect to Notes with a term in excess of thirty years such commission will be negotiated between the Company and the applicable Agent at the time of sale. The Agents may reallow any portion of the commission payable pursuant hereto to dealers or purchasers in connection with the offer and sale of any Notes. The Agents are authorized to solicit offers to purchase Notes only in the minimum principal amount of $100,000 or any amount in excess thereof that is a whole multiple of $1,000 (or in such other minimum purchase amounts and multiples thereof as are described in a supplement to the Basic Prospectus). Each Agent shall communicate to the Company, orally or in writing, each offer to purchase Notes received by it as agent which in its judgment should be considered by the Company. The Company shall have the sole right to accept offers to purchase Notes and may reject any offer in whole or in part. Each Agent shall have the right to reject any offer to purchase Notes that it considers to be unacceptable, and any such rejection shall not be deemed a breach of its agreements contained herein. (b) Purchases as Principal. Each sale of Notes to an Agent as principal ---------------------- shall be made in accordance with the terms of this Agreement and a separate agreement which will provide for the sale of such Notes to such Agent and the purchase and re-offering thereof by such Agent. Each such separate agreement (which may initially be an oral agreement, to be subsequently confirmed in writing) is herein referred to as a "Terms Agreement". Unless the context otherwise requires, each reference contained herein to "this Agreement" shall be deemed to include any applicable Terms Agreement between the Company and an Agent. Each such Terms Agreement, whether oral or in writing, shall be with respect to such information (as applicable) as is specified in Exhibit A hereto. An Agent's commitment to purchase Notes pursuant to any Terms Agreement shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall specify the principal amount of Notes to be purchased pursuant thereto, the maturity date thereof, the price to be paid to the Company for such Notes, the time and place of delivery of and payment for such Notes (the "Settlement Date") and any other relevant terms. An Agent may utilize a selling or dealer group in connection with the resale of the Notes purchased. Such Terms Agreement shall also specify any requirements for officers' certificates, opinions of counsel and letters from the independent auditors of the Company pursuant to Sections 3 and 4 hereof. (c) Procedures. Each Agent and the Company agree to perform the respective ---------- duties and obligations specifically provided to be performed in the Medium-Term Notes Administrative Procedures (attached hereto as Exhibit B) (the "Procedures"), as amended from time to time. The Procedures may be amended only by written agreement of the Company and each Agent; provided that with respect to any single issuance of -------- Notes, the Procedures may be - 5 - modified by written agreement of the Company and the Agents soliciting the purchase of such Notes (or purchasing such Notes pursuant to a Terms Agreement). (d) Delivery. The documents required to be delivered by Section 4 of this -------- Agreement shall be delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel to the Agents, at One Liberty Plaza, New York, New York 10006, not later than 5:00 p.m. New York City time, on the date hereof, or at such other time and/or place as each Agent and the Company may agree upon in writing (the "Commencement Date"). 3. Agreements. The Company agrees with each Agent that: ---------- (a) Prior to the termination of the offering of the Notes pursuant to this Agreement, the Company will not file any amendment to the Registration Statement or any Prospectus Supplement relating to the Notes unless the Company has previously furnished to each Agent (or, in the case of Prospectus Supplements setting out only the interest rate, maturity and other terms of Notes ("Pricing Supplements"), the Agent that has solicited the applicable offer of Notes) a copy thereof for its review and will not file any such proposed amendment or supplement to which any Agent (or, in the case of Pricing Supplements, the Agent that has solicited the applicable offer of Notes) reasonably objects; provided, -------- however, that the foregoing requirement shall not apply to any of the ------- Company's periodic filings with the Commission required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act or to any Pricing Supplement applicable to Notes sold by the Company directly to investors on its own behalf; and provided further that -------- ------- without the consent of, but after consultation with, the Agents, including the furnishing of drafts thereof, the Company may file any such proposed amendment or Prospectus Supplement which in the opinion of its counsel it is required by law to file. Subject to the foregoing sentence, the Company will promptly cause each Prospectus Supplement to be mailed to the Commission for filing pursuant to Rule 424(b) or will promptly cause each Prospectus Supplement to be filed with the Commission pursuant to said Rule. The Company will promptly advise each Agent (i) of the filing of any amendment or supplement to the Basic Prospectus, (ii) of the filing and effectiveness of any amendment to the Registration Statement, (iii) of any request by the Commission for any amendment of the Registration Statement or any amendment of or supplement to the Basic Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (v) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. If the - 6 - Company files any amendment to the Registration Statement or any Prospectus Supplement, which filing does not require the consent of the Agents, the Company will provide each Agent with a copy of such document promptly after the filing thereof and no Agent shall be obligated to solicit offers for the purchase of Notes so long as it is not reasonably satisfied with such document. (b) If, at any time when a prospectus relating to the Notes is required to be delivered under the Securities Act, any event occurs or condition exists as a result of which the Registration Statement or the Prospectus as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if, in the opinion of the Company, it is necessary at any time to amend or supplement the Registration Statement or the Prospectus, as then amended or supplemented, to comply with the Securities Act, the Company will immediately notify each Agent to suspend solicitation of offers to purchase Notes and, if so notified by the Company, each Agent shall forthwith suspend such solicitation and cease using the Prospectus as then amended or supplemented; and if the Company shall decide to amend or supplement the Registration Statement or Prospectus as then amended or supplemented, it will so advise each Agent promptly by telephone (with confirmation in writing) and will prepare and cause to be filed promptly with the Commission an amendment or supplement to the Registration Statement or Prospectus as then amended or supplemented which will include a description of such facts or events and/or will correct such statement or omission or effect such compliance and will supply such amended or supplemented Prospectus to each Agent in such quantities as it may reasonably request; and, if such amendment or supplement and any documents, certificates and opinions furnished to an Agent pursuant to paragraph (f) below in connection with the preparation or filing of such amendment or supplement, are satisfactory in all respects to such Agent, upon the filing of such amendment or supplement with the Commission or effectiveness of an amendment to the Registration Statement such Agent will resume the solicitation of offers to purchase Notes hereunder. Notwithstanding any other provision of this Section 3(b), until the distribution of any Notes any Agent may own as principal has been completed, if any event occurs or condition exists as a result of which it is necessary to amend or supplement the Registration Statement or Prospectus to make the information therein comply with the Securities Act or complete or accurate in all material respects, the Company agrees to provide such Agent with immediate notice by telephone (with confirmation in writing) to cease sales of any Notes, and the Company will forthwith prepare and furnish, at its own expense, any amendments or supplements to the Registration Statement or Prospectus, satisfactory in all respects to such Agent, in such quantities as it may reasonably request. If such amendment or supplement and any documents, certificates and opinions furnished to an Agent pursuant to paragraph (f) below in connection with the preparation and filing of such amendment or supplement are satisfactory in all respects to such Agent, upon the filing of such amendment - 7 - or supplement to the Registration Statement or Prospectus such Agent may resume its resale of the Notes as principal. (c) As soon as practicable, the Company will make generally available to its security holders and to each Agent an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act, and, not later than 45 days after the end of the 12-month period beginning at the end of each fiscal quarter of the Company (other than the last fiscal quarter of any fiscal year) during which the effective date of any post-effective amendment to the Registration Statement occurs, not later than 90 days after the end of the fiscal year beginning at the end of each last fiscal quarter of any fiscal year of the Company during which the effective date of any post-effective amendment to the Registration Statement occurs, and not later than 90 days after the end of each fiscal year of the Company during which any Notes were issued, the Company will make generally available to its securityholders an earnings statement covering such 12-month period or such fiscal year, as the case may be, that will satisfy the provisions of such Section 11(a) and Rule 158. (d) The Company will furnish to each Agent, without charge, three conformed copies of the Registration Statement including exhibits and materials, if any, incorporated by reference therein and, during the period mentioned in Section 3(b) above, as many copies of the Prospectus, any documents incorporated by reference therein and any supplements and amendments thereto as any Agent may reasonably request. The terms "supplement" and "amendment" or "amend" as used in this Agreement shall include all documents filed by the Company with the Commission subsequent to the date of the Basic Prospectus, pursuant to the Exchange Act, which are deemed to be incorporated by reference in the Prospectus. (e) (1) The Company will make every reasonable effort to qualify the Notes for offer and sale under the securities or Blue Sky laws of such jurisdictions as any Agent shall reasonably request and will pay all expenses (including fees and disbursements of counsel) in connection with such qualification and in connection with the determination of the eligibility of the Notes for investment under the laws of such jurisdictions as any Agent may designate; provided, however, that the -------- ------- Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified, and (2) the Company or its designated agent shall submit such reports or information as may be required from time to time by applicable law, regulations and guidelines promulgated by Japanese governmental and regulatory authorities in the case of the issue and purchase of, and for so long as there are outstanding any, Notes denominated in Japanese yen. (f) During the term of this Agreement the Company shall furnish to each Agent such certificates of officers of the Company relating to the business, operations - 8 - and affairs of the Company and its subsidiaries, the Registration Statement, the Basic Prospectus, any amendments or supplements thereto, the Indenture, the Notes, this Agreement, the Procedures, any Terms Agreement and the performance by the Company of its obligations hereunder as such Agent may from time to time reasonably request. (g) The Company will, whether or not any sale of Notes is consummated, pay all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and all amendments thereto, (ii) the preparation, issuance and delivery of the Notes, (iii) the fees and disbursements of the Company's accountants and of the Trustee and Paying Agent and their respective counsel, (iv) the qualification of the Notes under securities laws in accordance with the provisions of Section 3(e) hereof, including filing fees and the reasonable fees and disbursements of counsel to the Agents in connection therewith and in connection with the preparation of any Blue Sky Memorandum, (v) the printing and delivery to the Agents in quantities as hereinabove stated of copies of the Registration Statement and all amendments thereto, and of the Basic Prospectus and any amendments or supplements thereto (including Pricing Supplements), (vi) the printing and delivery to the Agents of copies of the Indenture and any Blue Sky Memorandum and (vii) any fees charged by rating agencies for the rating of the Notes. The Company will also, whether or not any sale of the Notes is consummated, reimburse the Agents promptly upon receipt of an invoice therefor for the reasonable fees of their counsel, as agreed by the Company and the Agents, incurred in connection with the preparation of this Agreement and the offering and sale of the Notes as well as any reasonable disbursements and out-of-pocket expenses incurred by such counsel, as agreed by the Company and the Agents. (h) Each acceptance by the Company of an offer for the purchase of Notes solicited by an Agent, and each sale of Notes to an Agent pursuant to a Terms Agreement, shall be deemed to be an affirmation that the representations and warranties of the Company contained in this Agreement and in any certificate theretofore delivered to such Agent pursuant hereto are true and correct in all material respects at the time of such acceptance or sale, as the case may be, and an undertaking that such representations and warranties will be true and correct in all material respects at the time of delivery to the purchaser or his agent or to such Agent, of the Notes relating to such acceptance or sale, as the case may be, as though made at and as of each such time (and it is understood that such representations and warranties shall relate to the Registration Statement and the Basic Prospectus as amended and supplemented to each such time). (i) Each time the Registration Statement or the Basic Prospectus is amended or supplemented, (other than by a Pricing Supplement or an amendment or supplement providing for a change deemed immaterial in the reasonable opinion - 9 - of the Agents), if so requested by any Agent, and each time the Company sells Notes to an Agent pursuant to a Terms Agreement, the Company will deliver or cause to be delivered forthwith to the relevant Agent or Agents a certificate of the Company signed by the Chairman of the Board, the President, the Vice Chairman of the Board, any Vice President or the Treasurer, dated the date of the effectiveness of such amendment or filing or supplement or sale, as the case may be, in form reasonably satisfactory to such Agent or Agents, of the same tenor as the certificate referred to in Section 4(c) relating to the Registration Statement and the Basic Prospectus as amended and supplemented to the time of delivery of such certificate. (j) Each time the Registration Statement or the Basic Prospectus is amended or supplemented, if in the reasonable judgment of any Agent (or, in the case of a Pricing Supplement, in the reasonable judgment of the Agent that has solicited the offer to purchase the relevant Notes) the information contained in the amendment or supplement is of such nature that an opinion of counsel should be furnished, and each time the Company sells Notes to an Agent pursuant to a Terms Agreement, if so indicated in the applicable Terms Agreement, the Company shall furnish or cause to be furnished forthwith to such Agent a written opinion of counsel of the Company. Any such opinion shall be dated the date of such amendment or supplement or the date of such sale, as the case may be, shall be in a form satisfactory to such Agent and shall be of the same tenor as the opinion referred to in Section 4(b)(i) but modified to relate to the Registration Statement and the Basic Prospectus as amended and supplemented to the time of delivery of such opinion. In lieu of such opinion, counsel last furnishing such an opinion to such Agent may furnish to such Agent a letter to the effect that it may rely on such last opinion to the same extent as though it were dated the date of such letter (except that statements in such last opinion will be deemed to relate to the Registration Statement and the Basic Prospectus as amended and supplemented to the time of delivery of such letter). (k) Each time that the Registration Statement or the Basic Prospectus is amended or supplemented to set forth amended or supplemental financial information or such amended or supplemental information is incorporated by reference in the Registration Statement or the Basic Prospectus, if so requested by any Agent, or each time the Company sells Notes to an Agent pursuant to a Terms Agreement, if so indicated in the applicable Terms Agreement, the Company shall cause its independent auditors forthwith to furnish each Agent or such Agent, as appropriate, with a letter, dated the date of the effectiveness of such amendment or the date of filing of such supplement, or the date of such sale, as the case may be, in a form satisfactory to the recipient, of the same tenor as the letter referred to in Section 4(d), with regard to the amended or supplemental financial information included or incorporated by reference in the Registration Statement and the Basic Prospectus, as amended or supplemented to the date of such letter. - 10 - (l) Between the date of any Terms Agreement and the Settlement Date, or such later date as may be specified in such Terms Agreement, with respect to such Terms Agreement, the Company will not, without the prior consent of the Agent which is a party to such Terms Agreement, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company substantially similar in currency, maturity and other material terms to the Notes, other than (i) the Notes that are to be sold pursuant to such Terms Agreement, (ii) debt securities issued for consideration other than cash and (iii) commercial paper in the ordinary course of business, except as may otherwise be provided in any such Terms Agreement. (m) The Company will not issue any Notes except as have been duly authorized by all necessary corporate action on the part of the Company. (n) The Company will not issue any Notes directly to investors or through other agents, dealers or underwriters except in accordance with applicable law. 4. Conditions of the Obligations of the Agents. The obligations of each ------------------------------------------- Agent to solicit offers to purchase the Notes as agent of the Company and to purchase Notes as principal pursuant to any Terms Agreement will be subject to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of the Company's officers made in each certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all covenants and agreements herein contained on its part to be performed and observed and to the following additional conditions precedent: (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall have been instituted or threatened, and there shall have been no material adverse change in the condition of the Company and its consolidated subsidiaries, taken as a whole, from that set forth in the Registration Statement or the Prospectus as amended or supplemented to such date. (b) At the Commencement Date, such Agent shall have received, and at each Settlement Date with respect to any applicable Terms Agreement to which such Agent is a party, if called for by such Terms Agreement, such Agent shall have received: (i) The opinion, dated as of such date, of either Shelby Yastrow, Senior Vice President, General Counsel and Secretary for the Company or Gloria Santona, Assistant General Counsel, Vice President and Assistant Secretary for the Company, to the effect that: (A) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business - 11 - or its ownership or leasing of property requires such qualification and has all corporate power and authority to own its properties and conduct its business as set forth in the Prospectus, except where such failure to be so qualified or be in good standing cannot be reasonably expected to have a material adverse effect on the Company and its consolidated subsidiaries, taken as a whole. (B) Each of the Significant Subsidiaries of the Company has been duly organized, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, and all of the issued and outstanding shares of capital stock of each Significant Subsidiary (except McDonald's Australia Limited and McDonald's Property Company Limited, of which the Company directly or indirectly owns a majority of the capital stock) are owned, directly or indirectly, by the Company, have been duly authorized and validly issued, and (except in the case of McDonald's Deutschland, Inc., formerly McDonald's System of Germany, Inc.) are fully paid and non-assessable, and are so owned free and clear of any claim, lien, encumbrance or security interest except where such failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its consolidated subsidiaries, taken as a whole. (C) This Agreement (and, if the opinion is being given pursuant to Section 3(j) on account of the Company having entered into a Terms Agreement, the applicable Terms Agreement) has been duly authorized, executed and delivered by the Company. (D) The Indenture has been duly authorized, executed and delivered by the Company, is a valid and binding agreement of the Company and has been duly qualified under the Trust Indenture Act. (E) The Notes have been duly authorized and, when (1) executed and authenticated in accordance with the Indenture, (2) paid for by the purchasers thereof and (3) delivered to such purchasers, will be valid and binding obligations of the Company and will be entitled to the benefits of the Indenture. (F) The Registration Statement and any amendments thereto is effective under the Securities Act, and, to the best of such - 12 - counsel's knowledge, no proceedings for a stop order are pending or threatened by the Commission. (G) The execution, delivery and performance of this Agreement, the Notes and the Indenture will not contravene any provision of applicable law or the Restated Certificate of Incorporation or By-Laws of the Company or, to the knowledge of such counsel, any agreement or other instrument binding upon the Company and no consent, approval or authorization of any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, the Notes and the Indenture, except such as are specified and have been obtained and except that the offer and sale of the Notes in certain jurisdictions may be subject to the Blue Sky or securities laws of such jurisdictions. (H) The statements in the Prospectus under the captions "Description of Debt Securities", "Description of Registered Notes", "Plan of Distribution" and "United States Tax Considerations" insofar as such statements constitute summaries of the documents, proceedings or matters referred to therein, are accurate summaries of such documents, proceedings and matters. (I) Such counsel does not know of any legal or governmental proceeding pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that is required to be described in the Registration Statement or the Prospectus and is not so described or of any contract or other document which is required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement that is not described or filed as required. (J) Such counsel (1) is of the opinion that each document, if any, filed pursuant to the Exchange Act (except for financial statements included therein as to which such counsel need not express any opinion) and incorporated by reference in the Registration Statement and the Prospectus complied when so filed as to form in all material respects with the Exchange Act and the applicable rules and regulations thereunder; (2) has no reason to believe that (except for financial statements included therein as to which such counsel need not express any belief) any part of the Registration Statement (including the documents incorporated by reference therein) filed with the Commission pursuant to the Securities Act relating to the Notes, when such part became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or - 13 - necessary to make the statements therein not misleading; (3) is of the opinion that the Registration Statement and Prospectus, as amended or supplemented, if applicable (except for financial statements included therein as to which such counsel need not express any opinion), comply as to form in all material respects with the Securities Act and the applicable rules and regulations thereunder; and (4) has no reason to believe that (except for financial statements included therein as to which such counsel need not express any belief) the Prospectus, as amended or supplemented, if applicable, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. It is understood that such counsel may limit his or her opinion to the laws of the United States of America, the laws of the State of Illinois, and the General Corporation Law of the State of Delaware. The opinions set forth in paragraphs (i)(D) and (i)(E) above regarding the valid and binding nature of the Indenture and the Notes may be limited by the inclusion of statements to the effect that their enforceability may be limited by applicable bankruptcy, insolvency, moratorium and other similar laws affecting the enforceability of creditors' rights generally, and general principles of equity. The opinions set forth in paragraphs (i)(D) and (i)(E) above may be further limited by inclusion of a statement to the effect that insofar as such opinions relate to Notes denominated in a currency other than United States dollars, the effective enforcement of a foreign currency claim in the federal or state courts of the State of New York may be limited by requirements that a claim (or a foreign currency judgment in respect of such a claim) be converted into United States dollars at the rate of exchange prevailing on the judgment date. For purposes of paragraph (i)(B) above, the term "Significant Subsidiaries" shall mean the list of the Company's domestic and foreign subsidiaries appearing in Exhibit 21 (or any successor exhibit) to the Company's most recently filed Annual Report on Form 10-K as of the Commencement Date or the applicable Settlement Date, as the case may be. (ii) The opinion dated as of such date, of Cleary, Gottlieb, Steen & Hamilton, counsel to you, covering the matters in paragraphs (i)(C), (i)(D), (i)(E), (i)(H) (with respect only to the statements under the caption "Description of Debt Securities", "Description of Registered Notes" and "Plan of Distribution") and clauses (3) and (4) of (i)(J) above, provided that with respect -------- to clauses (3) and (4) of (i)(J) above, - 14 - such counsel may state that their belief is based upon their participation in the preparation of the Registration Statement and the Prospectus and any amendments or supplements thereto (other than documents incorporated by reference) and review and discussion of the contents thereof including documents incorporated by reference) but is without independent check or verification except as specified. (c) On the Commencement Date, and at each Settlement Date with respect to any Terms Agreement to which such Agent is a party, the Company shall have furnished to such Agent, a certificate of the Company, signed by the Chairman of the Board, the President, the Vice Chairman of the Board, any Vice President or the Treasurer, dated as of the Commencement Date or such Settlement Date, to the effect that the signer of such certificate has examined the Registration Statement, the Basic Prospectus, any Prospectus Supplement and this Agreement and that: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the date of such certificate, and the Company has complied in all material respects with all the agreements and satisfied in all material respects all the conditions on its part to be performed or satisfied at or prior to the date of such certificate; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Company's knowledge, threatened; and (iii) since the date of the most recent financial statements included or incorporated by reference in the Prospectus, as amended or supplemented, there has been no material adverse change in the condition of the Company and its consolidated subsidiaries, taken as a whole, from that set forth in the Registration Statement and the Prospectus, as amended or supplemented. (d) On the Commencement Date, and at each Settlement Date with respect to any Terms Agreement to which such Agent is a party, if called for by such Terms Agreement, the Company's independent auditors shall have furnished to such Agent, a letter or letters, dated as of the Commencement Date or such Settlement Date, in form and substance satisfactory to it, confirming that they are independent auditors within the meaning of the Securities Act and the respective applicable published rules and regulations thereunder and containing statements and information of the type ordinarily included in "comfort letters" to underwriters with respect to the financial statements and certain financial information contained or incorporated by reference in the Registration Statement and the Prospectus as then amended or supplemented. - 15 - (e) On the Commencement Date and at each Settlement Date with respect to any Terms Agreement to which such Agent is a party, the Company shall have furnished to such Agent such appropriate further information, certificates and documents as it may reasonably request. 5. Indemnification and Contribution. -------------------------------- (a) The Company agrees to indemnify and hold harmless each Agent and each person, if any, who controls such Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages or liabilities (including the reasonable fees and expenses of counsel in connection with any governmental or regulatory investigation or proceeding) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof or the Prospectus (if used within the period set forth in paragraph (b) of Section 3 hereof and as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company will not be liable in -------- ------- any such case to the extent that any such loss, claim, damage or liability is caused by (i) any such untrue statement or alleged untrue statement or omission or alleged omission made therein based upon information furnished in writing to the Company by an Agent relating to such Agent expressly for use therein; (ii) any untrue statement or alleged untrue statement or omission or alleged omission made in that part of the Registration Statement that consists of the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of First Fidelity Bank, National Association (formerly Fidelity Bank, National Association); or (iii) the fact that any Agent, as principal, sold Notes to a person, or Notes were sold to a person solicited by any Agent, to whom there was not sent or given, at or prior to the confirmation of such sale, a copy of the Prospectus as most recently amended or supplemented, and such untrue statement or alleged untrue statement or omission or alleged omission was corrected in the form of the Prospectus most recently provided by the Company to such Agent. (b) Each Agent agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and any person controlling the Company and each other Agent and any person controlling such Agent to the same extent as the foregoing indemnity from the Company to such Agent, but only with reference to information relating to such Agent furnished in writing by it expressly for use in the Registration Statement or the Prospectus. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought - 16 - pursuant to either paragraph (a) or (b) above, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the indemnified party. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in this Section 5 is unavailable to an indemnified party under paragraph (a) or (b) hereof or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and each Agent participating in the offering of Notes that gave rise to such losses, claims, damages or liabilities (a "Relevant Agent") on the other from the offering of such Notes or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and each Relevant Agent on the other in connection with the statements or omissions that resulted in such losses, claims, - 17 - damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and each Relevant Agent on the other in connection with the offering of such Notes shall be deemed to be in the same respective proportion as the total net proceeds from the offering of such Notes (before deducting expenses) received by the Company bear to the total discounts and commissions received by such Relevant Agent in respect thereof. The relative fault of the Company on the one hand and of each Relevant Agent on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Relevant Agent and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. If more than one Agent is a Relevant Agent in respect of a proceeding, each Relevant Agent's obligation to contribute pursuant to this Section 5 shall be several and not joint, and shall be in the proportion that the principal amount of the Notes that are the subject of such proceeding and that were offered and sold through such Relevant Agent bears to the aggregate principal amount of the Notes that are the subject of such proceeding. (e) The Company and each Agent agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or by any other method of allocation that does --- ---- not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5, no Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Notes referred to in paragraph (d) above that were offered and sold to the public through such Agent exceeds the amount of any damages that such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (f) The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (g) The Company acknowledges that the statements set forth in the last paragraph of the cover page and under the caption "Plan of Distribution" in the Prospectus Supplement dated July ___, 1995 relating to the Notes constitute the only - 18 - information furnished in writing by or on behalf of any Agent for inclusion in the Basic Prospectus or such Prospectus Supplement and the Agents confirm that such statements are correct. 6. Restrictions on Offers and Sales of Registered Notes. ---------------------------------------------------- (a) Each Agent represents and agrees that it will not offer or sell any Note directly or indirectly in Japan or to residents of Japan or for the benefit of any Japanese person (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale directly or indirectly in Japan or to any Japanese person during the period of 90 days from the issue date of such Note (which Note is denominated in Japanese yen) or 180 days from the issue date of the Note (which Note is a dual currency Note, reverse dual currency Note or optional dual currency Note) and that thereafter it will not do so, except under circumstances that will result in compliance with any applicable laws, regulations and ministerial guidelines of Japan taken as a whole. Furthermore, in connection with the issuance of Notes denominated in Japanese yen, the Company and each Agent agree to comply with all applicable laws, regulations and guidelines as amended from time to time of the Japanese governmental and regulatory authorities. (b) No Notes denominated in Japanese yen shall be sold without the specific approval of the Japanese Ministry of Finance, except for single currency Notes repayable at their non-variable principal or redemption amount and bearing interest at a fixed rate or by reference to yen LIBOR (plus or minus a spread) and structured Notes, such as Nikkei-linked and DAX-linked issues, in each case which have heretofore been permitted by the Japanese Ministry of Finance. 7. Position of the Agents. In soliciting offers to purchase the Notes, ---------------------- each Agent is acting solely as agent for the Company, and not as principal. Each Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by it and accepted by the Company, but no Agent shall have any liability to the Company in the event any such purchase is not consummated for any reason. Under no circumstances will any Agent be obligated to purchase any Notes for its own account other than pursuant to, and subject to the conditions set forth in, any Terms Agreement. 8. Termination. This Agreement may be terminated at any time either (a) ----------- by the Company as to any Agent or (b) by any Agent, insofar as this Agreement relates to such Agent, upon the giving of written notice of such termination to the other parties hereto. In the event of such termination with respect to any Agent, this Agreement shall remain in full force and effect with respect to any Agent as to which such termination has not occurred. Any Terms Agreement may be terminated, immediately upon notice to the Company, at any time prior to the Settlement Date relating to a Terms Agreement (i) if there has been, since the respective dates as of which information is given in the Registration Statement, as amended to - 19 - the date of such Terms Agreement, any material adverse change in the condition of the Company and its consolidated subsidiaries, taken as a whole, or (ii) if there has occurred any material outbreak or escalation of hostilities or any material adverse change in financial markets or any calamity or crisis the effect of which is such as to make it, in the reasonable judgment of the Agent which is a party to such Agreement, impracticable to market the Notes, or (iii) if trading in securities generally on the New York Stock Exchange or the American Stock Exchange has been suspended or materially limited or if a general moratorium on commercial banking activities has been declared by either federal or New York State authorities. In the event of termination of this Agreement or any Terms Agreement, no party shall have any liability to the other parties hereto, except (1) as provided in the first two sentences of the third paragraph of Section 2(a) (with respect to any commissions earned by the Agents but not yet paid by the Company at the time of such termination), Section 3(g), Section 5 and Section 9 and (2) if, at the time of termination, an Agent shall own any Notes purchased pursuant to a Terms Agreement entered into prior to the termination of this Agreement with the intention of reselling them or an offer to purchase any Notes has been accepted by the Company but the time of delivery to the purchaser or its agent of such Notes has not occurred, as provided in Sections 3(b) through 3(e)(1), 3(h) through 3(k) and 3(n) hereof; provided that -------- the exception set forth in clause (2) of this sentence shall be of no further force or effect immediately after the earlier of (i) resale or delivery, as the case may be, of the Notes referred to in such clause and (ii) in the case of Notes purchased pursuant to a Terms Agreement entered into prior to the termination of this Agreement, a date 270 calendar days from the date of such termination. The provisions of Sections 3(e)(2), 3(g), 5 and 9 hereof shall survive the termination or cancellation of any Terms Agreement. 9. Representations and Indemnities to Survive. The respective ------------------------------------------ agreements, representations, warranties, indemnities and other statements of the Company or its officers and each Agent set forth in or made pursuant to this Agreement or any Terms Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Agent or the Company or any of the officers, directors or controlling persons referred to in Section 5 hereof, and will survive delivery of and payment for the Notes. 10. Notices. All communications hereunder will be in writing and ------- effective only on receipt, and shall be mailed, delivered or sent by facsimile transmission and confirmed as follows: (i) if to Merrill Lynch, Pierce, Fenner & Smith Incorporated at Merrill Lynch & Co., Merrill Lynch World Headquarters, North Tower, World Financial Center, 23rd Floor, New York, New York 10281, Attention: MTN Product Management; (ii) if to Goldman Sachs & Co., at _________________________________ (iii) if to J.P. Morgan Securities Inc., at 60 Wall Street, New York, New York 10260; - 20 - (iv) if to Morgan Stanley & Co. Incorporated, at 4th Floor, 1221 Avenue of the Americas, New York, New York 10020, Attention: Managing Director, Short- and Medium-Term Note Department; and to Morgan Stanley & Co. Incorporated, at 28th Floor, 1251 Avenue of the Americas, New York, New York 10020, Attention: Investment Banking Information Center, Peter Cooper; and (v) if to PaineWebber Incorporated, at 1285 Avenue of the Americas, 11th Floor, New York, New York 10019, Attention: James W. Kilman, Jr.; (vi) if to Salomon Brothers Inc, at Seven World Trade Center, 32nd Floor, New York, New York 10048, Attention: Medium-Term Note Department; and (vii) if to the Company, at One McDonald's Plaza, Oak Brook, Illinois 60521, Attention: Treasurer, with a copy to the Controller; or at such other address as any party may notify to the other parties hereto from time to time. 11. Successors. This Agreement and any Terms Agreement will inure to the ---------- benefit of and be binding upon the parties hereto and thereto and their respective successors and the officers and directors and controlling persons referred to in Section 5 hereof, and no other person will have any right or obligation hereunder. 12. Counterparts. This Agreement may be signed in any number of ------------ counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 13. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN -------------- ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon this letter and your acceptance shall represent a binding agreement between the Company and you. Very truly yours, McDONALD'S CORPORATION By: ------------------------------------ Title: Vice President and Treasurer - 21 - The foregoing Agreement is hereby confirmed and accepted as of the date first written above. MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: --------------------------------- Title: GOLDMAN SACHS & CO. By: --------------------------------- MORGAN STANLEY & CO. INCORPORATED By: --------------------------------- Title: J.P. MORGAN SECURITIES INC. By: --------------------------------- Title: PAINEWEBBER INCORPORATED By: --------------------------------- Title: SALOMON BROTHERS INC By: --------------------------------- Title - 22 - Exhibit A McDonald's Corporation MEDIUM-TERM NOTES, SERIES E TERMS AGREEMENT _______________, 19__ McDonald's Corporation One McDonald's Plaza Oak Brook, Illinois 60521 Attention: Treasurer Re: U.S. Distribution Agreement dated _________________, 1995 The undersigned agrees to purchase the following principal amount of your Medium-Term Notes: [Currency/Amount] Initial Public Offering Price: Stated Maturity: Purchase Price: Purchase Date and Time: Settlement Date and Time: Place of Delivery: Form: Book-Entry __________ or Certificated _____________ Redeemable by Company: ___Yes ___No Redemption Price Schedule: Date Price ---- ----- Repayable at option of Holder: ___Yes ___No Repayment Price Schedule: Date Price ---- ----- For Fixed Rate Notes: Interest Rate: Interest Payment Dates: (if other than February 15 and August 15) Regular Record Dates: (if other than February 1 and August 1) A-1 For Floating Rate Notes: Base Rate: Initial Interest Rate: Spread: Spread Multiplier: Index Maturity: Interest Reset Period: Interest Reset Dates: Interest Payment Dates: Maximum Interest Rate, if any: Minimum Interest Rate, if any: For Indexed Notes: [specify appropriate terms] For Original Issue Discount Notes: [specify appropriate terms] For Amortizing Notes: [specify amortization schedule] (Other terms) The provisions of Sections 1, 2(b), 2(c), 2(d), 3 through 6 and 8 through 13 of the Distribution Agreement and the related definitions are incorporated by reference herein and shall be deemed to have the same force and effect as if set forth in full herein. [The certificates referred to in Section 3(i) of the Distribution Agreement, the opinion referred to in Section 3(j) of the Distribution Agreement and the auditors' letter referred to in Section 3(k) of the Distribution Agreement will be required.] [The following opinions, letters, information, certificates and documents referred to in Section 4 of the Distribution Agreement will be required:] A-2 [The lockup period referred to in Section 3(l) shall extend to a date ____ calendar days after the Settlement Date.] [NAME OF PURCHASER] By: ----------------------------- Title: Accepted as of the date written above: McDONALD'S CORPORATION By: ---------------------------- Title: A-3 Exhibit B Medium-Term Note Administrative Procedures ------------------------------------------ Medium-Term Notes, Series E (the "Notes") are to be offered on a continuing basis by McDonald's Corporation (the "Company"). Each of Merrill Lynch & Co., Goldman Sachs & Co., J.P. Morgan Securities Inc., Morgan Stanley & Co. Incorporated, PaineWebber Incorporated and Salomon Brothers Inc as agent (each an "Agent"), has agreed to solicit offers to purchase the Notes and to purchase Notes, as principal, for its own account. The Notes are being sold pursuant to a U.S. Distribution Agreement between the Company and the Agents dated _____________, 1995 (the "Agreement"). The Notes will be in registered form and will be issued under an Indenture dated as of March 1, 1987, between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as trustee (the "Trustee"), and any indenture supplemental thereto. If any provision of these Administrative Procedures limits or conflicts with any provision of the form of Note attached to these Administrative Procedures as Annex I hereto, such provision in the form of Note shall be controlling. Each Note will be represented by either a Global Security (as defined hereinafter) (a "Registered Note") or a certificate delivered to the Holder thereof or a Person designated by such Holder (a "Certificated Note"). Each Global Security representing Registered Notes will be delivered to Morgan Guaranty Trust Company of New York ("Morgan Guaranty" or the "DTC Agent"), acting as agent for The Depository Trust Company ("DTC"), and will be recorded in the book-entry system maintained by DTC (a "Book-Entry Note"). Only Registered Notes denominated and payable in U.S. dollars may be issued as Book- Entry Notes. Except as set forth in the Basic Prospectus (as defined in the Agreement), an owner of a Book-Entry Note will not be entitled to receive a certificate representing such Note. The procedures to be followed during, and the specific terms of, the solicitation of orders by the Agents and the sale as a result thereof by the Company are explained below. Administrative and record-keeping responsibilities will be handled for the Company by its Treasury Department. The Company will advise the Agents, the Paying Agent and the Trustee in writing of those persons handling administrative responsibilities with whom the Agents, the Paying Agent and the Trustee are to communicate regarding orders to purchase Notes and the details of their delivery. Administrative procedures and specific terms of the offering are explained below. Book-Entry Notes will be issued in accordance with the administrative procedures set forth in Part I hereof, and Certificated Notes will be issued in accordance with the administrative procedures set forth in Part II hereof. Unless otherwise defined herein, terms defined in the Indenture or in the Basic Prospectus shall be used herein as therein defined. B-1 PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES In connection with the qualification of the Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the DTC Agent will perform the custodial, document control and administrative functions described below for the Registered Notes. The DTC Agent will perform such functions in accordance with its respective obligations under a Letter of Representations from the Company and the DTC Agent to DTC dated as of the date hereof and a Medium-Term Note Certificate Agreement between Morgan Guaranty and DTC, dated April 18, 1989 and as amended to date, and its obligations as a participant in DTC, including DTC's Same-Day Funds Settlement system ("SDFS"). Issuance: On any date of settlement (as defined under - - -------- "Settlement" below) for one or more Fixed Rate Book- Entry Notes, the Company will issue a single global security in fully registered form without coupons (a "Global Security") representing up to $200,000,000 principal amount of all such Notes that have the same interest rate, Stated Maturity and redemption provisions. On any settlement date for one or more Floating Rate Book-Entry Notes, the Company will issue a single Global Security representing up to $200,000,000 principal amount of all such Notes that have the same Base Rate, Initial Interest Rate, Index Maturity, Spread or Spread Multiplier, Interest Reset Period, Interest Payment Dates, redemption provisions, Minimum Interest Rate (if any), Maximum Interest Rate (if any) and Stated Maturity. On any settlement date for one or more Indexed Book-Entry Notes, the Company will issue a single Global Security representing up to $200,000,000 principal amount of all such Notes that have the same terms (as such terms are identified in the Pricing Supplement relating to such Notes). Each Global Security will be dated and issued as of the date of its authentication by the Trustee for the Registered Notes represented by such Global Security. No Global Security will represent (i) more than one of a Fixed Rate, Floating Rate and Indexed Book-Entry Notes or (ii) any Certificated Note. Identification Numbers: The Company has arranged with the CUSIP Service Bureau - - ---------------------- of Standard & Poor's Corporation (the "CUSIP Service Bureau") for the reservation of a series of CUSIP numbers (including tranche numbers) for the Registered Notes. Such series consists of approximately 900 CUSIP numbers and relates to Global Securities representing Book-Entry Notes and book-entry medium-term notes B-2 issued by the Company with other series designations. The DTC Agent has obtained from the CUSIP Service Bureau written lists of such reserved CUSIP numbers, and caused such lists to be delivered to the DTC Agent and to DTC. The DTC Agent will assign CUSIP numbers to Global Securities as described below under Settlement Procedure "B". DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the DTC Agent has assigned to Global Securities. The DTC Agent will notify the Company at any time when fewer than 100 of the reserved CUSIP numbers remain unassigned to Global Securities, and, if it deems necessary, the Company will reserve additional CUSIP numbers for assignment to Global Securities. Upon obtaining such additional CUSIP numbers, the Company shall deliver a list of such additional CUSIP numbers to the DTC Agent and to DTC. Registration: Each Global Security will be registered in the name of - - ------------ CEDE & Co., as nominee for DTC. The beneficial owner of a Book-Entry Note (or one or more indirect participants in DTC designated by such owner) will designate one or more direct participants in DTC (with respect to such Note, the "Participants") to act as agent or agents for such owner in connection with the book-entry system maintained by DTC, and DTC will record in book-entry form, in accordance with instructions provided by such Participants, a credit balance with respect to such beneficial owner in such Note in the account of such Participants. The ownership interest of such beneficial owner in such Note will be recorded through the records of such Participants or through the separate records of such Participants and one or more indirect participants in DTC. Transfers: Transfers of a Book-Entry Note will be accomplished by - - --------- book entries made by DTC and, in turn, by Participants (and in certain cases, one or more indirect participants in DTC) acting on behalf of beneficial transferors and transferees of such Note. Exchanges: The DTC Agent may deliver to DTC and the CUSIP Service - - --------- Bureau at any time a written notice of consolidation specifying (i) the CUSIP numbers of two or more Outstanding Global Securities that represent (A) B-3 Fixed Rate Book-Entry Notes having the same interest rate, Interest Payment Date, redemption provisions and Stated Maturity and for which interest has been paid to the same date, (B) Floating Rate Book-Entry Notes having the same Base Rate, Index Maturity, Spread or Spread Multiplier, Interest Reset Period, Interest Payment Dates, redemption and repayment provisions, Minimum Interest Rate (if any), Maximum Interest Rate (if any) and Stated Maturity and for which interest has been paid to the same date or (C) Indexed Book-Entry Notes having the same terms (as such terms are identified in the Pricing Supplement relating to such Notes), (ii) a date, occurring at least 30 days after such written notice is delivered and at least 30 days before the next Interest Payment Date for such Book- Entry Notes, on which such Global Securities shall be exchanged for a single replacement Global Security and (iii) a new CUSIP number to be assigned to such replacement Global Security. Upon receipt of such a notice, DTC will send to its participants (including the DTC Agent) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the DTC Agent will deliver to the CUSIP Service Bureau a written notice setting forth such exchange date and the new CUSIP number and stating that, as of such exchange date, the CUSIP numbers of the Global Securities to be exchanged will no longer be valid. On the specified exchange date, the DTC Agent will exchange such Global Securities for a single Global Security bearing the new CUSIP number and the CUSIP numbers of the exchanged Global Securities will, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. Notwithstanding the foregoing, if the Global Securities to be exchanged exceed $200,000,000 in aggregate principal amount, one Global Security will be authenticated and issued to represent each $200,000,000 of principal amount of the exchanged Global Securities and an additional Global Security will be authenticated and issued to represent any remaining principal amount of such Global Securities (see "Denominations" below). Maturities: Each Book-Entry Note will mature on a date not less - - ---------- than nine months nor more than 60 years after the settlement date for such Note. A Floating Rate Book- Entry Note B-4 will mature only on an Interest Payment Date for such Note. Any Note denominated in Japanese yen will mature on a date not less than one year after the Original Issue Date for such Note and will not be subject to optional redemption or prepayment prior to such time. Denominations: Unless otherwise specified in the applicable Pricing - - ------------- Supplement, Book-Entry Notes will be issued in principal amounts of $100,000 or any amount in excess thereof that is an integral multiple of $1,000, provided that the minimum denomination of a Book-Entry -------- Note denominated in Japanese yen shall be at least 1,000,000,000 yen. Global Securities will be denominated in principal amounts not in excess of $200,000,000. If one or more Book-Entry Notes having an aggregate principal amount in excess of $200,000,000 would, but for the preceding sentence, be represented by a single Global Security, then one Global Security will be authenticated and issued to represent each $200,000,000 principal amount of such Book-Entry Note or Notes and an additional Global Security will be authenticated and issued to represent any remaining principal amount of such Book-Entry Note or Notes. In such a case, each of the Global Securities representing such Book-Entry Note or Notes shall be assigned the same CUSIP number. Interest: General. Interest, if any, on each Book-Entry Note - - -------- ------- will accrue from the Original Issue Date of the Global Security representing such Note or from the last day to which interest has been paid thereon or duly provided for and will be calculated and paid in the manner described in such Note and in the applicable Pricing Supplement. The first payment of interest on any Book- Entry Note originally issued between a Record Date and an Interest Payment Date will be made on the next succeeding Interest Payment Date. Unless otherwise specified therein, each payment of interest for a Book- Entry Note will include interest accrued to but excluding the Interest Payment Date (provided that, in the case of Floating Rate Book-Entry Notes that reset daily or weekly, interest payments will include interest to and excluding the Regular Record Date immediately preceding the Interest Payment Date) or to but excluding Maturity. Interest B-5 payable at the Maturity of a Book-Entry Note will be payable to the Person to whom the principal of such Note is payable. Standard & Poor's Corporation will use the information received in the pending deposit message described under Settlement Procedure "C" below in order to include the amount of any interest payable and certain other information regarding the related Global Security in the appropriate weekly bond report published by Standard & Poor's Corporation. Regular Record Dates. The Regular Record Date with -------------------- respect to any Interest Payment Date for a Fixed Rate Book-Entry Note shall, unless otherwise specified, be the February 1 or August 1 (whether or not a Business Day) immediately preceding such Interest Payment Date. The Regular Record Date with respect to any Interest Payment Date for a Floating Rate Book-Entry Note shall be the date (whether or not a Business Day) fifteen calendar days immediately preceding such Interest Payment Date. Interest Payment Dates on Fixed Rate Book-Entry Notes. ----------------------------------------------------- Unless otherwise specified pursuant to Settlement Procedure "A" below, interest payments on Fixed Rate Book-Entry Notes will be made semiannually on February 15 and August 15 of each year and at Maturity; provided, however, that in the case of a Fixed Rate -------- ------- Book-Entry Note issued between a Regular Record Date and an Interest Payment Date, the first interest payment will be made on the Interest Payment Date following the next succeeding Regular Record Date. Interest Payment Dates on Floating Rate Book-Entry -------------------------------------------------- Notes. Unless otherwise specified, interest payments ----- will be made on Floating Rate Book-Entry Notes monthly, quarterly, semiannually or annually. Unless otherwise specified, interest will be payable, in the case of Floating Rate Book-Entry Notes that: reset daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified; reset quarterly, on the third Wednesday of March, June, September and December of each year; reset semiannually, on the third Wednesday of each of two months specified pursuant to Settlement Procedure "A" below; and reset annually, on the third Wednesday of the month specified pursuant to B-6 Settlement Procedure "A" below; provided, however, that -------- ------- if an Interest Payment Date for a Floating Rate Book- Entry Note would otherwise be a day that is not a Business Day with respect to such Floating Rate Book- Entry Note, such Interest Payment Date will be the next succeeding Business Day with respect to such Floating Rate Book-Entry Note, except in the case of a Floating Rate Book-Entry Note for which the Base Rate is LIBOR, if such Business Day is in the next succeeding calendar month, such Interest Payment Date will be the immediately preceding Business Day; and provided, -------- further, that in the case of a Floating Rate Book-Entry ------- Note issued between a Regular Record Date and an Interest Payment Date, the first interest payment will be made on the Interest Payment Date following the next succeeding Regular Record Date. Notice of Interest Payment and Regular Record Dates. --------------------------------------------------- On the first Business Day of January, April, July and October of each year, the DTC Agent will deliver to the Company and DTC a written list of Regular Record Dates and Interest Payment Dates that will occur with respect to Book-Entry Notes during the six-month period beginning on such first Business Day. Promptly after each Interest Determination Date for Floating Rate Book-Entry Notes, Morgan Guaranty, as Calculation Agent, will notify Standard & Poor's Corporation of the interest rates determined on such Interest Determination Date. Calculation of Interest: Fixed Rate Book-Entry Notes. Interest on Fixed Rate - - ----------------------- --------------------------- Book-Entry Notes (including interest for partial periods) will be calculated on the basis of a 360-day year of twelve 30-day months. Floating Rate Book-Entry Notes. Interest rates on ------------------------------ Floating Rate Book-Entry Notes will be determined as set forth in the form of Notes. Interest on Floating Rate Book-Entry Notes, except as otherwise set forth herein, will be calculated on the basis of actual days elapsed and a year of 360 days, except that in the case of a Floating Rate Book-Entry Note for which the Base Rate is the Treasury Rate or CMT, interest will be calculated on the basis of the actual number of days in the year. B-7 Payments of Principal Payment of Interest Only. Promptly after each Regular - - --------------------- ------------------------ and Interest: Record Date the DTC Agent will deliver to the Company - - ------------- and DTC a written notice specifying the CUSIP number, the amount of interest to be paid on each Global Security on the following Interest Payment Date (other than an Interest Payment Date coinciding with Maturity) and the total of such amounts. DTC will confirm the amount payable on each Global Security on such Interest Payment Date by reference to the daily bond reports published by Standard & Poor's Corporation. The Company will pay to the Paying Agent the total amount of interest due on such Interest Payment Date (other than at Maturity), and the Paying Agent will pay such amount to DTC, at the times and in the manner set forth below under "Manner of Payment". If any Interest Payment Date for a Fixed Rate Book-Entry Note is not a Business Day the payment due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Interest Payment Date. Payments at Maturity. On or about the first Business -------------------- Day of each month, the DTC Agent will deliver to the Company and DTC a written list of principal and interest to be paid on each Global Security maturing in the following month. The Company, DTC and the DTC Agent will confirm the amounts of such principal and interest payments with respect to each such Global Security on or about the fifth Business Day preceding the Maturity of such Global Security. The Company will pay to the Paying Agent the principal amount of such Global Security, together with interest due at such Maturity. The Paying Agent will pay such amount to DTC at the times and in the manner set forth below under "Manner of Payment". If any Maturity of a Global Security representing Fixed Rate Book-Entry Notes is not a Business Day, the payment due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Maturity. Promptly after payment to DTC of the principal and interest due at the Maturity of such Global Security, the Paying Agent will cancel such Global Security and deliver it to the Company with an appropriate debit advice. B-8 Manner of Payment. The total amount of any principal ----------------- and interest due on Global Securities on any Interest Payment Date or at Maturity shall be paid by the Company to the Paying Agent in funds available for use by the Paying Agent as of 9:30 a.m. (New York City time) on such date. The Company will make such payment on such Global Securities by instructing the Paying Agent to withdraw funds from an account maintained by the Company. The Company will confirm such instructions in writing to the Paying Agent. For Maturity, redemption and other principal payments, the Paying Agent will pay, prior to 10:00 a.m. (New York City time) on such date or as soon as possible thereafter, by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of principal (together with interest thereon) due on a Global Security on such date. Thereafter on such date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds available for immediate use to the respective Participants in whose names the Book-Entry Notes represented by such Global Security are recorded in the book-entry system maintained by DTC. Payments of interest shall be made to DTC in same day funds in accordance with existing arrangements in place between the DTC Agent and DTC. None of the Company, the Paying Agent or the DTC Agent shall have any direct responsibility or liability for the payment by DTC to such Participants of the principal of and interest on the Book-Entry Notes. Withholding Taxes. The amount of any taxes required ----------------- under applicable law to be withheld from any interest payment on a Book-Entry Note will be determined and withheld by the Participant, indirect participant in DTC or other person responsible for forwarding payments and materials directly to the beneficial owner of such Note. Procedures upon Company's - - ------------------------- Exercise of Optional Redemption: - - ------------------------------- Company Notice to Trustee and Paying Agent regarding ---------------------------------------------------- Exercise of Optional Redemption. At least 45 ------------------------------- days prior to the date on which it intends to redeem a Book-Entry Note, the Company will notify the Trustee and Paying B-9 Agent that it is exercising such option with respect to such Book-Entry Note on such date. Paying Agent Notice to DTC regarding Company's Exercise ------------------------------------------------------- of Optional Redemption. After receipt of notice that ---------------------- the Company is exercising its option to redeem a Book- Entry Note, the Trustee will, at least 30 days before the redemption date of such Book-Entry Note, deliver to DTC a notice identifying such Book-Entry Note by CUSIP number and informing DTC of the Company's exercise of such option with respect to such Book-Entry Note. Deposit of Redemption Price. On or before any --------------------------- redemption date, the Company shall deposit with the Paying Agent an amount of money sufficient to pay the redemption price, plus interest accrued to such redemption date, for all the Book-Entry Notes or portions thereof which are to be repaid on such redemption date. The Paying Agent will use such money to repay such Book-Entry Notes pursuant to the terms set forth in such Notes. Acceptance of Offers: The Company will have the sole right to accept offers - - -------------------- to purchase Registered Notes. Each Agent will communicate orally or in writing each reasonable offer to purchase Registered Notes received by it. The Company may reject any offer in whole or in part. Each Agent may reject any offer received by it in whole or in part in its reasonable discretion. Settlement: The receipt by the Company of immediately available - - ---------- funds in payment for a Book-Entry Note and the authentication and issuance of the Global Security representing such Note shall constitute "settlement" with respect to such Note. All orders accepted by the Company will be settled on the next Business Day pursuant to the timetable for settlement set forth below unless the Company and the purchaser agree to settlement on a later date. Settlement Procedures: Settlement Procedures with regard to each Book-Entry - - --------------------- Note sold by the Company through an Agent shall be as follows: B-10 A. Such Agent will advise the Company by telephone of the following settlement information: 1. Principal amount. 2. Maturity Date. 3. In the case of a Fixed Rate Book-Entry Note, the interest rate and repayment or redemption provisions (if any) or, in the case of a Floating Rate Book-Entry Note, the Base Rate, Initial Interest Rate (if known at such time), Index Maturity, Spread or Spread Multiplier (if any), Interest Reset Dates, Interest Reset Period, Minimum Interest Rate (if any), Maximum Interest Rate (if any) and redemption provisions (if any) or, in the case of a in Indexed Book- Entry Note, the terms of such Notes as specified in the Pricing Supplement relating to such Note. 4. Specified Currency. 5. Settlement date. 6. Issue Date. 7. Issue Price. 8. Interest Payment Period. 9. Interest Payment Dates. 10. Any information applicable to Original Discount Notes. 11. Agent's commission, determined as provided in Section 2 of the U.S. Distribution Agreement. B. The Company will advise the DTC Agent by telephone (confirmed in writing at any time on the same date) or electronic transmission of the information set forth in Settlement Procedure "A" above. The DTC Agent will then assign a CUSIP number to the Global Security representing such Note and advise the Agent of such number. Each such communication by the Company shall constitute a representation and warranty by the Company to the DTC Agent, the Trustee and such Agent that (i) such Note is then, and at the time of issuance and sale thereof will be, duly authorized for issuance and sale by the Company and (ii) such Note, and the Global Security representing such B-11 Note, will conform with the terms of the Indenture. C. The DTC Agent will enter a pending deposit message through DTC's Participant Terminal System, providing the following Settlement information to DTC, such Agent, Standard & Poor's Corporation and, upon request, the Trustee: 1. The information set forth in Settlement Procedure "A". 2. Identification as a Fixed Rate Book-Entry Note or a Floating Rate Book-Entry Note. 3. Initial Interest Payment Date for such Note, number of days by which such date succeeds the related DTC Record Date (which term means the Regular Record Date, and in the case of Floating Rate Notes that reset daily or weekly the date that is five calendar days immediately preceding the applicable Interest Payment Date) and amount of interest, if known, payable on such Interest Payment Date. 4. Interest Payment Period or frequency of Interest Payment Dates. 5. CUSIP number of the Global Security representing such Note. 6. Whether such Global Security will represent any other Book-Entry Note (to the extent known at such time). D. The Company will complete and deliver to the DTC Agent the instructions necessary to complete the Global Security representing such Note, with a customer confirmation. E. First National Bank of Chicago, as Authenticating Agent, will authenticate the Global Security representing such Note. F. DTC will credit such Note to the DTC Agent's participant account at DTC. G. The DTC Agent will enter an SDFS delivery order through DTC's Participant Terminal System B-12 instructing DTC to (i) debit such Note to the DTC Agent's participant account and credit such Note to such Agent's participant account and (ii) debit such Agent's settlement account and credit the DTC Agent's settlement account for an amount equal to the price of such Note less such Agent's commission. The entry of such a deliver order shall constitute a representation and warranty by the DTC Agent to DTC that (i) the Global Security representing such Book-Entry Note has been issued and authenticated and (ii) the DTC Agent is holding such Global Security pursuant to the Medium-Term Note Certificate Agreement between the DTC Agent and DTC. H. Such Agent will enter an SDFS delivery order through DTC's Participant Terminal System instructing DTC (i) to debit such Note to such Agent's participant account and credit such Note to the participant accounts of the Participants with respect to such Note and (ii) to debit the settlement accounts of such Participants and credit the settlement account of such Agent for an amount equal to the price of such Note. I. Transfers of funds in accordance with SDFS delivery orders described in Settlement Procedures "G" and "H" will be settled in accordance with SDFS operating procedures in effect on the settlement date. J. The DTC Agent will credit to an account of the Company maintained at the DTC Agent funds available for immediate use in the amount transferred to the DTC Agent in accordance with Settlement Procedure "G". K. Such Agent will confirm the purchase of such Note to the purchaser either by transmitting to the Participants with respect to such Note a confirmation order or orders through DTC's institutional delivery system or by mailing a written confirmation to such purchaser. B-13 L. Periodically, the DTC Agent will send to the Company a statement setting forth the principal amount of Registered Notes Outstanding as of the date of such statement and setting forth a brief description of any sales of which the Company has advised the DTC Agent but which have not yet been settled. Settlement Procedures For orders of Book-Entry Notes solicited by an - - --------------------- Agent and accepted by the Company for settlement on Timetable: the first Business Day after the sale date, Settlement - - ---------- Procedures "A" through "K" set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: Settlement Procedure Time --------- ---- A 11:00 a.m. on the sale date B 12:00 Noon on the sale date C 2:00 p.m. on the sale date D 3:00 p.m. on day before settlement date E 9:00 a.m. on settlement date F 10:00 a.m. on settlement date G-H 2:00 p.m. on settlement date I 4:45 p.m. on settlement date J-K 5:00 p.m. on settlement date If a sale is to be settled more than one Business Day after the sale date, Settlement Procedures "A", "B" and "C" shall be completed as soon as practicable but not later than 11:00 a.m., 12:00 Noon and 2:00 p.m., respectively, on the first Business Day after the sale date. If the Initial Interest Rate for a Floating Rate Book-Entry Note has not been determined at the time that Settlement Procedure "A" is completed, Settlement Procedures "B" and "C" shall be completed as soon as such rate has been determined but no later than 11:00 a.m. and 2:00 p.m., respectively, on the second Business Day before the settlement date. Settlement Procedure "I" is subject to extension in accordance with any extension of Fedwire closing deadlines and in the other events specified in SDFS operating procedures in effect on the settlement date. B-14 If settlement of a Book-Entry Note is rescheduled or cancelled, the DTC Agent will deliver to DTC through DTC's Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m. on the Business Day immediately preceding the scheduled settlement date. Failure to Settle: If the DTC Agent fails to enter an SDFS delivery order - - ----------------- with respect to a Book-Entry Note pursuant to Settlement Procedure "G", the DTC Agent may deliver to DTC, through DTC's Participant Terminal System, as soon as practicable a withdrawal message instructing DTC to debit such Note to the DTC Agent's participant account. DTC will process the withdrawal message, provided that the DTC Agent's participant account contains a principal amount of the Global Security representing such Note that is at least equal to the principal amount to be debited. If a withdrawal message is processed with respect to all the Book-Entry Notes represented by a Global Security, the DTC Agent will mark such Global Security "cancelled", make appropriate entries in the DTC Agent's records and send such cancelled Global Security to the Company. The CUSIP number assigned to such Global Security shall, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. If a withdrawal message is processed with respect to one or more, but not all, of the Book-Entry Notes represented by a Global Security, the DTC Agent will exchange such Global Security for two Global Securities, one of which shall represent such Book-Entry Notes and shall be cancelled immediately after issuance and the other of which shall represent the other Book-Entry Notes previously represented by the surrendered Global Security and shall bear the CUSIP number of the surrendered Global Security. If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such Note by the beneficial purchaser thereof (or a person, including an indirect participant in DTC, acting on behalf of such purchaser), such Participants and, in return, the Agent that solicited the order to purchase such Book-Entry Note may enter SDFS delivery orders through DTC's Participant Terminal System reversing the orders entered pursuant to Settlement Procedures "H" and "G", B-15 respectively. Thereafter, the DTC Agent will deliver the withdrawal message and take the related actions described in the preceding paragraph. Notwithstanding the foregoing, upon any failure to settle with respect to a Book-Entry Note, DTC may take any actions in accordance with its SDFS operating procedures then in effect. In the event of a failure to settle with respect to one or more, but not all, of the Book-Entry Notes to have been represented by a Global Security, the DTC Agent will provide, in accordance with Settlement Procedures "D" and "E", for the authentication and issuance of a Global Security representing the other Book-Entry Notes to have been represented by such Global Security and will make appropriate entries in its records. Procedure for Rate Changes; - - --------------------------- Preparation of Pricing The Company and the Agents will discuss from time to - - ---------------------- time the rates to be borne by Registered Notes that Supplements: may be sold as a result of the solicitation - - ------------ of offers by any Agent. If any offer to purchase a Registered Note is accepted by the Company, the Company will prepare a Pricing Supplement reflecting the terms of such Note and will arrange to have the Pricing Supplement filed with the Commission in accordance with the applicable paragraph of Rule 424(b) under the Securities Act of 1933, as amended, and will supply by facsimile transmission or by overnight express for delivery by 11:00 a.m. on the Business Day next following the date of acceptance one copy thereof (or additional copies if requested) to each Agent which presented the order (each, a "Presenting Agent") at each address listed below and one copy to the Trustee. The relevant Agent will cause a Prospectus and Pricing Supplement to be delivered to the purchaser of the Registered Note. Copies of Pricing Supplements shall be sent to: if Merrill Lynch & Co. is the Presenting Agent: Merrill Lynch & Co. - Tritech Services 4 Corporate Place Corporate Park 287 Piscateway, New Jersey 08854 B-16 Attn: Final Prospectus Unit/Nachman Kimerling Telephone: (908) 878-6526 Facsimile: (908) 878-6530 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Merrill Lynch World Headquarters World Financial Center, North Tower, 23rd Floor New York, New York 10281-1323 Attn: MTN Product Management Telephone: (212) 449-7582 Facsimile: (212) 449-2234 if Golman Sachs & Co. is the Presenting Agent: ------------------------------------ ------------------------------------ ------------------------------------ if J.P. Morgan Securities Inc. is the Presenting Agent: J.P. Morgan Securities Inc. 60 Wall Street 2nd Floor-Capital Markets New York, New York 10260 Telephone: (212) 648-0787 Facsimile: (212) 837-5939 if Morgan Stanley & Co. Incorporated is the Presenting Agent: Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas 4th Floor New York, New York 10020 Attn: Carlos Cabrera if PaineWebber Incorporated is Presenting Agent: Debt Syndicate PaineWebber Incorporated 1285 Avenue of the Americas New York, New York 10019 Attn: Peter Masco Telephone: (212) 713-3357 B-17 Facsimile: (212) 713-2285 if Salomon Brothers Inc is the Presenting Agent: Enrique Castro Salomon Brothers Inc 8800 Hidden River Parkway Tampa, Florida 33637 Telephone: (813) 558-7165 Facsimile: (813) 558-4123 Suspension of Solicitation; - - --------------------------- Amendment or Supplement: The Company may instruct the Agents to suspend - - ----------------------- solicitation of purchases at any time. Upon receipt of notice from the Company, the Agents will forthwith suspend solicitation until such time as the Company has advised it that solicitation of purchases may be resumed. If the Company decides to amend or supplement the Registration Statement or the Prospectus, it will promptly advise the Agents and the Trustee and will furnish each Agent and Trustee with the proposed amendment or supplement in accordance with the terms of the Agreement. The Company will mail to the Commission for filing therewith any supplement to the Prospectus (including any Pricing Supplement), provide each Agent with copies of any supplement (or, in the case of a Pricing Supplement, provide each relevant Agent with copies of such Pricing Supplement), and confirm to each Agent that such supplement has been mailed for filing with the commission (or, in the case of a Pricing Supplement, confirm such information with each relevant Agent). In the event that at the time the Company suspends solicitation of purchases there shall be any orders outstanding for settlement, the Company will promptly advise the relevant Agent and the DTC Agent whether such orders may be settled and whether copies of the Prospectus as in effect at the time of the suspension may be delivered in connection with the settlement of such orders. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such orders may not be settled or that copies of such Prospectus may not be so delivered. B-18 Delivery of Prospectus: A copy of the Prospectus and a Pricing Supplement - - ---------------------- relating to a Book-Entry Note must accompany or precede any written offer of such Note, confirmation of the purchase of such Note and payment of such Note by its purchaser. If notice of a change in the terms of the Book-Entry Notes is received by an Agent between the time an order for a Book-Entry Note is placed and the time written confirmation thereof is sent by such Agent to a customer or his agent, such confirmation shall be accompanied by a Prospectus and Pricing Supplement setting forth the terms in effect when the order was placed. Subject to the second preceding paragraph, each Agent will deliver a Prospectus and Pricing Supplement as herein described with respect to each Book-Entry Note sold by it. The Company will make such delivery if such Note is sold directly by the Company to a purchaser (other than an Agent). Authenticity of The Company will cause the Trustee and the - - --------------- Authenticating Agent (if other than the Trustee) to Signatures: furnish each Agent from time to time with the specimen - - ----------- signatures of each of the Trustee's or Authenticating Agent's officers, employees or agents who have been authorized by the Trustee to authenticate Notes, but no Agent will have any obligation or liability to the Company or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company, the Trustee or the Authenticating Agent on any Note. Payment of Selling - - ------------------ Commissions and The Company agrees to pay each Agent a commission as - - --------------- set forth in the Agreement in the form of a discount Expenses: equal to the percentage of the principal amount of each - - -------- Note sold by the Company as a result of a solicitation made by such Agent. B-19 PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES Maturities: Each Certificated Note will have a maturity from date - - ---------- of issue of not less than nine months and not more than 60 years. A Floating Rate Certificated Note will mature only on an Interest Payment Date for such Note. Any Note denominated in Japanese yen will mature on a date not less than one year after the Original Issue Date for such Note and will not be subject to optional redemption prior to such time. Currency: The currency denomination with respect to any - - -------- Certificated Note and the payment of principal, premium (if any) and interest (if any) with respect to any such Certificated Note, shall be as set forth therein and in the applicable Pricing Supplement. Denominations: Unless otherwise specified in the applicable Pricing - - ------------- Supplement, Certificated Notes will be issued only in minimum denominations of $100,000 and any larger amount that is an integral multiple of $1,000. In the case of a Certificated Note having a Specified Currency other than U.S. dollars, the minimum denomination and other authorized denominations shall be set forth in the applicable Pricing Supplement and in such Certificated Note, provided that the minimum denomination of a -------- Certificated Note denominated in Japanese yen shall be at least 1,000,000,000 yen. Registration: Each Certificated Note will be issued in fully - - ------------ registered definitive form. Transfers and Exchanges: A Certificated Note may be presented for transfer or - - ----------------------- exchange at the corporate trust office of the Trustee. Certificated Notes will be exchangeable for Certificated Notes having identical terms but different authorized denominations without service charge. Certificated Notes will not be exchangeable for Book- Entry Notes. Interest: General. Interest, if any, on each Certificated Note - - -------- ------- will accrue from the Original Issue Date for the first Interest Payment Period or the last date to which interest has been paid, if any, for each subsequent interest payment period, and will be calculated and paid in the manner described in B-20 such Note and in the applicable Pricing Supplement. Unless otherwise specified therein, each payment of interest on a Certificated Note will include interest accrued to but excluding the Interest Payment Date (provided that, in the case of Floating Rate Certificated Notes that reset daily or weekly, interest payments will include accrued interest to and including the Regular Record Date immediately preceding the Interest Payment Date) or to but excluding Maturity. Interest payable at the Maturity of a Certificated Note will be payable to the Person to whom the principal of such Note is payable. Regular Record Dates. The Regular Record Date with -------------------- respect to any Interest Payment Date for a Fixed Rate Certificated Note shall, unless otherwise specified, be the February 1 or August 1 (whether or not a Business Day) immediately preceding such Interest Payment Date. The Regular Record Date with respect to any Interest Payment Date for a Floating Rate Certificated Note shall be the date (whether or not a Business Day) fifteen calendar days immediately preceding such Interest Payment Date. Interest Payment Dates on Fixed Rate Certificated ------------------------------------------------- Notes. Unless otherwise specified pursuant to ------ Settlement Procedure "A" below, interest payments on Fixed Rate Certificated Notes will be made semiannually on February 15 and August 15 of each year and at Maturity; provided, however, that in the case of a -------- ------- Fixed Rate Certificated Note issued between a Regular Record Date and an Interest Payment Date, the first interest payment will be made on the Interest Payment Date following the next succeeding Regular Record Date. Interest Payment Dates on Floating Rate Certificated ---------------------------------------------------- Notes. Unless otherwise specified, interest payments ----- will be made on Floating Rate Certificated Notes monthly, quarterly, semiannually or annually. Unless otherwise specified, interest will be payable, in the case of Floating Rate Certificated Notes that: reset daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified; reset quarterly, on the third Wednesday of March, June, September and December of each year; reset semiannually, on the third Wednesday of each of two months specified pursuant to B-21 Settlement Procedure "A" below; and reset annually, on the third Wednesday of the month specified pursuant to Settlement Procedure "A" below; provided, however, that -------- ------- if an Interest Payment Date for a Floating Rate Certificated Note would otherwise be a day that is not a Business Day with respect to such Floating Rate Certificated Note, such Interest Payment Date will be the next succeeding Business Day with respect to such Floating Rate Certificated Note, except in the case of a Floating Rate Certificated Note for which the Base Rate is LIBOR, if such Business Day is in the next succeeding calendar month, such Interest Payment Date will be the immediately preceding Business Day; and provided, further, that in the case of a Floating Rate -------- ------- Certificated Note issued between a Regular Record Date and an Interest Payment Date, the first interest payment will be made on the Interest Payment Date following the next succeeding Regular Date. Calculation of Interest: Fixed Rate Certificated Notes. Interest on Fixed Rate - - ----------------------- ----------------------------- Certificated Notes (including interest for partial periods) will be calculated on the basis of a 360-day year of twelve 30-day months. Floating Rate Certificated Notes. Interest rates on -------------------------------- Floating Rate Certificated Notes will be determined as set forth in the form of Notes. Interest on Floating Rate Certificated Notes, except as otherwise set forth herein, will be calculated on the basis of actual days elapsed and a year of 360 days, except that in the case of a Floating Rate Certificated Note for which the Base Rate is the Treasury Rate, interest will be calculated on the basis of the actual number of days in the year. Payments of Principal All interest payments (excluding interest - - --------------------- payments made at Maturity) will be made by check drawn and Interest: on the Paying Agent, and mailed to the person entitled - - ------------- thereto as provided above not later than the applicable Interest Payment Date; provided, however, that a Holder -------- ------- of $10,000,000 (or the equivalent thereof in a Specified Currency other than U.S. dollars) or more in aggregate principal amount of Registered Notes of like tenor and term shall be entitled to receive such U.S. dollar payments by wire transfer of immediately available funds if appropriate wire transfer instructions have been B-22 received in writing by the Paying Agent not later than fifteen calendar days prior to the applicable Interest Payment Date. At Maturity, the principal of, premium, if any, and interest on each Certificated Note will be payable in immediately available funds by wire transfer provided that the Paying Agent receives the Certificated Note and appropriate information, in writing. Certificated Notes presented to the Paying Agent or the Trustee will be retained by the Trustee or returned to the Company. Redemption: The applicable Pricing Supplement will set forth all - - ---------- terms, if any, relating to the redemption of Notes prior to Maturity. Acceptance of Offers: The Company will have the sole right to accept offers - - -------------------- to purchase Certificated Notes. Each Agent will communicate orally or in writing each reasonable offer to purchase Certificated Notes received by it. The Company may reject any offer in whole or in part. Each Agent may reject any offer received by it in whole or in part in its reasonable discretion. Settlement: All offers accepted by the Company will be settled not - - ---------- later than the fifth Business Day next succeeding the date of acceptance unless otherwise agreed by any purchaser and the Company. Details for Settlement: Settlement procedures with regard to each Certificated - - ---------------------- Note sold by any Agent, as agent, shall be as follows: A. Such Agent will, for each offer to purchase Certificated Notes received by it, provide by telephone or facsimile transmission the following information to the Vice President and Treasurer of the Company or his designee. 1. Exact name of registered owner. 2. Exact address of registered owner (for interest payments and notices). 3. Taxpayer identification number of registered owner. 4. Principal amount of Certificated Note. B-23 5. Interest rate. 6. Date of Note. 7. Settlement date. 8. Stated Maturity. 9. In the case of a Fixed Rate Certificated Note, the interest rate and repayment or redemption provisions (if any) or, in the case of a Floating Rate Certificated Note, the Base Rate, Initial Interest Rate (if known at such time), Index Maturity, Interest Reset Dates, Interest Reset Period, Spread or Spread Multiplier (if any), Minimum Interest Rate (if any), Maximum Interest Rate (if any) and repayment or redemption provisions (if any) or, in the case of an Indexed Note, the terms of such Note as such terms are identified in the Pricing Supplement relating to such Note. 10. The Agent's commission to be paid in the form of a discount upon settlement. 11. Interest Payment Dates. 12. Proceeds. 13. Terms relating to redemption, if any. 14. Denomination. 15. Currency of Certificated Note. 16. Any information applicable to Original Issue Discount Notes. 17. Other terms. Such Agent will advise the Company of the foregoing information for each sale made by it in time for the Trustee's authenticating agent, B-24 including the Trustee itself if no authenticating agent is appointed (the "Authenticating Agent") to prepare the required Certificated Notes. If the Company rejects an offer, the Company will promptly notify the relevant Agent. B. After receiving the details for each offer from an Agent, the Company will, if it accepts such offer and after recording the details and making any necessary calculations, provide to the Authenticating Agent the information necessary for the Authenticating Agent to prepare each Certificated Note (as more fully set forth in the Agency Agreement dated as of ____________, 1995 among the Company, the Trustee and Morgan Guaranty Trust Company (the "Agency Agreement"). C. The Authenticating Agent will complete and distribute a pre-printed 5-ply Note packet containing the following documents (or a 1-ply Note with attached confirmation and 4 appropriately designated photocopies thereof) in forms approved by the Company, the relevant Agent and the Trustee: 1. Certificated Note with customer information. 2. Stub 1 -- For Trustee. 3. Stub 2 -- For relevant Agent. 4. Stub 3 -- For Company. 5. Stub 4 -- For Authenticating Agent. In the event the relevant Agent refuses to accept and pay for such Note because the Note was incorrectly prepared, the relevant Agent shall not be required to credit the Company's account as provided below, or to cause such account to be so credited. B-25 D. The Authenticating Agent will deliver the Certificated Note (with the confirmation) and stubs 1 and 2 to the relevant Agent or to its representative designated in writing by it (the "Representative") at an office of the relevant Agent or the Representative located in the borough of Manhattan and south of Chambers Street, and the Agent or its Representative will acknowledge receipt of the Certificated Note by stamping the delivery receipt with the date and time received and returning it to the Authenticating Agent. Such delivery will be made only against such receipt. In the event that the instructions given by the relevant Agent for payment to the account of the Company are revoked, the Company will as promptly as possible credit or, cause to be credited the account of such Agent designated by it for such purpose in an amount of immediately available funds equal to the amount of such payment. E. The relevant Agent or the representative will deliver the Certificated Note (with confirmation) to the customer against payment in immediately available funds. In all cases, receipt by the customer of the Prospectus, appropriately amended or supplemented, must accompany or precede any written offer of the Certificated Note, delivery of the Certificated Note, and confirmation and payment by the customer for the Certificated Note. If the relevant Agent is instructed by the purchaser to deliver the Certificated Note and confirmation to different locations, the Certificated Note and the confirmation will each be accompanied or preceded by the Prospectus, appropriately amended or supplemented, then in effect. F. The relevant Agent or the Representative will obtain the acknowledgment of receipt of the Certificated Note by the customer through completion of stub 2. G. The Authenticating Agent will send by first class mail stub 3 to the Company's Treasury Department. Periodically, the Authenticating B-26 Agent will also send to the Company's Treasury Department a statement to the Company setting forth the principal amount of the Notes outstanding as of that date after giving effect to such transaction (or make such reports available through the MPI System). In the event of a purchase of Certificated Notes by an Agent, as principal, appropriate settlement details will be set forth in the applicable Terms Agreement to be entered into between such Agent and the Company pursuant to the Agreement. Settlement Procedures For offers accepted by the Company Settlement - - --------------------- Procedures "A" through "G" set forth above shall be Timetable: completed on or before the respective times (New York - - --------- City time) set forth below. Settlement Procedure Time --------- ---- A With respect to items 1-3 of Settlement Procedure A, 1:00 p.m. on the second Business Day preceding the date of settlement, and with respect to items 4-14 thereof, 11:00 a.m. on the Business Day immediately following the day of offer; provided, -------- that with respect to offers of Certificated Notes denominated in a Specified Currency other than U.S. dollars, items 12-14 thereof shall be provided to the Company by 1:00 p.m. on the day of offer (or as soon as practicable thereafter) B 3:00 p.m. on the Business Day immediately preceding the day of settlement; provided, that -------- with respect to offers of Notes denominated in a Specified Currency other than U.S. dollars, items 12-14 of Settlement Procedure A shall be provided to the Authenticating Agent by 2:00 p.m. on the day of offer (or as soon as practicable thereafter) C-D 2:15 p.m. on day of settlement E-F 3:00 p.m. on day of settlement G 5:00 p.m. on day of settlement B-27 Confirmation: Each Agent shall, for each Certificated Note offer - - ------------ received by it and accepted by the Company, issue a confirmation to the purchaser, setting forth such of the details set forth above as is deemed appropriate by such Agent. Note Delivery and Upon instructions from the Company, the Authenticating - - ----------------- Agent will deliver the Certificated Notes to the Cash Payment: relevant Agent or the Representative (for the benefit - - ------------ of the purchaser). Delivery by the Authenticating Agent of the Certificated Notes will be made in accordance with paragraph D of the Details for Settlement. Fails: For offers received by an Agent, in the event that a - - ----- purchaser shall fail to accept delivery of and make payment for a Certificated Note, such Agent will notify the Trustee, the Authenticating Agent and the Company, by telephone, confirmed in writing, and return the Certificated Note to the Authenticating Agent promptly. Upon receipt of the Certificated Note from such Agent, the Authenticating Agent will notify the Company and the Company will as promptly as possible credit or cause to be credited the account of such Agent designated by it for such purpose in an amount of immediately available funds equal to the amount previously credited thereto in respect of the Certificated Note. Such debits and credits will be made on the settlement date, if possible, and in any event not later than the Business Day following the settlement date. If such fail shall have occurred for any reason other than the failure of such Agent to provide the necessary information to the Company as described above for settlement or to provide a confirmation to the purchasers within a reasonable period of time as described above, the Company will reimburse such Agent for its actual loss of the use of funds during the period when such funds were credited to the account of the Company. Immediately upon receipt of the Certificated Note in respect of which the fail occurred, the Authenticating Agent will void the Note, make the appropriate entries in B-28 its records and deliver the Note to the Trustee which will, in turn, make appropriate entries in its records and destroy the Certificated Note. Maturity: At Maturity, the principal amount of each Note will be - - -------- payable in immediately available funds provided that the Trustee or other paying agent receives the Certificated Note and appropriate information, in writing. Certificated Notes presented to any paying agent or the Trustee will be destroyed by the Trustee. Procedure for Rate The Company and the Agents will discuss from time - - ------------------ to time the rates to be borne by Certificated Notes Changes: that may be sold as a result of the solicitation of - - ------- offers by any Agent. If any offer to purchase a Certificated Note is accepted by the Company, the Company will prepare a Pricing Supplement reflecting the terms of such Certificated Note and will arrange to have the Pricing Supplements filed with the Commission in accordance with the applicable paragraph of Rule 424(b) under the Securities Act of 1933, as amended, and will supply by facsimile transmission or by overnight express one copy for delivery by 11:00 a.m. on the Business Day next following the date of acceptance one copy thereof (or additional copies if requested) to each Agent which presented the order (each, a Presenting Agent") at each address listed below and one copy to the Trustee. The Agent which presented the order (each a "Presenting Agent") at each address listed below and one copy to the Trustee. The relevant Agent will cause a Prospectus and Pricing Supplement to be delivered to the purchaser of the Certificated Note. Copies of Pricing Supplements shall be sent to: if Merrill Lynch & Co. is the Presenting Agent: Merrill Lynch & Co. Tritech Services 4 Corporate Place Corporate Park 287 Piscateway, New Jersey 08854 Attn: Final Prospectus Unit/ Nachman Kimerling Telephone: (908) 878-6526 Facsimile: (908) 878-6530 B-29 Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated Merrill Lynch World Headquarters World Financial Center, North Tower, 23rd Floor New York, New York 10281-1323 Attn: MTN Product Management Telephone: (212) 449-7582 Facsimile: (212) 449-2234 if Goldman Sachs & Co. is the Presenting Agent: ------------------------------------ ------------------------------------ ------------------------------------ if J. P. Morgan Securities Inc. is the Presenting Agent: J.P. Morgan Securities Inc. 60 Wall Street 2nd Floor-Capital Markets New York, New York 10260 Telephone: (212) 648-0787 Facsimile: (212) 837-5939 if Morgan Stanley & Co. Incorporated is the Presenting Agent: Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas 4th Floor New York, New York 10020 Attn: Carlos Cabrera if PaineWebber Incorporated is Presenting Agent: Debt Syndicate PaineWebber Incorporated 1285 Avenue of the Americas New York, New York 10019 Attn: Peter Masco Telephone: (212) 713-3357 Facsimile: (212) 713-2285 B-30 if Salomon Brothers Inc is the Presenting Agent: Terry Alvarez Salomon Brothers Inc One New York Plaza 36th Floor Balancing Operations New York, New York 10004 Telephone: (212) 747-7493 Facsimile: (212) 635-5382 Suspension of Solicitation; - - --------------------------- Amendment or Supplement: The Company may instruct the agents to suspend - - ----------------------- solicitation of purchases at any time. Upon receipt of notice from the Company, the Agents will forthwith suspend solicitation until such time as the Company has advised them that solicitation of purchases may be resumed. If the Company decides to amend or supplement the Registration Statement or the Prospectus, it will promptly advise the Agents and the Trustee and will furnish each Agent and Trustee with the proposed amendment or supplement in accordance with the terms of the Agreement. The Company will mail to the Commission for filing therewith any supplement to the Prospectus (including any Pricing Supplement), provide each Agent with copies of any supplement (or, in the case of a Pricing Supplement, provide each relevant Agent with copies of such Pricing Supplement), and confirm to each Agent that such supplement has been mailed for filing with the Commission (or, in the case of a Pricing Supplement, confirm such information with each relevant Agent). In the event that at the time the Company suspends solicitation of purchases there shall be any orders outstanding for settlement, the Company will promptly advise the relevant Agent and the Trustee whether such orders may be settled and whether copies of the Prospectus as in effect at the time of the suspension may be delivered in connection with the settlement of such orders. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such B-31 orders may not be settled or that copies of such Prospectus may not be so delivered. Authenticity of - - --------------- Signatures: The Company will cause the Trustee and the - - ---------- Authenticating Agent (if other than the Trustee) to furnish each Agent from time to time with the specimen signatures of each of the Trustee's or Authenticating Agent's officers, employees or agents who have been authorized by the Trustee to authenticate Notes, but no Agent will have any obligation or liability to the Company or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company, the Trustee or the Authenticating Agent on any Note. Payment of Selling - - ------------------ Commission and Expenses: The Company agrees to pay each Agent a commission as - - ----------------------- set forth in the Agreement in the form of a discount equal to the percentage of the principal amount of each Note sold by the Company as a result of a solicitation made by such Agent. B-32 EX-1.(C) 3 EURO DISTRIBUTION AGREEMENT Exhibit 1(c) Draft of 7/5/95 McDonald's Corporation US$584,662,000 Medium-Term Notes, Series E Due from 184 Days to 60 Years from Date of Issue EURO DISTRIBUTION AGREEMENT _______________, 1995 Merrill Lynch International Limited Ropemaker Place 25 Ropemaker Street London, England EC2Y 9LY Goldman Sachs International Peterborough Court 133 Fleet Street London, England EC4A 2BB J.P. Morgan Securities Ltd. 60 Victoria Embankment London, England EC4Y OJP Morgan Stanley & Co. International Limited 25 Cabot Square Canary Wharf London, England E14 4QA Salomon Brothers International Limited Victoria Plaza 111 Buckingham Palace Road London, England SW1W 0SB Ladies and Gentlemen: McDonald's Corporation, a Delaware corporation (the "Company"), confirms its agreement with you with respect to the issue and sale by the Company outside the United States of its Medium-Term Notes, Series E, in bearer form due from 184 days to 60 years from date of issue and having an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or its equivalent in other currencies or currency units (the "Notes"). The Notes are to be issued under an indenture dated as of March 1, 1987 between the Company and First Fidelity Bank, National Association (the "Trustee") and any indentures supplemental thereto (collectively, the "Indenture"), will be issued in temporary and permanent global, and individual definitive, bearer form in denominations of US$25,000 and integral multiples of $5,000 in excess thereof (or in such other denominations as shall be provided in a supplement to the Basic Prospectus referred to below) and will bear interest at rates and have such other terms as are provided in a supplement to the Basic Prospectus referred to below. Notes may bear interest at fixed or floating rates to be provided in a supplement to the Basic Prospectus referred to below, and may, whether or not bearing interest, be issued with original issue discount. The Notes may be issued in amounts denominated in United States dollars or in amounts denominated in other currencies or in the European Currency Unit or other composite currencies. References herein to amounts stated in United States dollars shall be deemed to refer to the equivalent amount of other currency or European Currency Units or other composite currency to the extent applicable. Subject to the terms and conditions stated herein and subject to the reservation by the Company of the right to sell Notes directly to investors on its own behalf or through other agents, dealers or underwriters, the Company hereby appoints each of you (individually an "Agent" and collectively the "Agents") as an agent for the purpose of soliciting offers to purchase the Notes from the Company by others and agrees that if and whenever the Company determines to sell Notes directly to an Agent as principal for resale to others it will enter into a Terms Agreement relating to such sale in accordance with the provisions of Section 2(b) hereof. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, each Agent agrees, severally but not jointly, to use its reasonable best efforts to solicit offers to purchase Notes upon terms acceptable to the Company at such times and in such amounts as the Company shall from time to time specify. In acting under this Agreement and in connection with the sale of any Notes by the Company (other than Notes sold to an Agent as principal pursuant to a Terms Agreement), each Agent is acting solely as agent of the Company and does not assume any obligation towards or relationship of agency or trust with any purchaser of the Notes. 1. Representations and Warranties. The Company represents and warrants to ------------------------------- and agrees with each Agent as follows: (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"), and has filed with the Securities and Exchange Commission (the "Commission") a registration statement on such Form (Registration No. 33_______) and such registration statement has become effective, for the registration under the Securities Act of the offering of the Notes. Such registration statement, including the exhibits thereto, as amended at the date of the sale of any Notes, is hereinafter called the "Registration Statement". The Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and the Company has duly authorized the issuances of the Notes. The Registration Statement, as amended at the date of this Agreement, meets the requirements set -2- forth in Rule 415(a)(1)(x) under the Securities Act and complies in all other material respects with said Rule. The Company proposes to file with the Commission from time to time, pursuant to Rule 424(b) under the Securities Act, supplements to the prospectus relating to the Notes included in the Registration Statement, which will describe certain terms of the Notes, and prior to any such filing will advise each Agent of all further information (financial and other) with respect to the Company to be set forth therein. Such prospectus in the form in which it appears in the Registration Statement is called the "Basic Prospectus". The term "Prospectus" means the Basic Prospectus together with the prospectus supplement or supplements specifically relating to any Notes sold pursuant to this Agreement (a "Prospectus Supplement"), as filed with, or transmitted for filing with, the Commission pursuant to Rule 424 under the Securities Act. Any reference herein to the Registration Statement, Basic Prospectus or Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which have been filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in the Prospectus complied or will comply when so filed in all material respects with the Exchange Act and the rules and regulations thereunder, (ii) each part of the Registration Statement (including the documents incorporated by reference therein) filed with the Commission pursuant to the Securities Act relating to the Notes, when such part became effective or was incorporated by reference into the Registration Statement, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (iii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations thereunder and (iv) the Registration Statement and the Prospectus do not contain and, as further amended or supplemented, if applicable, will not contain any untrue statements of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, except that the representations and warranties set forth in this Section 1(b) do not apply to (a) that part of the Registration Statement that consists of the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of First Fidelity Bank, National Association, as Trustee under the Indenture, or (b) statements or omissions in the Registration Statement or the Prospectus based upon information furnished to the Company in writing by an Agent, relating to such Agent, expressly for use therein. -3- 2. Solicitations as Agent; Purchases as Principal. ----------------------------------------------- (a) Solicitations as Agent. On the basis of the representations and ----------------------- warranties herein contained, but subject to the terms and conditions herein set forth, each Agent will use its reasonable best efforts to solicit offers to purchase the Notes upon the terms and conditions set forth in the Prospectus as then amended or supplemented; provided, -------- however, that each Agent hereby represents and agrees that it will not ------- make any representations or use any information other than that set forth in the Prospectus (as then amended or supplemented) or solicit any offer to purchase the Notes other than by means of such Prospectus as then amended or supplemented. The Company reserves the right, in its sole discretion, to instruct the Agents to suspend at any time, for any period of time or permanently, the solicitation of offers to purchase the Notes. Upon receipt of notice from the Company, each Agent will forthwith suspend solicitations of offers to purchase Notes from the Company until such time as the Company has advised the Agents that such solicitation may be resumed. During the period of time that this Agreement is suspended the Company shall not be required to deliver any certificates, opinions or letters in accordance with Sections 3(h), (i) and (j); provided, however, that no Agent shall be required to -------- -------- resume soliciting offers to purchase Notes until the Company has delivered such certificates, opinions or letters as requested by such Agent if any of the events described in Section 3(h), (i) or (j) have occurred during the period of suspension. The Company agrees to pay each Agent, as consideration for the sale of any Notes resulting from a solicitation made by it, a commission in the form of a discount from the principal amount of each Note sold by the Company hereunder as a result of such solicitation. With respect to Notes with a term of 184 days to 30 years, such commission will be equal to the following percentage of the principal amount of such Note: Term Commission Rate ---- --------------- From 184 days to less than one year 0.125% From one year to less than 18 months 0.150% From 18 months to less than 2 years 0.200% From 2 years to less than 3 years 0.250% From 3 years to less than 4 years 0.350% From 4 years to less than 5 years 0.450% From 5 years to less than 6 years 0.500% From 6 years to less than 7 years 0.550% From 7 years to less than 10 years 0.600% From 10 years to less than 20 years 0.625% From 20 years to 30 years 0.750% -4- and with respect to Notes with a term in excess of thirty years such commission will be negotiated between the Company and the applicable Agent at the time of sale. The Agents may reallow any portion of the commission payable pursuant hereto to dealers or purchasers in connection with the offer and sale of any Notes. The Agents are authorized to solicit offers to purchase Notes only in principal amounts of US$25,000 or any amount in excess thereof that is an integral multiple of $5,000 (or in such other minimum purchase amounts and multiples thereof as are described in a supplement to the Basic Prospectus). Each Agent shall communicate to the Company, orally or in writing, each offer to purchase Notes received by it as agent which in its judgment should be considered by the Company. The Company shall have the sole right to accept offers to purchase Notes and may reject any offer in whole or in part. Each Agent shall have the right to reject any offer to purchase Notes that it considers to be unacceptable, and any such rejection shall not be deemed a breach of its agreements contained herein. (b) Purchases as Principal. Each sale of Notes to an Agent as principal ---------------------- shall be made in accordance with the terms of this Agreement and a separate agreement which will provide for the sale of such Notes to such Agent and the purchase and re-offering thereof by such Agent. Each such separate agreement (which may initially be an oral agreement, to be subsequently confirmed in writing) is herein referred to as a "Terms Agreement". Unless the context otherwise requires, each reference contained herein to "this Agreement" shall be deemed to include any applicable Terms Agreement between the Company and an Agent. Each such Terms Agreement, whether oral or in writing, shall be with respect to such information (as applicable) as is specified in Exhibit A hereto. An Agent's commitment to purchase Notes pursuant to any Terms Agreement shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall specify the principal amount of Notes to be purchased pursuant thereto, the maturity date thereof, the price to be paid to the Company for such Notes, the time and place of delivery of and payment for such Notes (the "Settlement Date") and any other relevant terms. An Agent may utilize a selling or dealer group in connection with the resale of the Notes purchased. Such Terms Agreement shall also specify any requirements for officers' certificates, opinions of counsel and letters from the independent public auditors of the Company pursuant to Sections 3 and 4 hereof. (c) Procedures. Each Agent and the Company agree to perform the ---------- respective duties and obligations specifically provided to be performed in the Medium-Term Note Administrative Procedures (attached hereto as Exhibit B) (the "Procedures"), as amended from time to time. The Procedures may be amended only by written agreement of the Company and each Agent; provided -------- -5- that with respect to any single issuance of Notes, the Procedures may be modified by written agreement of the Company and the Agents soliciting the purchase of such Notes (or purchasing such Notes pursuant to a Terms Agreement). The Company will furnish a copy of the Procedures from time to time in effect to the Trustee, each authenticating agent or paying agent designated pursuant to the Indenture and the common depositary, if any, for the operator of the Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel"). (d) Delivery. The documents required to be delivered by Section 4 of this -------- Agreement shall be delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel to the Agents, at One Liberty Plaza, New York, New York 10006 not later than 5:00 p.m. New York City Time, on the date hereof, or at such other time and/or place as each Agent and the Company may agree upon in writing (the "Commencement Date") 3. Agreements. The Company agrees with each Agent that: ----------- (a) Prior to the termination of the offering of the Notes pursuant to this Agreement, the Company will not file any amendment to the Registration Statement or any Prospectus Supplement relating to the Notes unless the Company has previously furnished to each Agent (or, in the case of Prospectus Supplements setting out only the interest rate, maturity and other terms of Notes ("Pricing Supplements"), the Agent that has solicited the applicable offer to purchase Notes) a copy thereof for its review and will not file any such proposed amendment or supplement to which any Agent reasonably objects (or, in the case of Pricing Supplements, the Agent that has solicited the applicable offer to purchase Notes reasonably objects); provided, however, that the -------- ------- foregoing requirement shall not apply to any of the Company's periodic filings with the Commission required to be filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act or to any Pricing Supplement applicable to Notes sold by the Company directly to investors on its own behalf; and provided further that without the -------- ------- consent of, but after consultation with, the Agents, including the furnishing of drafts thereof, the Company may file any such proposed amendment or Prospectus Supplement which in the opinion of its counsel it is required by law to file. Subject to the foregoing sentence, the Company will promptly cause each Prospectus Supplement to be filed with the Commission pursuant to Rule 424(b). The Company will promptly advise each Agent (i) of the filing of any amendment or supplement to the Basic Prospectus, (ii) of the filing and effectiveness of any amendment to the Registration Statement, (iii) of any request by the Commission for any amendment of the Registration Statement or any amendment of or supplement to the Basic Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose and (v) of the -6- receipt by the Company of any notification with respect to the suspension of the qualification of the Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. If the Company files any amendment to the Registration Statement or any Prospectus Supplement, which filing does not require the consent of the Agents, the Company will provide each Agent with a copy of such document promptly after the filing thereof and no Agent shall be obligated to solicit offers for the purchase of Notes so long as it is not reasonably satisfied with such document. (b) If, at any time when a prospectus relating to the Notes is required to be delivered under the Securities Act, any event occurs or condition exists as a result of which the Registration Statement or the Prospectus as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if, in the opinion of the Company, it is necessary at any time to amend or supplement the Registration Statement or the Prospectus, as then amended or supplemented, to comply with the Securities Act, the Company will immediately notify each Agent to suspend solicitation of offers to purchase Notes and, if so notified by the Company, each Agent shall forthwith suspend such solicitation and cease using the Prospectus as then amended or supplemented; and if the Company shall decide to amend or supplement the Registration Statement or Prospectus as then amended or supplemented, it will so advise each Agent promptly by telephone (with confirmation in writing) and will prepare and cause to be filed promptly with the Commission an amendment or supplement to the Registration Statement or Prospectus as then amended or supplemented which will include a description of such facts or events and/or will correct such statement or omission or effect such compliance and will supply such amended or supplemented Prospectus to each Agent in such quantities as it may reasonably request; and, if such amendment or supplement and any documents, certificates and opinions furnished to an Agent pursuant to paragraph (f) below in connection with the preparation or filing of such amendment or supplement, are satisfactory in all respects to such Agent, upon the filing of such amendment or supplement with the Commission or effectiveness of an amendment to the Registration Statement such Agent will resume the solicitation of offers to purchase Notes hereunder. Notwithstanding any other provision of this Section 3(b), until the distribution of any Notes any Agent may own as principal has been completed, if any event occurs or condition exists as a result of which it is necessary to amend or supplement the Registration Statement or Prospectus to make the information therein comply with the Securities Act or complete or accurate in all material respects, the Company agrees to provide such Agent with immediate notice by telephone (with confirmation in writing ) to cease sales of any Notes, and the Company will forthwith prepare and furnish, at its -7- own expense, any amendments or supplements to the Registration Statement or Prospectus, satisfactory in all respects to such Agent, in such quantities as it may reasonably request. If such amendment or supplement and any documents, certificates and opinions furnished to an Agent pursuant to paragraph (f) below in connection with the preparation and filing of such amendment or supplement are satisfactory in all respects to such Agent, upon the filing of such amendment or supplement to the Registration Statement or Prospectus such Agent may resume its resale of the Notes as principal. (c) As soon as practicable, the Company will make generally available to its security holders and to each Agent an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 under the Securities Act, and, not later than 45 days after the end of the 12-month period beginning at the end of each fiscal quarter of the Company (other than the last fiscal quarter of any fiscal year) during which the effective date of any post-effective amendment to the Registration Statement occurs, not later than 90 days after the end of the fiscal year beginning at the end of each last fiscal quarter of any fiscal year of the Company during which the effective date of any post-effective amendment to the Registration Statement occurs, and not later than 90 days after the end of each fiscal year of the Company during which any Notes were issued, the Company will make generally available to its security holders an earnings statement covering such 12-month period or such fiscal year, as the case may be, that will satisfy the provisions of such Section 11(a) and Rule 158. (d) The Company will furnish to each Agent, without charge, three conformed copies of the Registration Statement including exhibits and materials, if any, incorporated by reference therein and, during the period mentioned in Section 3(b) above, as many copies of the Prospectus, any documents incorporated by reference therein and any supplements and amendments thereto as any Agent may reasonably request. The terms "supplement" and "amendment" or "amend" as used in this Agreement shall include all documents filed by the Company with the Commission subsequent to the date of the Basic Prospectus, pursuant to the Exchange Act, which are deemed to be incorporated by reference in the Prospectus. (e) The Company or its designated agent shall submit such reports or information as may be required from time to time by applicable law, regulations and guidelines promulgated by Japanese governmental and regulatory authorities in the case of the issue and purchase of, and for so long as there are outstanding, any Notes denominated in Japanese yen. (f) During the term of this Agreement, the Company shall furnish to each Agent such certificates of officers of the Company relating to the business, operations and affairs of the Company and its subsidiaries, the Registration Statement, the -8- Basic Prospectus, any amendments or supplements thereto, the Indenture, the Notes, this Agreement, the Procedures, any Terms Agreement and the performance by the Company of its obligations hereunder as such Agent may from time to time reasonably request. (g) The Company will, whether or not any sale of Notes is consummated, pay all expenses incident to the performance of its obligations under this Agreement, including: (i) the preparation and filing of the Registration Statement and all amendments thereto, (ii) the preparation, issuance and delivery of the Notes, (iii) the fees and disbursements of the Company's accountants and of the Trustee and Paying Agent and their respective counsel, (iv) the qualification of the Notes under securities laws, in accordance with the provisions of Section 3(e), including filing fees and the reasonable fees and disbursements of counsel to the Agents in connection therewith, (v) the printing and delivery to the Agents in quantities as hereinabove stated of copies of the Registration Statement and all amendments and of the Basic Prospectus and any amendments or supplements thereto, (vi) the listing of any Notes on the Luxembourg Stock Exchange and (vii) any fees charged by rating agencies for the rating of the Notes. The Company will also, whether or not any sale of the Notes is consummated, reimburse the Agents promptly upon receipt of an invoice therefor for the reasonable fees of their counsel, as agreed by the Company and the Agents, incurred in connection with the preparation of this Agreement and the offering and sale of the Notes as well as any reasonable disbursements and out-of-pocket expenses incurred by such counsel, as agreed by the Company and the Agents. The Company will also indemnify and hold the Agents harmless against any documentary, stamp or similar transfer or issue tax, including any interest and penalties, on the issue of the temporary global Notes and the Notes in accordance with the terms of this Agreement, on the execution and delivery of the Indenture and this Agreement, and on the exchange of the temporary global Notes for definitive Notes or permanent global Notes, which are or may be required to be paid under the laws of the United Kingdom, the United States or any political subdivision or taxing authority thereof or therein. (h) Each acceptance by the Company of an offer for the purchase of Notes solicited by an Agent, and each sale of Notes to an Agent pursuant to a Terms Agreement, shall be deemed to be an affirmation that the representations and warranties of the Company contained in this Agreement and in any certificate theretofore delivered to such Agent pursuant hereto are true and correct in all material respects at the time of such acceptance or sale, as the case may be, and an undertaking that such representations and warranties will be true and correct in all material respects at the time of delivery to the purchaser or his agent, or to such Agent, of the Notes relating to such acceptance or sale, as the case may be, as though made at and as of each such time (and it is understood that such -9- representations and warranties shall relate to the Registration Statement and the Basic Prospectus as amended and supplemented to each such time). (i) Each time the Registration Statement or the Basic Prospectus is amended or supplemented (other than by a Pricing Supplement or an amendment or supplement providing for a change deemed immaterial in the reasonable opinion of the Agents), if so requested by any Agent, and each time the Company sells Notes to an Agent pursuant to a Terms Agreement, the Company will deliver or cause to be delivered forthwith to the relevant Agent or Agents a certificate of the Company signed by the Chairman of the Board, the President, the Vice Chairman of the Board, any Vice President or the Treasurer, dated the date of the effectiveness of such amendment or filing or supplement or sale, as the case may be, in form reasonably satisfactory to such Agent or Agents, of the same tenor as the certificate referred to in Section 4(c) relating to the Registration Statement and the Basic Prospectus as amended and supplemented to the time of delivery of such certificate. (j) Each time the Registration Statement or the Basic Prospectus is amended or supplemented, if in the reasonable judgment of any Agent (or, in the case of a Pricing Supplement, in the reasonable judgment of the Agent that has solicited the offer to purchase the relevant Notes) the information contained in the amendment or supplement is of such a nature that an opinion of counsel should be furnished, and each time the Company sells Notes to an Agent pursuant to a Terms Agreement, if so indicated in the applicable Terms Agreement, the Company shall furnish or cause to be furnished forthwith to such Agent a written opinion of counsel of the Company. Any such opinion shall be dated the date of such amendment or supplement or the date of such sale, as the case may be, shall be in a form satisfactory to such Agent and shall be of the same tenor as the opinion referred to in Section 4(b)(i) but modified to relate to the Registration Statement and the Basic Prospectus as amended and supplemented to the time of delivery of such opinion. In lieu of such opinion, counsel last furnishing such an opinion to such Agent may furnish to such Agent a letter to the effect that it may rely on such last opinion to the same extent as though it were dated the date of such letter (except that statements in such last opinion will be deemed to relate to the Registration Statement and the Basic Prospectus as amended and supplemented to the time of delivery of such letter). (k) Each time that the Registration Statement or the Basic Prospectus is amended or supplemented to set forth amended or supplemental financial information or such amended or supplemental information is incorporated by reference in the Registration Statement or the Basic Prospectus, if so requested by any Agent, or each time the Company sells Notes to an Agent pursuant to a Terms Agreement, if so indicated in the applicable Terms Agreement, the Company shall cause its independent public auditors forthwith to furnish each Agent or such Agent, as appropriate, with a letter, dated the date of the effectiveness of such amendment -10- or the date of filing of such supplement, or the date of such sale, as the case may be, in a form satisfactory to the recipient, of the same tenor as the letter referred to in Section 4(d), with regard to the amended or supplemental financial information included or incorporated by reference in the Registration Statement and the Basic Prospectus, as amended or supplemented to the date of such letter. (l) Between the date of any Terms Agreement and the Settlement Date, or such later date as may be specified in such Terms Agreement, with respect to such Terms Agreement, the Company will not, without the prior consent of the Agent which is a party to such Terms Agreement, offer, sell, contract to sell or otherwise dispose of any debt securities of the Company substantially similar in currency, maturity and other material terms to the Notes, other than (i) the Notes that are to be sold pursuant to such Terms Agreement, (ii) debt securities issued for consideration other than cash and (iii) commercial paper in the ordinary course of business, except as may otherwise be provided in any such Terms Agreement. (m) The Company will not issue any Notes except as have been duly authorized by all necessary corporate action on the part of the Company. (n) In connection with the application to list the Notes on the Luxembourg Stock Exchange, the Company will furnish from time to time any and all documents, instruments, information and undertakings and publish all advertisements or other material that may be necessary in order to effect such listing and maintain such listing until none of the listed Notes is outstanding or until such time as payment in respect of principal, premium, if any, and interest in respect of all the listed Notes has been duly provided for, whichever is earlier; provided, --------- however, that if the Company can no longer reasonably maintain such -------- listing, it will use reasonable efforts to obtain and maintain the quotation for, or listing of, the Notes on such other stock exchange or exchanges as the Company may decide, with the approval of the Agents. In addition, for so long as any Notes are listed, the Company will maintain in Luxembourg, or in such other place as the Notes are listed (if the Notes are no longer listed on the Luxembourg Stock Exchange), a paying agent in respect of the Notes. (o) The Company will not issue any Notes directly to investors or through other agents, dealers or underwriters except in accordance with applicable law. 4. Conditions of the Obligations of the Agents. The obligations of -------------------------------------------- each Agent to solicit offers to purchase the Notes as agent of the Company and to purchase Notes as principal pursuant to any Terms Agreement will be conditioned upon the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of the Company's officers made in each certificate furnished pursuant to the provisions hereof, to the -11- performance and observance by the Company of all covenants and agreements herein contained on its part to be performed and observed and to the following additional conditions precedent: (a) No stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall have been instituted or threatened, and there shall have been no material adverse change in the condition of the Company and its consolidated subsidiaries, taken as a whole, from that set forth in the Registration Statement or the Prospectus as amended or supplemented to such date. (b) At the Commencement Date, such Agent shall have received, and at each Settlement Date with respect to any applicable Terms Agreement to which such Agent is a party, if called for by such Terms Agreement, such Agent shall have received: (i) The opinion, dated as of such date, of either Shelby Yastrow, Senior Vice President, General Counsel and Secretary for the Company or Gloria Santona, Vice President, Assistant General Counsel and Assistant Secretary for the Company, to the effect that: (A) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification and has all corporate power and authority to own its properties and conduct its business as set forth in the Prospectus, except where such failure to be so qualified or be in good standing cannot be reasonably expected to have a material adverse effect on the Company and its consolidated subsidiaries, taken as whole. (B) Each of the Significant Subsidiaries of the Company has been duly organized, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, and all of the issued and outstanding shares of capital stock of each Significant Subsidiary (except McDonald's Australia Limited and McDonald's Property Company Limited, of which the Company directly or indirectly owns a majority of the capital stock) are owned, directly or indirectly, by the Company, have been duly authorized and validly issued, and (except in the case of McDonald's Deutschland, Inc., formerly McDonald's System of -12- Germany, Inc.) are fully paid and non-assessable, and are so owned free and clear of any claim, lien, encumbrance or security interest except where such failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its consolidated subsidiaries, taken as a whole. (C) This Agreement (and, if the opinion is being given pursuant to Section 3(j) on account of the Company having entered into a Terms Agreement, the applicable Terms Agreement) has been duly authorized, executed and delivered by the Company. (D) The Indenture has been duly authorized, executed and delivered by the Company, is a valid and binding agreement of the Company and has been duly qualified under the Trust Indenture Act. (E) The Notes have been duly authorized and, when (i) executed and authenticated in accordance with the Indenture, (ii) paid for by the purchasers thereof and (iii) delivered to such purchasers, will be valid and binding obligations of the Company and will be entitled to the benefits of the Indenture. (F) The Registration Statement and any amendments thereto is effective under the Securities Act, and, to the best of such counsel's knowledge, no proceedings for a stop order are pending or threatened by the Commission. (G) The execution, delivery and performance of this Agreement, the Notes and the Indenture will not contravene any provision of applicable law or the Restated Certificate of Incorporation or By-Laws of the Company or, to the knowledge of such counsel, any agreement or other instrument binding upon the Company and no consent, approval or authorization of any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, the Notes and the Indenture, except such as are specified and have been obtained and except that the offer and sale of the Notes in any jurisdiction may be subject to the securities or other laws of such jurisdiction. (H) The statements in the Prospectus under the captions "Description of Debt Securities", "Description of Bearer Notes", "Plan of Distribution" and "United States Taxation" insofar as such statements constitute summaries of the documents, proceedings or matters referred to therein, are accurate summaries of such documents, proceedings and matters. -13- (I) Such counsel does not know of any legal or governmental proceeding pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that is required to be described in the Registration Statement or the Prospectus and is not so described or of any contract or other document which is required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement that is not described or filed as required. (J) Such counsel (1) is of the opinion that each document, if any, filed pursuant to the Exchange Act (except for financial statements included therein as to which such counsel need not express any opinion) and incorporated by reference in the Registration Statement and the Prospectus complied when so filed as to form in all material respects with the Exchange Act and the applicable rules and regulations thereunder, (2) has no reason to believe that (except for financial statements included therein as to which such counsel need not express any belief) any part of the Registration Statement (including the documents incorporated by reference therein) filed with the Commission pursuant to the Securities Act relating to the Notes, when such part became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (3) is of the opinion that the Registration Statement and Prospectus, as amended or supplemented, if applicable (except for financial statements included therein as to which such counsel need not express any opinion), comply as to form in all material respects with the Securities Act and the applicable rules and regulations thereunder and (4) has no reason to believe that (except for financial statements included therein as to which such counsel need not express any belief) the Prospectus, as amended or supplemented, if applicable, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. It is understood that such counsel may limit his or her opinion to the laws of the United States of America, the laws of the State of Illinois, and the General Corporation Law of the State of Delaware. -14- The opinions set forth in paragraphs (i) (D) and (i) (E) above regarding the valid and binding nature of the Indenture and the Notes may be limited by the inclusion of statements to the effect that their enforceability may be limited by applicable bankruptcy, insolvency, moratorium and other similar laws affecting the enforceability of creditors' rights generally, and general principles of equity. The opinions set forth in paragraphs (i) (D) and (i)(E) above may be further limited by inclusion of a statement to the effect that insofar as such opinions relate to Notes denominated in a currency other than United States dollars, the effective enforcement of a foreign currency claim in the federal or state courts of the State of New York may be limited by requirements that a claim (or a foreign currency judgment in respect of such a claim) be converted into United States dollars at the rate of exchange prevailing on the judgment date. For purposes of paragraph (B) above, the term "Significant Subsidiaries" shall mean the list of the Company's domestic and foreign subsidiaries appearing in Exhibit 21 (or any successor exhibit) to the Company's most recently filed Annual Report on Form 10-K as of the Commencement Date or the applicable Settlement Date, as the case may be. (ii) The opinion dated as of such date, of Cleary, Gottlieb, Steen & Hamilton, counsel to you, covering the matters in paragraphs (C), (D), (E), (H) (with respect only to the statements under the caption "Description of Debt Securities", "Description of Bearer Notes" and "Plan of Distribution") and clauses (3) and (4) of (J) above, provided that with respect to clauses (3) and (4) of (J) -------- above, such counsel may state that their belief is based upon their participation in the preparation of the Registration Statement and the Prospectus and any amendments or supplements thereto (other than documents incorporated by reference) and review and discussion of the contents thereof (including documents incorporated by reference) but is without independent check or verification except as specified. (c) On the Commencement Date, and at each Settlement Date, with respect to any Terms Agreement to which such Agent is a party, the Company shall have furnished to such Agent, a certificate of the Company, signed by the Chairman of the Board, the President, the Vice Chairman of the Board, any Vice President or the Treasurer, dated as of the Commencement Date or such Settlement Date, to the effect that the signer of such certificate has examined the Registration Statement, the Basic Prospectus, any Prospectus Supplement and this Agreement and that: -15- (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the date of such certificate, and the Company has complied in all material respects with all the agreements and satisfied in all material respects all the conditions on its part to be performed or satisfied at or prior to the date of such certificate; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Company's knowledge, threatened; and (iii) since the date of the most recent financial statements included or incorporated by reference in the Prospectus, as amended or supplemented, there has been no material adverse change in the condition of the Company and its consolidated subsidiaries, taken as a whole, from that set forth in the Registration Statement and the Prospectus, as amended or supplemented. (d) On the Commencement Date, and at each Settlement Date with respect to any Terms Agreement to which such Agent is a party, if called for by such Terms Agreement, the Company's independent auditors shall have furnished to such Agent, a letter or letters, dated as of the Commencement Date or such Settlement Date, in form and substance satisfactory to it, confirming that they are independent auditors within the meaning of the Securities Act and the respective applicable published rules and regulations thereunder and containing statements and information of the type ordinarily included in "comfort letters" to underwriters with respect to the financial statements and certain financial information contained or incorporated by reference in the Registration Statement and the Prospectus as then amended or supplemented. (e) On the Commencement Date and at each Settlement Date with respect to any Terms Agreement to which such Agent is a party, the Company shall have furnished to such Agent such appropriate further information, certificates and documents as it may reasonably request. (f) On the Commencement Date, application to list the Notes on the Luxembourg Stock Exchange shall have been made and prior to the issuance of the first Note, such listing shall have been granted upon issuance of the temporary global Notes or definitive Notes, subject only to delivery to such Exchange of Prospectuses as most recently amended or supplemented. (g) On each Settlement Date with respect to Notes that, as contemplated in the Pricing Supplement or Term Sheet relating to such Notes, are to be listed, the Luxembourg Stock Exchange shall have agreed to list such Notes subject only to their issuance. -16- 5. Indemnification and Contribution. -------------------------------- (a) The Company agrees to indemnify and hold harmless each Agent and each person, if any, who controls such Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages or liabilities (including the reasonable fees and expenses of counsel in connection with any governmental or regulatory investigation or proceeding) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, --------- however, that the Company will not be liable in any such case to the -------- extent that any such loss, claim, damage or liability is caused by (i) any such untrue statement or alleged untrue statement or omission or alleged omission made therein based upon information furnished in writing to the Company by an Agent relating to such Agent expressly for use therein; (ii) any untrue statement or alleged untrue statement or omission or alleged omission made in that part of the Registration Statement that consists of the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of First Fidelity Bank, National Association; or (iii) the fact that any Agent, as principal, sold Notes to a person, or Notes were sold to a person solicited by any Agent as agent, to whom there was not sent or given by such Agent, at or prior to the confirmation of such sale, a copy of the Prospectus as most recently amended or supplemented, and such untrue statement or alleged untrue statement or omission or alleged omission was corrected in the form of the Prospectus most recently provided by the Company to such Agent. (b) Each Agent agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and any person controlling the Company and each other Agent and any person controlling such Agent to the same extent as the foregoing indemnity from the Company to such Agent, but only with reference to information relating to such Agent furnished in writing by it expressly for use in the Registration Statement or the Prospectus. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either paragraph (a) or (b) above, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and others the -17- indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding, or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by the indemnified party. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in this Section 5 is unavailable to an indemnified party under paragraph (a) or (b) hereof or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and each Agent participating in the offering of Notes that gave rise to such losses, claims, damages or liabilities (a "Relevant Agent") on the other from the offering of such Notes or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and each Relevant Agent on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and each Relevant Agent on the other in connection with the offering of such Notes shall be deemed to be in the same respective proportion as the total net proceeds from -18- the offering of such Notes (before deducting expenses) received by the Company bear to the total discounts and commissions received by such Relevant Agent in respect thereof. The relative fault of the Company on the one hand and of each Relevant Agent on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by such Relevant Agent and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. If more than one Agent is a Relevant Agent in respect of a proceeding, each Relevant Agent's obligation to contribute pursuant to this Section 5 shall be several and not joint, and shall be in the proportion that the principal amount of the Notes that are the subject of such proceeding and that were offered and sold through such Relevant Agent bears to the aggregate principal amount of the Notes that are the subject of such proceeding. (e) The Company and each Agent agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation or by any other method of allocation that does -------- not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, and any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5, no Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Notes referred to in paragraph (d) above that were offered and sold to the public through such Agent exceeds the amount of any damages that such Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (f) The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (g) The Company acknowledges that the statements set forth in the last paragraph of the cover page and under the caption Plan of Distribution in the Prospectus Supplement dated July ___, 1995 relating to the Notes constitute the only information furnished in writing by or on behalf of any Agent for inclusion -19- in the Basic Prospectus or such Prospectus Supplement and the Agents confirm that such statements are correct. 6. Offering Restrictions. Each Agent hereby represents and agrees: --------------------- (a) except to the extent permitted under U.S. Treas. Reg. Section 1.163- 5(c)(2)(i)(D) (the "D Rules"), (1) it has not offered or sold, and during the restricted period will not offer or sell, Bearer Notes to a person who is within the United States or its possessions or to a United States person, and (2) it has not delivered and will not deliver within the United States or its possessions definitive Bearer Notes that are sold during the restricted period; (b) it has and throughout the restricted period will have in effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in selling Bearer Notes are aware that such Bearer Notes may not be offered or sold during the restricted period to a person who is within the United States or its possessions or to a United States person, except as permitted by the D Rules; (c) if it is a United States person, it is acquiring the Bearer Notes for purposes of resale in connection with their original issuance and if it retains Bearer Notes for its own account, it will only do so in accordance with the requirements of U.S. Treas. Reg. Section 1.163- 5(c)(2)(i)(D)(6); (d) with respect to each affiliate of an Agent that acquires Bearer Notes from such Agent for the purpose of offering or selling such Bearer Notes during the restricted period, such Agent repeats and confirms the representations and agreements contained in this Section 6 on such affiliate's behalf; (e) it has not entered and will not enter into any written contract with respect to the distribution or delivery of the Notes, except with (i) its affiliates, (ii) a member of the International Primary Markets Association, or an affiliate of such member, from which it has obtained, for the benefit of the Company and the several Agents, the representations contained in, and such person's agreement to comply with the provisions of, paragraphs (a) through (d) of this Section 6, or (iii) the prior written consent of the Company; (Terms used in paragraphs (a) through (e) of this Section 6 have the meanings given to them by the U.S. Internal Revenue Code and regulations thereunder, including the D Rules.) (f) (1) it has not offered or sold and will not offer or sell, prior to the date six months after their date of issue, any Notes, having a maturity of one year or greater, to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of -20- investments (as principal or agent) for the purpose of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (2) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom; and (3) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of any Notes to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such document may otherwise lawfully be issued or passed on; (g) it has not offered or sold and agrees that it will not offer or sell any Note directly or indirectly in Japan or to residents of Japan or for the benefit of any Japanese person (which term as used in this paragraph (g) means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for reoffering or resale directly or indirectly in Japan or to any Japanese person except in circumstances that result in compliance with any applicable laws, regulations and ministerial guidelines of Japan taken as a whole; and (h) without prejudice to the provisions of this Section 6 and subject to the obligations of the Company set forth in Section 3 of this Agreement, the Company shall have no responsibility for, and each Agent will obtain, any consent, approval or permission required for the subscription, offer, sale or delivery by such Agent of Notes under the laws and regulations in force in any jurisdiction to which such Agent is subject or in or from which such Agent makes any subscription, offer, sale or delivery. 7. Position of the Agents. In soliciting offers to purchase the ---------------------- Notes, each Agent is acting solely as agent for the Company, and not as principal. Each Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by it and accepted by the Company, but no Agent shall have any liability to the Company in the event any such purchase is not consummated for any reason. Under no circumstances will any Agent be obligated to purchase any Notes for its own account other than pursuant to, and subject to the conditions set forth in, any Terms Agreement. 8. Termination. This Agreement may be terminated at any time either ------------ (a) by the Company as to any Agent or (b) by any Agent, insofar as this Agreement relates to such Agent, upon the giving of written notice of such termination to the other parties hereto. In the event of such termination with respect to any Agent, this Agreement shall remain in full force and effect with respect to any Agent as to which such termination has not occurred. Any Terms Agreement may be terminated, immediately upon notice to the Company, at any time -21- prior to the Settlement Date relating to a Terms Agreement (i) if there has been, since the respective dates as of which information is given in the Registration Statement, as amended to the date of such Terms Agreement, any material adverse change in the condition of the Company and its consolidated subsidiaries, taken as a whole, or (ii) if there has occurred any material outbreak or escalation of hostilities or any material adverse change in financial markets or any calamity or crisis the effect of which is such as to make it, in the reasonable judgment of the Agent which is a party to such Agreement, impracticable to market the Notes, or (iii) if trading in securities generally on the New York Stock Exchange or the American Stock Exchange has been suspended or materially limited or if a general moratorium on commercial banking activities has been declared by either federal or New York State authorities. In the event of termination of this Agreement or any Terms Agreement, no party shall have any liability to the other parties hereto, except (1) as provided in the first two sentences of the third paragraph of Section 2(a) (with respect to any commissions earned by the Agents but not yet paid by the Company at the time of such termination), Section 3(f), Section 5 and Section 9 and (2) if, at the time of termination, an Agent shall own any Notes purchased pursuant to a Terms Agreement entered into prior to the termination of this Agreement with the intention of reselling them or an offer to purchase any Notes has been accepted by the Company but the time of delivery to the purchaser or its agent of such Notes has not occurred, as provided in Sections 3(b) through 3(d), 3(h) through 3(k), and 3(o); provided that the exception set forth in clause (2) of this sentence shall be of no further force or effect immediately after the earlier of (i) resale or delivery, as the case may be, of the Notes referred to in such clause and (ii) in the case of Notes purchased pursuant to a Terms Agreement entered into prior to the termination of this Agreement, a date 270 calendar days from the date of such termination. The provisions of Section 3(e), 3(g), 3(n), 3(o), 5 and 9 hereof shall survive the termination or cancellation of any Terms Agreement. 9. Representations and Indemnities to Survive. The respective ------------------------------------------- agreements, representations, warranties, indemnities and other statements of the Company or its officers and each Agent set forth in or made pursuant to this Agreement or any Terms Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Agent or the Company or any of the officers, directors or controlling persons referred to in Section 5 hereof, and will survive delivery of and payment for the Notes. 10. Notices. All communications hereunder will be in writing and -------- effective only on receipt, and shall be mailed, delivered or sent by facsimile transmission and confirmed as follows: (i) if to Merrill Lynch International Limited, at Ropemaker Place, 25 Ropemaker Street, London, England EC2Y 9LY, Facsimile: _________________, Attention: EMTN Sales and Distribution Desk; (ii) if to Goldman Sachs International, at Peterborough Court, 133 Fleet Street, London, England EC4A 2BB, Facsimile: ______________, Attention: _______________; -22- (iii) if to Morgan Stanley & Co. International Limited, at 25 Cabot Square, Canary Wharf, London, England E14 4QA, Facsimile: 44-171-425-7999, Attention: Short- and Medium-Term Finance Desk; (iv) if to J.P. Morgan Securities Ltd., at 60 Victoria Embankment, London, England EC4Y OJP, Facsimile: 44-171-325-8225, Attention: Euro Medium Term Note Desk; (v) if to Salomon Brothers International Limited, at Victoria Plaza, 111 Buckingham Palace Road, London, England SW1W OSB, Facsimile: 44-171-721-2828, Attention: Rachel Pickering; and (vi) if to the Company, at One McDonald's Plaza, Oak Brook, Illinois 60521, Facsimile: (708) 575-5211, Attention: Treasurer, with a copy to the Controller; or at such other address as any party may notify to the other parties hereto from time to time. 11. Successors. This Agreement and any Terms Agreement will inure to ---------- the benefit of and be binding upon the parties hereto and thereto and their respective successors and the officers and directors and controlling persons referred to in Section 5 hereof, and no other person will have any right or obligation hereunder. 12. Counterparts. This Agreement may be signed in any number of ------------ counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 13. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED --------------- IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon this letter and your acceptance shall represent a binding agreement between the Company and you. Very truly yours, McDONALD'S CORPORATION By: ______________________________________ Vice President and Treasurer -23- The foregoing Agreement is hereby confirmed and accepted as of the date first written above. MERRILL LYNCH INTERNATIONAL LIMITED By: ------------------------------ Title: GOLDMAN SACHS INTERNATIONAL By: ------------------------------ Title: J. P. MORGAN SECURITIES LTD. By: ------------------------------ Title: MORGAN STANLEY & CO. INTERNATIONAL LIMITED By: ------------------------------ Title: SALOMON BROTHERS INTERNATIONAL LIMITED By: ------------------------------ Title: -24- Exhibit A McDonald's Corporation MEDIUM-TERM NOTES, SERIES E TERMS AGREEMENT ___________________, 19__ McDonald's Corporation One McDonald's Plaza Oak Brook, Illinois 60521 Attention: Treasurer Re: Euro Distribution Agreement dated ____________, 1995 The undersigned agrees to purchase the following principal amount of your Medium-Term Notes, Series E: [Currency/Amount] Initial Public Offering Price: Stated Maturity Date: Purchase Price: Purchase Date and Time: Settlement Date and Time: Place of Delivery: Listing on Luxembourg Stock Exchange not requested: _____ (Notes will be listed unless checked) Redeemable by Company: ______ Yes ______ No Redemption Price Schedule: Date Price ---- ----- Repayable at option of Holder: _____ Yes _____ No Repayment Price Schedule: Date Price ---- ----- For Fixed Rate Notes: Interest Rate: Interest Payment Dates: (if other than February 15 and August 15) Regular Record Dates: (if other than February 1 and August 1) A-1 For Floating Rate Notes: Base Rate: Initial Interest Rate: Spread: Spread Multiplier: Index Maturity: Interest Reset Period: Interest Reset Dates: Interest Payment Dates: Maximum Interest Rate, if any: Minimum Interest Rate, if any: For Indexed Notes: [specify appropriate terms] For Original Issue Discount Notes: [specify appropriate terms] For Amortizing Notes: [specify amortization schedule] (Other terms) The provisions of Sections 1, 2(b), 2(c), 2(d), 3 through 6, and 8 through 13 of the Euro Distribution Agreement and the related definitions are incorporated by reference herein and shall be deemed to have the same force and effect as if set forth in full herein. [The certificates referred to in Section 3(i) of the Euro Distribution Agreement, the opinion referred to in Section 3(j) of the Euro Distribution Agreement and the accountants' letter referred to in Section 3(k) of the Euro Distribution Agreement will be required.] [The following opinions, letters, information, certificates and documents referred to in Section 4 of the Euro Distribution Agreement will be required: _____________________.] A-2 [The lockup period referred to in Section 3(1) shall extend to a date _____ calendar days after the Settlement Date.] [NAME OF PURCHASER] By: ______________________________________ Title: Accepted as of the date written above: McDONALD'S CORPORATION By: ______________________________________ Title: A-3 Exhibit B Medium-Term Note Administrative Procedures ------------------------------------------ The Medium-Term Notes, Series E (the "Notes") are to be offered on a continuing basis by McDonald's Corporation (the "Company"). Each of Merrill Lynch International Limited, Goldman Sachs International, J.P. Morgan Securities Ltd., Morgan Stanley & Co. International Limited, and Salomon Brothers International Limited, as agent (each an "Agent"), has agreed to solicit offers to purchase the Notes in bearer form (the "Bearer Notes"), which initially will be represented by Temporary Global Notes and subsequently by Permanent Global Notes and individual definitive Bearer Notes. The Bearer Notes are being sold pursuant to a Euro Distribution Agreement between the Company and the Agents dated ___________, 1995 ( the "Agreement"). The Bearer Notes will be issued under an Indenture dated as of March 1, 1987, as supplemented (the "Indenture"), between the Company and First Fidelity Bank, National Association, as trustee (the "Trustee"). If any provision of these Administrative Procedures limits or conflicts with any provision of the Bearer Notes, the Indenture or the Agreement the relevant provisions of the Bearer Notes, the Indenture or the Agreement shall be controlling. The Bearer Notes have been registered with the United States Securities and Exchange Commission (the "Commission") and will, except as otherwise indicated in the applicable Pricing Supplement, be listed on the Luxembourg Stock Exchange. The offering of the Bearer Notes will be subject to the restrictions set forth in Section 6 of the Agreement. Capitalized terms used herein without definition shall have the meanings assigned to such terms in the Indenture or the Prospectus (as defined in the Agreement). The Company has initially appointed the principal office of Morgan Guaranty Trust Company of New York in London as principal paying agent for the payment of principal of and interest on and as authenticating agent for, the Bearer Notes (the "Principal Paying Agent"), and Banque Generale du Luxembourg S.A. in Luxembourg as an additional paying agent (a "Paying Agent"; the Principal Paying Agent and the Paying Agent are collectively referred to as the "Paying Agents") and as listing agent (the "Listing Agent"). The Listing Agent will coordinate with the Principal Paying Agent and the Agents on a regular basis for the purpose of providing the Luxembourg Stock Exchange with such information regarding listed Bearer Notes issued and outstanding as such Exchange may require. Administrative procedures and specific terms of the offering are explained below: B-1 Maturities: Each Bearer Note will have a maturity from date of issue - - ----------- of not less than 184 days and not more than 60 years. A Floating Rate Bearer Note will mature only on an Interest Payment Date for such Note. Any Bearer Note denominated in Japanese yen will mature on a date not less than one year after the Original Issue Date for such Note and will not be subject to optional redemption or prepayment prior to such time. Denominations: Unless otherwise specified in the applicable Pricing - - ------------- Supplement, the denomination of any Bearer Note denominated in U.S. dollars will be a minimum of $25,000 and any larger amount that is an integral multiple of $5,000. In the case of a Bearer Note having a Specified Currency other than U.S. dollars, the minimum denomination and other authorized denominations shall be as set forth in the applicable Pricing Supplement, provided that the minimum denomination of a Bearer Note denominated in Japanese yen shall be at least 1,000,000,000 yen. Bearer Form: The Bearer Notes will be issuable only in bearer form. - - ----------- Date of Issuance: Each Bearer Note will be dated and issued as of the date - - ----------------- of its delivery by the Principal Paying Agent. Each Bearer Note will bear an Original Issue Date, which will be (i) with respect to a Temporary Global Note (or any portion thereof), the date of its original issue as specified in such Temporary Global Note and (ii) with respect to any Permanent Global Note or Individual Bearer Note (or portion thereof) issued subsequently upon transfer or exchange of a Bearer Note or in lieu of a destroyed, lost or stolen Bearer Note, the Original Issue Date of the predecessor Bearer Note, regardless of the date of authentication of such subsequently issued Bearer Note. B-2 Temporary Global Notes; Until the 40th Day following the date of issuance of a - - ----------------------- Bearer Note (the "Exchange Date") and until Final Permanent Global Notes; Certification (as defined below) with respect to such - - ----------------------- Bearer Note has occurred, such Bearer Note, together and Individual Bearer with all other Bearer Notes that have the same (i) - - --------------------- Original Issue Date, currency of denomination, non-tax Notes: related redemption provisions, if any, Stated Maturity, - - ------ (ii) either fixed interest rate (in the case of Fixed Rate Notes) or Base Rate, Initial Interest Rate, Index Maturity, Interest Reset Period, Interest Payment Dates, Minimum Interest Rate (if any), Maximum Interest Rate (if any) and Spread or Spread Multiplier (in the case of Floating Rate Notes), and (iii) index formula and related provisions, as such terms are identified in the Pricing Supplement relating to such Notes (in the case of Indexed Notes) (all such Bearer Notes herein referred to collectively as a "Tranche"), will be represented by a single Temporary Global Note in bearer form without interest coupons. The Company shall execute, and upon Company instructions the Principal Paying Agent shall complete and authenticate, such Temporary Global Note upon the same conditions and in substantially the same manner, and with the same effect, as an individual definitive Bearer Note. On or prior to the settlement date (which should also be the Original Issue Date), with respect to such Bearer Notes, the Principal Paying Agent shall deposit the Temporary Global Note with a common depositary located outside the United States (the "Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel") in the manner specified below under "Details for Settlement". The interest of each beneficial owner of such Temporary Global Note will be credited to the appropriate account with Cedel or Euroclear, as specified below under "Interest Payments". B-3 On or after the Exchange Date and provided that Final Certification (as described below) has occurred, the interest of the beneficial owner of such Bearer Note in the Temporary Global Note shall be canceled and such Bearer Note, together with all other Bearer Notes of the Tranche as to which Final Certification has occurred, shall thereafter be represented by a Permanent Global Note in bearer form without interest coupons held in London by the Depositary. The interest of the beneficial owner of such Bearer Note in such Permanent Global Note will be credited to the appropriate account with Cedel or Euroclear. The beneficial owner of an interest in a Permanent Global Note may, at any time, upon 30 days' written notice to the Principal Paying Agent given by such beneficial owner through either Cedel or Euroclear, as the case may be, exchange its beneficial interest in such Permanent Global Note for one or more individual Bearer Notes with coupons attached, if appropriate, equal in aggregate principal amount to such beneficial interest. To effect such exchange, the interest of the beneficial owner of such Bearer Note in such Permanent Global Note shall be canceled and one or more individual Bearer Notes shall be issued to such beneficial owner, through Euroclear or Cedel, as the case may be. In all events, Bearer Notes will be delivered by the Principal Paying Agent only outside the United States. Transfer of interests in a Temporary or Permanent Global Note will be made by Euroclear or Cedel in accordance with their customary operating procedures. Title to individual Bearer Notes and coupons will pass by physical delivery. The bearer of each coupon, whether or not the coupon is attached to an individual Bearer Note, shall be subject to and bound by all the provisions contained in the individual Bearer Note to which such coupon relates. The bearer of any individual Bearer Note and any coupon may, to the fullest extent permitted by applicable law, be treated at all times, by all Persons and for all purposes as the absolute owner of such Bearer Note or coupon, as the case may be, regardless of any notice of ownership, theft or loss or of any writing thereon. B-4 Final Certification: Final Certification with respect to a Temporary Global - - -------------------- Note shall mean the delivery by Euroclear or Cedel, as the case may be, to the Principal Paying Agent of a signed certificate (a "Clearance System Certificate") in the form set forth in Appendix 1 hereto with respect to the Bearer Notes being exchanged, dated no earlier than the Exchange Date for such Bearer Notes, or, if an interest payment on the Bearer Notes shall be due prior to the Exchange Date, dated no earlier than the related Interest Payment Date, to the effect that Euroclear or Cedel, as the case may be, has received certificates ("Certificates of Non-U.S. Beneficial Ownership") in the form set forth in Appendix 2 hereto with respect to each of such Bearer Notes, which Certificates of Non-U.S. Beneficial Ownership shall be dated no earlier than fifteen days before the date of the related Clearance System Certificate provided by Euroclear or Cedel, as the case may be, signed by the account holders appearing on its records as entitled to such Bearer Notes, to the effect that such Bearer Notes (i) are not beneficially owned by United States persons; or (ii) are owned by United States persons that are (a) foreign branches of United States financial institutions purchasing for their own account or for resale or (b) United States persons who acquired the Notes through foreign branches of U.S. financial institutions and who hold the Notes through such U.S. financial institutions (and in either case (a) or (b), each such financial institution has agreed that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986 and the regulations thereunder), or (iii) are owned by United States or foreign financial institutions for purposes of resale during the restricted period, in which event such financial institutions (whether or not also described in clause (i) or (ii)) shall have certified that they have not acquired the Notes for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. Currency: The currency denomination with respect to any Bearer - - --------- Note and the payment of interest and the repayment of principal with respect to any such Bearer Note, shall be as set forth therein and in the applicable Pricing Supplement. B-5 Interest Payments: Interest (if any) on each Bearer Note will accrue from - - ------------------ the Original Issue Date of such Bearer Note and will be paid in the manner described in such Bearer Note and in the Prospectus, as defined in the Agreement, as supplemented by the applicable Pricing Supplement; provided, however, that interest in respect of any portion of a Temporary Global Note for which Final Certification has not been made shall not be paid until Final Certification is received in respect of that portion. Except as specified above, interest on a Temporary Global Note or Permanent Global Note shall be payable to the beneficial owner thereof through credit to the account of such owner or of the custodian bank of such owner with Cedel or Euroclear. Interest on an individual Bearer Note shall be payable to the Holder of the appropriate coupon appertaining thereto upon presentation and surrender of such coupon at the office of the Principal Paying Agent or any other Paying Agent outside the United States. Principal Payments: Principal payments and the final installment of interest - - ------------------- at Maturity with respect to individual Bearer Notes will be made in immediately available funds upon presentation and surrender of such Bearer Notes to any paying agent outside the United States. Principal payments with respect to interests in a Permanent Global Note representing Bearer Notes will be made at Maturity or upon earlier redemption in the same manner as interest payments with respect to interests in a Permanent Global Note, as described under "Interest Payments". Redemption: The applicable Pricing Supplement will set forth all - - ----------- terms relating to the redemption of Bearer Notes prior to Stated Maturity other than for tax reasons. Payments of Principal Upon receipt of Bearer Notes to be repaid as set forth - - --------------------- in such Notes, the Trustee or Principal Paying Agent for and Interest Upon such Notes shall give notice to the Company not less - - ----------------- than 20 calendar days prior to each optional repayment Exercise of Optional date of such optional repayment date and of the - - -------------------- principal amount of Bearer Notes to be repaid on such Repayment: optional repayment date. - - ---------- B-6 On or prior to any optional repayment date, the Company shall deposit with such Trustee or such Principal Paying Agent an amount of money sufficient to pay the optional repayment price, and accrued interest thereon to such date, of all the Notes or portions thereof which are to be repaid on such date. Such Trustee or such Principal Paying Agent will use such money to repay such Notes pursuant to the terms set forth in such Notes. Procedure for Rate The Company and the Agents will discuss from time to - - ------------------ time the rates to be borne by Bearer Notes that may be Changes; Preparation sold as a result of the solicitation of offers by any - - -------------------- Agent. If any offer to purchase a Bearer Note is of Pricing Supplements: accepted by the Company, the Company will prepare a - - ----------------------- Pricing Supplement reflecting the terms of such Bearer Note and will arrange to have the Pricing Supplement filed with the Commission in accordance with the applicable paragraph of Rule 424(b) under the Securities Act of 1933, as amended, and will supply by facsimile or by overnight express one copy thereof (or additional copies if requested) to each Agent which presented the order (each, a "Presenting Agent") at the address listed below and one copy to the Principal Paying Agent, each additional paying agent outside the United States and, in the case of listed Bearer Notes, the Listing Agent for delivery to the Luxembourg Stock Exchange. Copies of the Pricing Supplements shall be sent to: if Merrill Lynch International Limited is the Presenting Agent: Merrill Lynch International Limited EMPN Sales and Distribution Desk Ropemaker Place 25 Ropemaker Street London, England EC2Y 9LY Telephone: 011-44-171-867-3995 Facsimile: 011-44-171-867-2292 if Goldman Sachs International is the Presenting Agent: B-7 if J.P. Morgan Securities Ltd. is the Presenting Agent: J.P. Morgan Securities Limited 60 Victoria Embankment London, England EC4Y OJP ATTN.: Head of Medium-Term Notes Telephone: 011-44-171-325-2468 Facsimile: 011-44-171-325-8225 if Morgan Stanley & Co. International Limited is the Presenting Agent: Morgan Stanley & Co. International Limited Short- and Medium-Term Finance Desk Colegrave House 70 Berners Street London, England WIP 3AE ATTN.: Michael J. Lytle Telephone: 011-44-171-425-7715 Facsimile: 011-44-171-425-4999 if Salomon Brothers International Limited is the Presenting Agent: Salomon Brothers International Limited Victoria Plaza 111 Buckingham Palace Road London, England SW1W 0SB ATTN.: Rachel Pickering Telephone: 011-44-171-721-3999 Facsimile: 011-44-171-736-2828 Suspension of The Company may instruct the Agents to suspend - - ------------- solicitation of purchases at any time. Upon receipt of Solicitation; notice from the Company, the Agent will forthwith - - ------------- suspend solicitation until such time as the Company has Amendment or advised it that solicitation of purchases may be - - ------------ resumed. Supplement: - - ----------- B-8 In the event that at the time the Company suspends solicitation of purchases there shall be any orders outstanding for settlement, the Company will promptly advise the relevant Agent and the Principal Paying Agent whether such orders may be settled and whether copies of the Prospectus as in effect at the time of the suspension may be delivered in connection with the settlement of such orders. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such orders may not be settled or that copies of such Prospectus may not be so delivered. If the Company decides to amend or supplement the Registration Statement or the Prospectus, it will promptly advise the Agents and the Principal Paying Agent and will furnish each Agent and the Paying Agents with the proposed amendment or supplement in accordance with the terms of the Agreement. The Company will mail to the Commission for filing therewith any supplement to the Prospectus (including any Pricing Supplement), provide each Agent with copies of any supplement (or, in the case of a Pricing Supplement, provide each relevant Agent with copies of such Pricing Supplement), confirm (in the case of listed Bearer Notes) the listing on the Luxembourg Stock Exchange of the supplement to the Prospectus and confirm to each Agent that such supplement has been mailed for filing with the Commission (or, in the case of a Pricing Supplement, confirm such information with each relevant Agent).. Delivery of Prospectus: Each Agent shall, for each Bearer Note order received by - - ----------------------- it, deliver a copy of the Prospectus as most recently amended or supplemented, together with the applicable Pricing Supplement affixed thereto, with the earlier of the delivery of (i) the confirmation of sale of the Bearer Note to a purchaser or such purchaser's agent or (ii) the Bearer Note purchased by such purchaser. The Principal Paying Agent will make such delivery if such Bearer Note is sold directly by the Company to a purchaser. B-9 Acceptance of Offers: The Company will have the sole right to accept offers to - - --------------------- purchase Bearer Notes. Each Agent will communicate orally or in writing each offer to purchase Bearer Notes received by such Agent which in such Agent's judgment should be considered by the Company. The Company may reject any offer in whole or in part. Each Agent may reject any offer received by it in whole or in part in its discretion. Confirmation: Each Agent shall, for each Bearer Note offer received by - - ------------- it and accepted by the Company, issue a confirmation to the purchaser, setting forth such of the details set forth below as it deems appropriate, delivery and payment instructions. Settlement: All offers accepted by the Company (unless otherwise - - ----------- agreed by the Company and the purchaser) will be settled not later than the seventh day following the date on which any such offer is accepted, or if such day is not a Business Day, then on the next succeeding Business Day, unless otherwise agreed by any purchaser and the Company. Details for Settlement; The Company, Agents, Depositary and Principal Paying - - ----------------------- Agent will follow the following timetable in order to Bearer Note Deliveries complete settlement with respect to each Tranche of - - ---------------------- Bearer Notes: and Cash Payment: - - ---------------- LATEST DAY TIME ACTION - - --- ------ ------ Settlement 12:00 Noon The Relevant Agent will, for each offer to purchase Date Minus (New York Bearer Notes received by it and accepted by the 3 City Time) Company, provide by telephone or facsimile transmission the following information to the Vice President and Treasurer of the Company or his designee. 1. Principal amount of Bearer Note. 2. Price. 3. In the case of a Fixed Rate Note, the interest rate and redemption or repayment provisions (if any), or, in the case of a Floating Rate Note, the Base Rate, Initial Interest Rate (if known at such time), Index Maturity, Interest Reset Dates, Interest Reset Period, Spread or Spread Multiplier (if any), Minimum Interest Rate (if any), Maximum Interest Rate (if any) and redemption or repayment provisions (if any). B-10 4. In the case of an Indexed Note, the terms of such Note as specified in the Pricing Supplement relating to such Note. 5. Issue Date of Bearer Note. 6. Settlement date. 7. Stated Maturity. 8. The Agent's commission to be paid in the form of a discount upon settlement. 9. Agent's account number at Cedel or Euroclear. 10. Amount of Proceeds. 11. Terms relating to redemption (other than tax), if any. 12. Denominations. 13. Currency of Bearer Note. 14. OID Information (Total Amount of OID, Original Yield to Maturity, Initial Accrual Period OID), if applicable. 15. Other terms. 16. If applicable, wire transfer instructions, including name of banking institution where transfer is to be made and account number. Settlement 9:00 a.m. The Company shall instruct the Principal Paying Agent Date Minus (London (to be confirmed by facsimile (substantially in the 2 time) form set out in Appendix 3)) to prepare a Temporary Global Note for each Tranche which the Company has agreed to sell. The Company will send a copy of such facsimile to the relevant Agent or Agents. The Principal Paying Agent shall telephone each of Euroclear or Cedel with a request for a security code for each Tranche agreed to be issued, which security code or codes will be notified by the Principal Paying Agent to the Company and the relevant Agent or Agents. B-11 3:45 p.m. In accordance with instructions received by the (London Company, the Principal Paying Agent shall prepare and time) authenticate a Temporary Global Note for each Tranche which the Company has agreed to sell, the settlement for which Tranche is to occur on the settlement date. All such Temporary Global Notes will then be delivered to the Depositary. The Principal Paying Agent will also give instructions to Euroclear or Cedel to credit the Bearer Notes represented by such Temporary Global Notes delivered to such Depositary to the Principal Paying Agent's distribution account at Euroclear or Cedel, as the case may be. The Principal Paying Agent will instruct Euroclear or Cedel to debit, on the settlement date, from the distribution account of the Principal Paying Agent the number of Bearer Notes of each Tranche with respect to which the relevant Agent has solicited an offer to purchase and to credit, on the settlement date, such Bearer Notes to the account of such Agent with Euroclear or Cedel against payment of the issue price, less the applicable commission, of such Bearer Notes. Each relevant Agent shall give corresponding instructions to Euroclear or Cedel. Settlement Euroclear and Cedel shall debit and credit accounts - - ---------- in accordance with instructions received by them. Date - - ---- 5:00 p.m. The Principal Paying Agent shall pay the Company the (New York aggregate net proceeds received by it in immediately City time) available funds via a transfer of funds to the dollar account of the Company with a bank in New York City (or, with respect to Bearer Notes payable other than in U.S. dollars, to a bank selected by the Company, which bank is located outside the United States) notified to the Principal Paying Agent from time to time. B-12 Failure to If any Agent shall have advanced its own funds for - - ---------- payment against subsequent receipt of funds from the Settle: purchaser and if a purchaser shall fail to make - - ------ payment for a Bearer Note, such Agent will promptly notify the Company, the Principal Paying Agent, the Trustee, the Depositary and Euroclear and Cedel by telephone, promptly confirmed in writing (but no later than the next Business Day). In such event, the Company shall promptly instruct the Principal Paying Agent to cancel the purchaser's interest in the appropriate Temporary Global Note representing such Bearer Note. Upon (i) confirmation from the Principal Paying Agent in writing (which may be given by facsimile) that the Principal Paying Agent has canceled such purchaser's interest in such Temporary Global Note and upon (ii) confirmation from such Agent in writing (which may be given by facsimile) that such Agent has not received payment from the purchaser, the Company will promptly pay to such Agent an amount in immediately available funds equal to the amount previously paid by such Agent in respect of such Bearer Note. Such payment will be made on the settlement date, if possible, and in any event not later than 12:00 Noon (New York City time) on the Business Day following the settlement date. The Principal Paying Agent and the Depositary will make or cause to be made such revisions to the Temporary Global Note representing such Bearer Note as are necessary to reflect the cancellation of such portion of such Temporary Global Note. If a purchaser shall fail to make payment for the Bearer Note for any reason other than the failure of such Agent to provide the necessary information to the Company as described above for settlement or to provide a confirmation to the purchaser within a reasonable period of time as described above, and if such Agent shall have otherwise complied with its obligations hereunder and in the Agreement, the Company will reimburse such Agent for such Agent's actual loss, as determined by the Agent, of the use of funds during the period when they were credited to the account of the Company or the Trustee. Immediately upon such cancellation, the Principal Paying Agent will make appropriate entries in its records to reflect the fact that a settlement did not occur with respect to such Bearer Note. B-13 Notice of The Listing Agent will provide information with - - --------- respect to each listed Bearer Note to be issued to Issuance to the Luxembourg Stock Exchange and will give notice by - - ----------- facsimile transmission to the Company and the Luxembourg relevant Agent as to the effectiveness of the listing - - ---------- of such Bearer Notes by the close of business on the Stock related settlement date. To the extent required by - - ----- the Luxembourg Stock Exchange, the Agents will Exchange: provide the Listing Agent with secondary market - - -------- information regarding Bearer Notes and the Listing Agent will provide such information to the Luxembourg Stock Exchange. Listing: The Listing Agent will, on a regular basis, provide - - -------- the Luxembourg Stock Exchange with such information regarding listed Bearer Notes issued and outstanding as such Exchange may require. Authenticity The Company will cause the Principal Paying Agent to - - ------------ furnish each Agent from time to time with the of specimen signatures of each of the officers, - - -- employees or agents of the Principal Paying Agent who Signatures: have been authorized by the Principal Paying Agent to - - ----------- authenticate Bearer Notes (including Temporary and Permanent Global Notes representing individual Bearer Notes), but no Agent will have any obligation or liability to the Company or the Principal Paying Agent in respect of the authenticity of the signature of any officer, employee or agent of the Company or the Principal Paying Agent on any Bearer Note. Paying of The Company agrees to pay each Agent a commission as - - --------- set forth in the Agreement in the form of a discount Selling equal to the percentage of the principal amount of - - ------- each Bearer Note sold by the Company as a result of a Commissions solicitation made by such Agent. - - ----------- and - - --- Expenses: - - -------- B-14 APPENDIX 1 FORM OF CERTIFICATION TO BE GIVEN BY THE EUROCLEAR OPERATOR OR CEDEL CERTIFICATION McDonald's Corporation Medium-Term Notes, Series E (the "Securities") This is to certify that, based solely on certifications we have received in writing, by tested telex or by electronic transmission from member organizations appearing in our records as persons being entitled to a portion of the principal amount set forth below (our "Member Organizations") substantially to the effect set forth in the Euro Distribution Agreement, as of the date hereof, $__________ principal amount of the above-captioned Securities (i) is owned by persons that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States persons"), (ii) is owned by United States persons that are (a) foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(i)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) United States persons who acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution has agreed, on its own behalf or through its agent, that we may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) is owned by United States or foreign financial institutions for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163- 5(c)(2)(i)(D)(7)), and to the further effect that United States or foreign financial institutions described in clause (iii) above (whether or not also described in clause (i) or (ii)) have certified that they have not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. We further certify (i) that we are not making available herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) any portion of the temporary global Security excepted in such certifications and (ii) that as of the date hereof we have not received any notification from any of our Member Organizations to the effect that the statements made by such Member Organizations with respect to any portion of the part Appendix 1 1 submitted herewith for exchange (or, if relevant, exercise of any rights or collection of any interest) are no longer true and cannot be relied upon as of the date hereof. We understand that this certification is required in connection with certain tax laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings. Dated:____________, 199_* Yours faithfully, [MORGAN GUARANTY TRUST COMPANY OF NEW YORK, Brussels office, as operator of the Euroclear System] OR [CEDEL BANK, SOCIETE ANONYME] By:________________________________ __________ * [Not earlier than the Certification Date as defined in the Operating Procedures.] Appendix 1 2 APPENDIX 2 FORM OF PARTICIPANT CERTIFICATION INCORPORATED BY REFERENCE TO A CERTIFICATION INSTRUCTION CERTIFICATE McDonald's Corporation Medium-Term Notes, Series E (the "Securities") This is to certify that as of the date hereof, and except as set forth below, the above-captioned Securities held by you for our account (i) are owned by person(s) that are not citizens or residents of the United States, domestic partnerships, domestic corporations or any estate or trust the income of which is subject to United States Federal income taxation regardless of its source ("United States person(s)"), (ii) are owned by United States person(s) that are (a) foreign branches of United States financial institutions (as defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions") purchasing for their own account or for resale, or (b) United States person(s) who acquired the Securities through foreign branches of United States financial institutions and who hold the Securities through such United States financial institutions on the date hereof (and in either case (a) or (b), each such United States financial institution hereby agrees, on its own behalf or through its agent, that you may advise the Issuer or the Issuer's agent that it will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder), or (iii) are owned by United States or foreign financial institution(s) for purposes of resale during the restricted period (as defined in U.S. Treasury Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the Securities is a United States or foreign financial institution described in clause (iii) above (whether or not also described in clause (i) or (ii)) this is to further certify that such financial institution has not acquired the Securities for purposes of resale directly or indirectly to a United States person or to a person within the United States or its possessions. As used herein, "United States" means the United States of America (including the States and the District of Columbia); and its "possessions" including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands. We undertake to advise you promptly by tested telex on or prior to the date on which you intend to submit your certification relating to the Securities held by your for our account in accordance with your Operating Procedures if any applicable statement herein is not correct on such date, and in the absence of any such notification it may be assumed that this certification applies as of such date. Appendix 2 1 This certification excepts and does not relate to $__________ of such interest in the above Securities in respect of which we are not able to certify and as to which we understand exchange and delivery of permanent Securities (or, if relevant, exercise of any rights or collection of any interest) cannot be made until we do so certify. We understand that this certification is required in connection with certain tax laws of the United States. In connection therewith, if administrative or legal proceedings are commenced or threatened in connection with which this certification is or would be relevant, we irrevocably authorize you to produce this certification to any interested party in such proceedings. Dated:_______________, 199_* Name of Person Making Certification By: ------------------------------ * To be dated no earlier than the fifteenth day preceding the Certification Date as defined in the Operating Procedures. Appendix 2 2 APPENDIX 3 Appendix 3 1 FORM OF COMPANY'S FACSIMILE TO PRINCIPAL PAYING AGENT ----------------------------------------------------- To: Morgan Guaranty Trust Company of New York London Office Attention: ----- ----------------------- Euro Distribution Agreement dated , 1995 ----------------------------- Terms defined in the Administrative Procedures relating to the above Distribution Agreement have the same meanings herein. We hereby confirm our telephone instruction to prepare, complete, authenticate and issue Temporary Global Notes (in accordance with the terms of the [Terms Agreement dated ______,] Administrative Procedures and Distribution Agreement) and give instructions to Euroclear and/or Cedel in order for you to: - * Credit account of [Name of Agent] with [Euroclear/Cedel]** with the following Bearer Notes: (a) Principal amount: (b) Settlement date: (c) Issue date: __________ * A separate facsimile is to be sent in respect of each offer accepted by the Company. Repeat this information (numbering consecutively) if Bearer Notes of more than one Tranche are to be issued to an Agent. ** Delete as appropriate. Appendix 3 1 (d) For Fixed Rate Notes: Interest Rate: For Floating Rate Notes: Base Rate: Initial Interest Rate: Spread: Spread Multiplier: Index Maturity: Interest Reset Period: Interest Reset Dates: Maximum Interest Rate, if any: Minimum Interest Rate, if any: (e) For Indexed Notes: [specify appropriate terms] (f) For Original Issue Discount Notes: [specify appropriate terms] (g) For Amortizing Notes: [specify amortization schedule] (h) Stated Maturity date: (i) Redemption terms: (j) Denominations: (k) Currency: (l) OID Information (Total Amount of OID, Original Yield to Maturity, Initial Accrual Period OID), if applicable: Appendix 3 2 (m) Whether the Notes will be listed: (n) Other terms: against payment of [__________]. Date: MCDONALD'S CORPORATION By: -------------------------------- Appendix 3 3 EX-4.(B) 4 SUPPLEMENTAL INDENTURE NO. 22 Exhibit 4(b) - - -------------------------------------------------------------------------------- SUPPLEMENTAL INDENTURE NO. 22 BETWEEN McDONALD'S CORPORATION AND FIRST FIDELITY BANK, NATIONAL ASSOCIATION Trustee ------------------------------------ Dated as of __________, 1995 ------------------------------------ SUPPLEMENTAL TO INDENTURE DATED AS OF MARCH 1, 1987 - - -------------------------------------------------------------------------------- MCDONALD'S CORPORATION SUPPLEMENTAL INDENTURE NO. 22 DATED AS OF ____________, 1995 SERIES OF MEDIUM-TERM NOTES, SERIES E $584,662,000 Supplemental Indenture No. 22, dated as of ____________, 1995, between McDONALD'S CORPORATION, a corporation organized and existing under the laws of the State of Delaware (hereinafter sometimes referred to as the "Company"), and FIRST FIDELITY BANK, NATIONAL ASSOCIATION, a national banking association, authorized to accept and execute trusts (hereinafter sometimes referred to as the "Trustee"), W I T N E S S E T H : WHEREAS, The Company and the Trustee have executed and delivered an Indenture dated as of March 1, 1987 (the "Indenture"). WHEREAS, Section 10.01 of the Indenture provides for the Company, when authorized by its Board of Directors, and the Trustee to enter into an indenture supplemental to the Indenture to establish the form or terms of Debt Securities as permitted by Sections 2.01 and 2.02 of the Indenture. WHEREAS, Sections 2.01 and 2.02 of the Indenture provide for Debt Securities of any series to be established pursuant to an indenture supplemental to the Indenture. NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the series of Debt Securities provided for herein, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of such series of Debt Securities, as follows: ARTICLE ONE RELATION TO INDENTURE; DEFINITIONS. SECTION 1.01. This Supplemental Indenture No. 22 constitutes an integral part of the Indenture. SECTION 1.02. For all purposes of this Supplemental Indenture: (1) Capitalized terms used herein without definition shall have the meanings specified in the Indenture or in Exhibits A-H (as described below) attached hereto. (2) All references herein to Articles and Sections, unless otherwise specified, refer to the corresponding Articles and Sections of this Supplemental Indenture No. 22; and (3) The terms "hereof," "herein," "hereto," "hereunder" and "herewith" refer to this Supplemental Indenture. ARTICLE TWO THE SERIES OF DEBT SECURITIES SECTION 2.01. (1) There shall be a series of Debt Securities issuable as Fully Registered Debt Securities or Unregistered Debt Securities (the "Notes") limited to an aggregate initial public offering price or purchase price of $584,983,000, or the equivalent thereof in one or more foreign or composite currencies, including the European Currency Units as designated by the Company (the "Specified Currency"). The Notes issuable as Fully Registered Debt Securities (the "Registered Notes") shall be designated the "Medium-Term Notes, Series E Due from Nine Months to 60 Years from Date of Issue" and the Notes issuable as Unregistered Debt Securities (the "Unregistered Notes") shall be designated the "Medium-Term Notes, Series E Due from 184 Days to 60 Years from Date of Issue." (2) $84,662,000 of the $584,662,000 established hereunder shall replace the $84,662,000 remaining of the Company's Medium-Term Notes, Series D Due from Nine Months to Sixty Years from Date of Issue and Medium-Term Notes, Series D Due from 184 days to Thirty Years from Date of Issue which were established under Supplemental Indenture No. 18. (3) Each Note will bear interest either at a fixed rate (a "Fixed Rate Note"), which may be zero in the case of Original Issue Discount Notes (as defined below), or at a floating rate (a "Floating Rate Note") or at a rate determined by reference to an Index (as defined below). SECTION 2.02. Fixed Rate Notes and Floating Rate Notes which are Registered Notes shall contain substantially the terms and provisions set forth in either the form of Series E Fixed Rate Registered Note or the form of Series E Floating Rate Registered Note attached hereto as Exhibits A and B, respectively, or such other forms of Registered Notes specified in an Officer's Certificate pursuant to duly adopted resolutions of the Board of Directors of the Company. All of the terms and provisions of such Registered Notes are hereby incorporated by reference herein. -2- SECTION 2.03. (1) Fixed Rate Notes and Floating Rate Notes which are Unregistered Notes shall contain substantially the terms and provisions set forth in one or more of the following forms: (i) Fixed Rate Temporary Global Note representing Medium-Term Notes, Series E, attached hereto as Exhibit C; (ii) Floating Rate Temporary Global Note representing Medium-Term Notes, Series E, attached hereto as Exhibit D; (iii) Fixed Rate Permanent Global Note representing Medium-Term Notes, Series E, attached hereto as Exhibit E; (iv) Floating Rate Permanent Global Note, representing Medium-Term Notes, Series E, attached hereto as Exhibit F; (v) Series E Fixed Rate Bearer Note attached hereto as Exhibit G; (vi) Series E Floating Rate Bearer Note attached hereto as Exhibit H or (vii) such other forms of Unregistered Notes specified in an Officer's Certificate pursuant to duly adopted resolutions of the Board of Directors of the Company. All of the terms and provisions of such Unregistered Notes are hereby incorporated by reference herein. SECTION 2.04. If any provision of the Indenture or this Supplemental Indenture No. 22 limits, qualifies, or conflicts with another provision of a Note, such provision in such Note shall control. SECTION 2.05. In addition to the terms described in Sections 2.02 and 2.03, herein, respectively, a Registered Note or an Unregistered Note, as the case may be, shall contain the following terms to be specified in an Officer's Certificate: (1) the principal amount and Specified Currency for such Note (and, if the Specified Currency is other than U.S. dollars, certain other terms relating to such Note and such Specified Currency, including the authorized denominations of such Note); (2) whether such Note is a Fixed Rate Note, Floating Rate Note or an Indexed Note (as defined below) as to which interest is determined by reference to an Index (as defined below); (3) the price (expressed as a percentage of the aggregate principal amount thereof) at which such Note will be issued (the "Issue Price"); (4) the date on which such Note will be issued (the "Original Issue Date"); (5) the date on which such Note will mature (the "Stated Maturity"); (6) if such Note is a Fixed Rate Note, the rate per annum at which such Note will bear interest, if any, and the dates on which interest will be payable if other than February 15 and August 15 in the case of a Registered Note, or February 15 and August 15 in the case of an Unregistered Note; (7) if such Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the Interest Reset Period, the Interest Payment Dates, the Index Maturity, the Maximum Interest Rate, if any, the Minimum Interest Rate, if any, the Spread or Spread Multiplier, if any (all as defined in Sections 2.02 and 2.08 herein), and any other terms relating to the particular method of calculating the interest rate for such Note; (8) whether such Note is an Original Issue Discount Note (as defined below); (9) if such Note is an Indexed Note (as defined below), the manner in which the principal amount of the Note payable at Stated Maturity and/or the interest amount payable will be determined (other than as described in Section 2.08 hereof); (10) whether such Note may be redeemed at the option of the Company, or repaid at the option of the Holder, prior to Stated Maturity and, if so, the provisions (other than the redemption and prepayment provisions specified in Sections 2.02 and -3- 2.03 herein) relating to such redemption or repayment, including, in the case of an Original Issue Discount Note, Index Note or Amortizing Note (each as defined below), the information necessary to determine the amount due upon redemption or repayment; (11) if such Note is an Amortizing Note, information necessary to determine the repayment schedule, including the manner in which payments thereon will be applied to interest and the reduction of unpaid principal; and (12) any other terms of such Note not inconsistent with the provisions of the Indenture. SECTION 2.06. (1) The First National Bank of Chicago, ________________ is hereby initially appointed as Authenticating Agent, Registrar, Paying Agent and Calculation Agent with respect to the Registered Notes. (2) Morgan Guaranty Trust Company of New York, London Office, 60 Victoria Embankment, London, is hereby initially appointed as Authenticating Agent, Principal Paying Agent and Calculation Agent with respect to the Unregistered Notes. SECTION 2.07. With respect to any Notes issued hereunder, (1) the term "Original Issue Discount Note" shall mean (a) a Note, including any such Note whose interest rate is zero, that has a stated redemption price at maturity that exceeds its Issue Price by at least 0.25% of its aggregate principal amount, multiplied by the number of full years from the Original Issue Date to the Stated Maturity for such Note and (b) any other Note designated by the Company as issued with original issue discount for United States federal income tax purposes; and (2) the term "Yield to Stated Maturity" shall mean the yield to Stated Maturity, calculated at the time of issuance of the Notes or, if applicable, at the most recent redetermination of interest on such Notes and calculated in accordance with accepted financial practice. SECTION 2.08. (1) With respect to any Notes hereunder, the term "Indexed Note" shall mean a Note, the principal amount payable at Stated Maturity of which (the "Indexed Principal Amount") and/or the interest amount payable on which is determined by reference to a measure (the "Index") which will be related to (i) the rate of exchange between the Specified Currency for such Note and the other currency or composite currency (the "Indexed Currency") specified in such Indexed Note (such Indexed Note, "Currency Indexed Note"); (ii) the difference in the price of a specified commodity (the "Indexed Commodity") on specified dates (such Indexed Note, "Commodity Indexed Note"), (iii) the difference in the level of a specified stock index (the "Stock Index"), which may be based on U.S. or foreign stocks, on specified dates (such Indexed Note, "Stock Indexed Note") or (iv) such other objective price or economic measures as are described in such Indexed Note. (2) Unless otherwise specified in an Indexed Note, interest on such Indexed Note will be payable by the Company based on the amount designated therein as the "Face Amount" of such Indexed Note. Such Indexed Note will describe whether the principal -4- amount of such Indexed Note that would be payable upon redemption or repayment prior to Stated Maturity will be the Face Amount of such Indexed Note, the Indexed Principal Amount of such Indexed Note at the time of redemption or repayment, or another amount described in such Indexed Note. SECTION 2.09. With respect to any Notes hereunder, the term "Amortizing Note" shall mean any Note, payments in respect of which represent interest due and the reduction of unpaid principal as provided in such Amortizing Note. SECTION 2.10. Any interest on any Registered Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Registered Holder on the relevant Regular Record Date by virtue of having been such Holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in Clause (1) and Clause (2) below: (1) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Registered Notes are registered at the close of business on a special record date ("Special Record Date") for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee (and any paying agent designated by the Company) in writing of the amount of Defaulted Interest proposed to be paid on each Registered Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee or any paying agent designated by the Company an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee or with any paying agent designated by the Company for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this SECTION 2.09 provided. Thereupon the Trustee or a paying agent designated by the Company shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee or a paying agent designated by the Company of the notice of the proposed payment. The Trustee or a paying agent designated by the Company shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Holder of Registered Notes at his address as it appears in the Debt Security Register, not less than 10 days prior to such Special Record Date. The Trustee or a paying agent designated by the Company may, in its discretion, in the name and at the expense of the Company, cause a similar notice to be published at least once in an Authorized Newspaper in each Place of Payment, but such publication shall not be a condition precedent to the establishment of such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Registered Notes are registered on such Special Record Date and shall no longer be payable pursuant to the following Clause (2). -5- (2) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Registered Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee or any paying agent designated by the Company of the proposed payment pursuant to this Clause, such payment shall be deemed practicable by the Trustee or any paying agent designated by the Company. Subject to the foregoing provisions of this Section, each Registered Note delivered under this Supplemental Indenture No. 22 upon transfer of or in exchange for or in lieu of any other Registered Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Registered Note. SECTION 2.11. (1) Any interest on any Unregistered Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date for such Unregistered Note, shall be payable pursuant to such procedures as may be satisfactory to the Trustee or any paying agent designated by the Company in such manner that there is no discrimination between the Holders of Registered Notes and Unregistered Notes and notice of the payment date therefor shall be given by the Trustee or any paying agent, in the name and at the expense of the Company in the manner provided in Section 14.05 of the Indenture not more than 25 days and not less than 20 days prior to the date of the proposed payment. (2) Subject to the foregoing, each Unregistered Note delivered under this Supplemental Indenture No. 22 in exchange for or in lieu of any other Unregistered Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Unregistered Note. ARTICLE THREE MISCELLANEOUS SECTION 3.01. The recitals of fact herein and in the Notes shall be taken as statements of the Company and shall not be construed as made by the Trustee. SECTION 3.02. This Supplemental Indenture No. 22 shall be construed in connection with and as a part of the Indenture. SECTION 3.03. (1) If any provision of this Supplemental Indenture No. 22 limits, qualifies, or conflicts with another provision of the Indenture required to be included in indentures qualified under the Trust Indenture Act of 1939 (as in effect on the date of this Supplemental Indenture No. 22) by any of the provisions of Section 310 to 317, inclusive, of the said Trust Indenture Act, such required provisions shall control. -6- (2) In case any one or more of the provisions contained in this Supplemental Indenture No. 22 or in the Notes issued hereunder should be invalid, illegal, or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected, impaired, prejudiced or disturbed thereby. SECTION 3.04. Whenever in this Supplemental Indenture No. 22 either of the parties hereto is named or referred to, this shall be deemed to include the successors or assigns of such party, and all the covenants and agreements in this Supplemental Indenture No. 22 contained by or on behalf of the Company or by or on behalf of the Trustee shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not. SECTION 3.05. (1) This Supplemental Indenture No. 22 may be simultaneously executed in several counterparts, and all said counterparts executed and delivered, each as an original, shall constitute but one and the same instrument. (2) The descriptive headings of the several Articles of this Supplemental Indenture No. 22 were formulated, used and inserted herein for convenience only and shall not be deemed to affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, McDONALD'S CORPORATION has caused this Supplemental Indenture No. 22 to be signed, acknowledged and delivered by its President, Vice Chairman and Chief Financial Officer or Vice President and Treasurer and its corporate seal to be affixed hereunto and the same to be attested by its Secretary or Assistant Secretary, and FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Trustee, has caused this Supplemental Indenture No. 22 to be signed, acknowledged and delivered by one of its Assistant Vice Presidents, and its seal to be affixed hereunto and the same to be attested by one of its Authorized Officers, all as of the day and year first written above. McDONALD'S CORPORATION [CORPORATE SEAL] By: ----------------------------- Carleton D. Pearl Vice President and Treasurer Attest: - - ----------------------------- -7- Assistant Secretary FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Trustee [CORPORATE SEAL] By: ----------------------------- Assistant Vice President Attest: - - ----------------------------- Authorized Officer -8- STATE OF ILLINOIS SS: COUNTY OF DuPAGE On the ______ day of ________________________, in the year one thousand nine hundred ninety-five, before me appeared Carleton Day Pearl to me personally known, who, being by me duly sworn, did say that he resides in Chicago, Illinois, that he is a Vice President and Treasurer of McDONALD'S CORPORATION, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation, that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. - - ----------------------------- Notary Public STATE OF PENNSYLVANIA SS: COUNTY OF On the ______ day of __________________________, in the year one thousand nine hundred ninety-five, before me appeared ____________________ to be personally known, who, being by me duly sworn, did say that he resides at ___________________________________________, that he is an Assistant Vice President of FIDELITY BANK, NATIONAL ASSOCIATION, one of the corporations described in and which executed the above instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority. - - ----------------------------- Notary Public -9- BRA\MISC\MTN\SERIES-E\SUPP22.DOC -10- EX-4.(C) 5 SERIES E FIXED RATE NOTE Exhibit 4(c) SERIES E FIXED RATE NOTE REGISTERED PRINCIPAL AMOUNT MCDONALD'S CORPORATION No. MEDIUM-TERM NOTE, SERIES E (FIXED RATE) CUSIP Due from Nine Months to 60 Years from Date of Issue If the registered owner of this Note (as indicated below) is The Depository Trust Company or a nominee of The Depository Trust Company, this Note is a Global Security and the following legend is applicable: Unless this certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE SECURITIES REPRESENTED HEREBY IN DEFINITIVE FORM, THIS GLOBAL SECURITY MAY BE TRANSFERRED IN WHOLE, BUT NOT IN PART, AND ONLY BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO STATED MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES Issue Price: Original Issue Date: Interest Rate: Stated Maturity: Specified Currency: (Applicable only if other than U.S. dollars) Option to Receive Payments in Specified Currency: [_] Yes [_] No (Applicable only if Specified Currency is other than U.S. dollars) Authorized Denominations: (Applicable only if other than U.S.$100,000 and increments of U.S.$1,000 or if Specified Currency is other than U.S. dollars) Method of Payment of Principal: (Applicable only if other than immediately available funds) Interest Payment Dates: (Applicable only if other than February 15 and August 15 of each year) Regular Record Dates: (Applicable only if other than February 1 and August 1 of each year) Optional Redemption: Optional Redemption Dates: Redemption Prices: [_] The Redemption Price shall initially be % of the principal amount of the Note to be redeemed and shall decline at each anniversary of the initial Optional Redemption Date by % of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount; provided, however, that if this Note is an Original Issue Discount Note, -------- ------- the Redemption Price shall be the Amortized Face Amount of the principal amount to be redeemed. [_] Other: Sinking Fund: Sinking Fund Dates: Sinking Fund Amounts: Amortizing Note: [_] Yes [_] No Amortization Schedule: Optional Repayment: Optional Repayment Dates: Optional Repayment Prices: Original Issue Discount Note: Total Amount of OID: Yield to Stated Maturity: Initial Accrual Period OID: F-1 MCDONALD'S CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (herein referred to as the "Company"), for value received hereby promises to pay or registered assigns, the principal amount specified above of _____________________ (Specified Currency) on the Stated Maturity shown above and to pay accrued interest on said principal amount at the Interest Rate shown above from and including the Original Issue Date shown above or from and including the most recent date to which interest has been paid or duly provided for, semiannually in arrears unless otherwise specified on the face hereof on but excluding February 15 and August 15 of each year and at but excluding Maturity (each such day being an "Interest Payment Date"), until said principal amount is paid or duly provided for in accordance with the terms hereof. Interest on this Note, if any, will be computed on the basis of a 360-day year of twelve 30-day months. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in the Indenture referred to on the reverse hereof, be paid to the Person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which, in the case of interest payable on a February 15, or August 15 (other than interest payable at Maturity) shall be the February 1 or August 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date and, in the case of interest payable at Maturity, shall be the Maturity (as defined below) of this Note and, in all other cases, shall be as specified on the face hereof. Notwithstanding the foregoing, if this Note is issued between a Regular Record Date and the related Interest Payment Date, the interest so payable for the period from the Original Issue Date to such Interest Payment Date shall be paid on the next succeeding Interest Payment Date to the Registered Holder hereof on the related Regular Record Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Registered Holder hereof on such Regular Record Date, and may be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than ten days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Registered Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of F-2 New York, (b) the City of Chicago or (c) if the Specified Currency for this Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg) and (ii) if the Specified Currency for this Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). The principal hereof and any premium and interest hereon are payable by the Company in the Specified Currency shown above. If the Specified Currency shown above is other than U.S. dollars, the Company or the Paying Agent will arrange to convert all payments in respect hereof into U.S. dollars in the manner described on the reverse hereof. The Holder hereof may, if so indicated above, elect to receive all payments in respect hereof in the Specified Currency by delivery of a written notice to the Paying Agent not later than fifteen calendar days prior to the applicable payment date. Such election will remain in effect until revoked by written notice to the Paying Agent received not later than fifteen calendar days prior to the applicable payment date. If the Company determines that the Specified Currency is not available to the Company for making payments in respect hereof due to the imposition of exchange controls or other circumstances beyond the Company's control, then the Holder hereof may not so elect to receive payments in the Specified Currency, and any such outstanding election shall be automatically suspended, and payments shall be in U.S. dollars, until the Company determines that the Specified Currency is again available to the Company for making such payments. If this Note is a Certificated Note, payments of interest in U.S. dollars (other than interest payable at Maturity) will be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Debt Security Register on the applicable Regular Record Date, provided that, if the Holder hereof is the Holder of U.S.$10,000,000 (or the -------- equivalent thereof in a Specified Currency other than U.S. dollars determined as provided on the reverse hereof) or more in aggregate principal amount of Registered Notes of like tenor and term, such U.S. dollar interest payments will be made by wire transfer of immediately available funds, but only if appropriate wire transfer instructions have been received in writing by the Paying Agent not less than fifteen calendar days prior to the applicable Interest Payment Date. Simultaneously with any election by the Holder hereof to receive payments in respect hereof in the Specified Currency (if other than U.S. dollars), such Holder shall provide appropriate wire transfer instructions to the F-3 Paying Agent and all such payments will be made by wire transfer of immediately available funds to an account maintained by the payee with a bank located outside the United States. Unless otherwise specified on the face hereof, the principal hereof and any premium and interest hereon payable at Maturity will be paid in immediately available funds upon surrender of this Note at the corporate trust office or agency of the Paying Agent located in the City of Chicago. If this Note is a Global Security, beneficial owners of interest herein will be paid in accordance with the Depositary's and its participants' procedures in effect from time to time. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. This Note shall not become valid or obligatory for any purpose unless and until this Note has been authenticated by First Fidelity Bank, National Association, or its successor, as Trustee. IN WITNESS WHEREOF, the Company has caused this Note to be executed under its corporate seal. Dated: MCDONALD'S CORPORATION By____________________________________ Vice President and Treasurer Attest________________________________ [Assistant] Secretary CERTIFICATE OF AUTHENTICATION This is one of the Registered Notes issued under the within- mentioned Indenture. FIRST FIDELITY BANK, NATIONAL ASSOCIATION as Trustee THE FIRST NATIONAL BANK OF CHICAGO, as Authenticating Agent By____________________________________ Authorized Signatory F-4 MCDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E (FIXED RATE) This Note is one of a series of duly authorized debt securities of the Company (the "Debt Securities") issued or to be issued in one or more series under an indenture dated as of March 1, 1987 (the "Indenture") between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as trustee (the "Trustee", which term includes any successor Trustee under the Indenture) to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Debt Securities and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Debt Security is one of the series designated on the face hereof limited to an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or the equivalent thereof in one or more foreign or composite currencies, subject to reduction as a result of the sale of other Debt Securities. The U.S. dollar equivalent of the public offering price or purchase price of Notes denominated in currencies other than U.S. dollars will be determined by an agent designated by the Company, which initially shall be The First National Bank of Chicago, [ ] (the "Paying Agent"), on the basis of the noon buying rate in The City of New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") for such currencies on the applicable trade dates; provided, -------- however, that in the case of ECU, the Market Exchange Rate shall be the rate ------- of exchange determined by the Commission of the European Communities, or any successor publication, on the applicable trade dates. "Maturity," when used with respect to this Note, means the date on which the principal of this Note or an installment of principal becomes due and payable as provided herein or in the Indenture, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. Unless otherwise specified on the face hereof in the case of Notes represented by a Global Security, the authorized denominations of Registered Notes denominated in U.S. dollars will be U.S.$100,000 and any larger amount that is an integral multiple of U.S.$1,000. The authorized denominations of Registered Notes denominated in a currency other than U.S. dollars will be as set forth on the respective faces thereof. R-1 Each Registered Note will be issued initially as either a Book- Entry Note or a Certificated Note. Only Registered Notes denominated and payable in U.S. dollars may be issued as Book-Entry Notes, and such Notes will not be exchangeable for Certificated Notes and, except as otherwise provided in the Indenture, will not otherwise be issuable as Certificated Notes. If the Specified Currency is other than U.S. dollars, the amount of any U.S. dollar payment to be made in respect hereof will be determined by the Paying Agent based on the highest firm bid quotation expressed in U.S. dollars received by the Paying Agent at approximately 11:00 a.m., New York City time, on the second Business Day preceding the applicable payment date (or, if no such rate is quoted on such date, the last preceding date on which such rate was quoted), from three (or, if three are not available, then two) recognized foreign exchange dealers in The City of New York selected by the Paying Agent for the purchase by the quoting dealer, for settlement on such payment date, of the aggregate amount of the Specified Currency payable on such payment date in respect of all Registered Notes denominated in such Specified Currency. All currency exchange costs will be borne by the Holders of such Registered Notes by deductions from such U.S. dollar payments. If no such bid quotations are available, then such payments will be made in the Specified Currency, unless the Specified Currency is unavailable to the Company due to the imposition of exchange controls or to other circumstances beyond the Company's control, in which case payment will be made as described in the next paragraph. Except as set forth below with respect to payments in ECU, if any payment in respect hereof is required to be made in a Specified Currency other than U.S. dollars and such currency is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions of or within the international banking community, then such payment shall be made in U.S. dollars until such currency is again available to the Company or so used. The amount so payable in such foreign currency shall be converted into U.S. dollars on the basis of the most recently available Market Exchange Rate for such currency or as otherwise indicated on the face hereof. Any payment made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture. Notwithstanding the foregoing, if a Specified Currency is unavailable to the Company solely because such currency no longer constitutes legal tender because it has been replaced by the ECU or the new single currency of the European Union once monetary union takes effect pursuant to Article 109l of the Treaty establishing the European Community, the amounts so payable in respect of such Note shall, beginning with the date such replacement becomes effective, be made in the relevant new single currency of the European Union; the amounts so payable on any date shall be converted into such single currency on the basis of the conversion officially in effect in the European Union on the effective date of such replacement. If any payment in respect hereof is required to be made in European Currency Units ("ECU") and ECU are unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or are no longer used in the European Monetary System, then such payment shall R-2 be made in U.S. dollars until ECU are again available to the Company or so used. The amount of such payment in U.S. dollars shall be computed on the basis of the equivalent of the ECU in U.S. dollars as of the second Business Day prior to the date on which such payment is due. The equivalent of the ECU in U.S. dollars as of any date shall be determined by the Paying Agent on the following basis: the component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU as of the last date on which the ECU was used in the European Monetary System. The equivalent of the ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Components. The U.S. dollar equivalent of each of the Components shall be determined by the Paying Agent on the basis of the most recently available Market Exchange Rates for such Components or as otherwise indicated on the face hereof. If the official unit of any component currency is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall be equal to the amount of the former component currency divided by the number of currencies into which that currency was divided. All determinations referred to above made by the Paying Agent shall be at its respective sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holder hereof. The interest payable hereon on each Interest Payment Date shall equal the amount of interest accrued from and including the immediately preceding Interest Payment Date in respect of which interest has been paid or duly made available for payment (or from and including the date of issue, if no interest has been paid hereon) to but excluding the related Interest Payment Date or Maturity, as the case may be. If so specified on the face hereof, the Company may, at its option, redeem this Note in whole, or from time to time in part in accordance with the procedures set forth in the Indenture, on the date or dates designated as the Optional Redemption Date(s) on the face hereof, at the Redemption Price(s) specified on the face hereof declining from a specified premium, if any, to par, together with accrued interest to the date of redemption. The Company may exercise such option by causing the Trustee or the Paying Agent to mail a notice of such redemption at least 30 but not more than 60 days prior to the applicable Optional Redemption Date. In the event of redemption of this Note in part only, a new Note or R-3 Notes for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If so specified on the face hereof, this Note will be repayable prior to its Stated Maturity at the option of the Holder on the Optional Repayment Date(s) shown on the face hereof at the Optional Repayment Price(s) shown on the face hereof, together with accrued interest to the date of repayment. In order for this Note to be repaid, the Paying Agent must receive at least 30 but not more than 45 days prior to an Optional Repayment Date (i) this Note with the form below entitled "Option to Elect Repayment" duly completed; or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United States of America setting forth the name of the Holder of this Note, the principal amount of the Note to be repaid, the certificate number or a description of the tenor and terms of this Note, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Note with the form below entitled "Option to Elect Repayment" duly completed will be received by the Paying Agent not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter. If the procedure described in clause (ii) of the preceding sentence is followed, this Note with the form duly completed must be received by the Paying Agent by such fifth Business Day. Any tender of this Note for Repayment shall be irrevocable. The repayment option may be exercised by the Holder of this Note for less than the entire principal amount of the Note, provided that the -------- principal amount of this Note remaining outstanding after repayment is an authorized denomination. Upon such partial repayment, this Note shall be cancelled and a new Note or Notes for the remaining principal amount hereof shall be issued in the name of the Holder of this Note. Unless otherwise specified on the face hereof, this Note will not be subject to any sinking fund. Any such sinking fund shall be administered in accordance with the terms specified on the face hereof and otherwise as set forth in the Indenture. Notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note, the amount payable in the event of redemption or repayment prior to the Stated Maturity hereof, in lieu of the principal amount due at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as of the redemption date or the date of repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that portion of the R-4 difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Stated Maturity (as set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount of this Note, if it is an Original Issue Discount Note, exceed its principal amount. If this Note is a Global Security, ownership of beneficial interests herein will be limited to participants in the Depositary or persons that hold interests through such participants, and the transfer of beneficial interests herein will be effected only through records maintained by the Depositary (and with respect to interests of participants in the Depositary) and by participants in the Depositary or persons that may hold interests through such participants (with respect to persons other than participants in the Depositary). As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for a like aggregate principal amount of Registered Notes of different authorized denominations, as requested by the Person surrendering the same. If this Note is a Global Security, this Note is exchangeable only if (x) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for this Note or if at any time the Depositary ceases to be in good standing under the Securities Exchange Act of 1934, as amended, and the Company does not appoint a successor Depositary within 90 days after the Company receives such notice or becomes aware that such Depositary is no longer in good standing, or (y) the Company in its sole discretion determines that this Note shall be exchanged for Certificated Notes in definitive form, provided that the definitive Notes so issued in exchange for this Note shall be in authorized denominations and be of like aggregate principal amount and tenor and terms as the portion of this Note to be exchanged. Except as provided above, owners of beneficial interests in this Note (if a Global Security) will not be entitled to have this Note or Notes represented by this Note registered in their names or receive physical delivery of Notes in definitive form and will not be considered the Holders hereof for any purpose under the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable on the Debt Security Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the registrar (the "Registrar") which R-5 initially shall be The First National Bank of Chicago, [ ], as registrar (the "Registrar") duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company, the Registrar and the Paying Agent duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Registered Notes of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferee. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or of the Trustee may treat the person in whose name this Note is registered as the Holder hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor such agent shall be affected by notice to the contrary. If an Event of Default with respect to the Debt Securities of this series shall have occurred and be continuing, the principal of all the Debt Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture. In case this Note shall at any time become mutilated, destroyed, stolen or lost and this Note or evidence of the loss, theft or destruction hereof (together with such indemnity and such other documents or proof as may be required by the Company or the Registrar) shall be delivered to the Registrar, a new Registered Note of like tenor and principal amount will be issued by the Company in exchange for, or in lieu of, this Note. All expenses and reasonable charges associated with procuring such indemnity and with the preparation, authentication and delivery of a new Registered Note shall be borne by the Holder of this Note. The Indenture permits, with certain exceptions as therein provided, the modification or amendment thereof and the modification of the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66-2/3% in aggregate principal amount of the Debt Securities at the time Outstanding of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debt R-6 Securities of any series at the time Outstanding, on behalf of the Holders of all the Debt Securities of such Series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued in exchange or substitution for this Note whether or not notation in regard thereto is made upon such Note. Holders of Debt Securities may not enforce their rights pursuant to the Indenture or the Debt Securities except as provided in the Indenture. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed. This Note shall be deemed to be a contract made and to be performed solely in the State of New York, and for all purposes shall be governed by, and construed in accordance with, the laws of said State without regard to the conflicts of law rules of said State. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. R-7 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM-as tenants in common UNIF GIFT MIN ACT-________Custodian________ TEN ENT-as tenants by the entireties (Cust) (Minor) JT ENT -as joint tenants with right Under Uniform Gifts of survivorship and not as to Minors Act tenants in common _________________________ (State) Additional abbreviations may also be used though not in the above list - - -------------------------------------------------------------------------------- OPTION TO ELECT REPAYMENT The undersigned hereby irrevocably requests and instructs the Company to repay $__________ principal amount of the within Note, pursuant to its terms, on the "Optional Repayment Date" first occurring after the date of receipt of the within Note as specified below, together with interest thereon accrued to the date or repayment, to the undersigned at: - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- (Please Print or Type Name and Address of the Undersigned) and to issue to the undersigned, pursuant to the terms of the Indenture, a new Note or Notes representing the remaining principal amount of this Note. For this Option to Elect Repayment to be effective, this Note with the Option to Elect Repayment duly completed must be received by the Company within the relevant time period set forth above at its office or agency in the Borough of Manhattan, the City and State of New York, located initially at the office of the Registrar at The First National Bank of Chicago, [ ], Attention: Corporate Trust Operations. Dated: ____________________________________________ Note: The signature to this Option to Elect Repayment must correspond with the name as written upon the face of the within Note in every particular without alteration or enlargement or any change whatsoever. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please insert Social Security or Other Identifying Number of Assignee [______________________________________] ----------------------------------------------------------------------------- Please Print or Type Name and Address Including Zip Code of Assignee ----------------------------------------------------------------------------- the within Note and all rights thereunder, hereby irrevocably constituting and appointing _____________________________________________________________________attorney to transfer such Note on the books of McDonald's Corporation with full power of substitution in the premises. Dated: ___________________________ ________________________________________ Signature ---------------------------------------- NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the Note in every particular, without alteration or enlargement or any change whatsoever R-8 EX-4.(D) 6 SERIES E FLOATING RATE NOTE Exhibit 4(d) SERIES E FLOATING RATE NOTE REGISTERED PRINCIPAL AMOUNT NO. MCDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E (FLOATING RATE) CUSIP Due from Nine Months to 60 Years from Date of Issue If the registered owner of this Note (as indicated below) is The Depository Trust Company or a nominee of The Depository Trust Company, this Note is a Global Security and the following legend is applicable: Unless this Certificate is presented by an authorized representative of The Depository Trust Company (55 Water Street, New York, New York) to the issuer or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of CEDE & CO., or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, CEDE & CO., has an interest herein. UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE SECURITIES REPRESENTED HEREBY IN DEFINITIVE FORM, THIS GLOBAL SECURITY MAY BE TRANSFERRED IN WHOLE, BUT NOT IN PART, AND ONLY BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO STATED MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) SET FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. Issue Price: Original Issue Date: Initial Interest Rate: Stated Maturity: Specified Currency: (Applicable only if other than U.S. dollars) Option to Receive Payments in Specified Currency: [ ] Yes [ ] No (Applicable only if Specified Currency is other than U.S. dollars) Method of Payment of Principal: (Applicable only if other than immediately available funds) Authorized Denominations: (Applicable only if other than U.S. $100,000 and increments of $1,000 or if Specified Currency is other than U.S. dollars) Base Rate: [ ] CD Rate [ ] CMT Rate [ ] Commercial Paper [ ] Federal Funds Rate [ ] LIBOR [ ] Treasury Rate [ ] Prime Rate [ ] Other (see attached) If Base Rate is CMT Rate, specify Designated CMT Telerate Page: If Base Rate is LIBOR, specify: LIBOR Reuters: Designated LIBOR Page: LIBOR Telerate: Interest Reset Period: Index Currency: Index Maturity: Interest Reset Dates: (Applicable only if other than as described on the reverse hereof) Interest Payment Dates: Interest Accrual: (Applicable only if other than as described on the reverse hereof) Spread Multiplier: Spread (+/-): Maximum Interest Rate: Minimum Interest Rate: Optional Redemption: Optional Redemption Dates: Redemption Prices: [ ] The Redemption Price shall initially be % of the principal amount of the Note to be redeemed and shall decline at each anniversary of the initial Optional Redemption Date by % of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount; provided, however, that if this Note is an Original Issue -------- ------- Discount Note, the Redemption Price shall be the Amortized Face Amount of the principal amount to be redeemed. [ ] Other: Sinking Fund: Amortizing Note: Sinking Fund Dates: Amortization Schedule: Sinking Fund Amounts: Optional Repayment: Original Issue Discount Note: Optional Repayment Dates: Total Amount of OID: Optional Repayment Prices: Yield to Stated Maturity: Initial Accrual Period OID: F-1 MCDONALD'S CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), for value received, hereby promises to pay or registered assigns, the principal amount specified above of _____________________ (Specified Currency) on the Stated Maturity shown above and to pay accrued interest on said principal amount at the Initial Interest Rate shown above from and including the Original Issue Date shown above until but excluding the first Interest Reset Date shown above following the Original Issue Date and thereafter at the Base Rate shown above, adjusted by the Spread and/or Spread Multiplier, if any, shown above, determined in accordance with the provisions on the reverse hereof, until said principal amount is paid or duly provided for in accordance with the terms hereof. The interest so payable, and punctually paid or duly provided for, on each Interest Payment Date specified above will, as provided in the Indenture referred to on the reverse hereof, be paid to the person in whose name this Note is registered at the close of business on the Regular Record Date for such interest, which, in the case of any Interest Payment Date shall be the date (whether or not a Business Day), fifteen calendar days immediately preceding such Interest Payment Date and, in the case of interest payable at Maturity (as defined below) shall be the Maturity of this Note. Notwithstanding the foregoing, if this Note is issued between a Regular Record Date and the related Interest Payment Date, the interest so payable for the period from the Original Issue Date to such Interest Payment Date shall be paid on the next succeeding Interest Payment Date to the Registered Holder hereof on the related Regular Record Date. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Registered Holder hereof on such Regular Record Date and may be paid to the Person in whose name this Note is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Notes not less than ten days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Registered Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of New York, (b) the City of Chicago or (c) if the Specified Currency for this Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg); (ii) if the Specified Currency for this Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally F-2 regarded in the ECU interbank market as a day on which payments in ECU shall not be made) and (iii) if this Note is a LIBOR Note, a London Business Day (as defined below). "London Business Day" means any day (i) if the Index Currency (as defined on the face hereof) is other than ECU, on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). The principal hereof and any premium and interest hereon are payable by the Company in the Specified Currency shown above. If the Specified Currency shown above is other than U.S. dollars, the Company or the Paying Agent will (unless otherwise specified on the face hereof) arrange to convert all payments in respect hereof into U.S. dollars in the manner described on the reverse hereof. The Holder hereof may, if so indicated above, elect to receive all payments in respect hereof in the Specified Currency by delivery of a written notice to the Paying Agent not later than fifteen calendar days prior to the applicable payment date. Such election will remain in effect until revoked by written notice to the Paying Agent received not later than fifteen calendar days prior to the applicable payment date. If the Company determines that the Specified Currency is not available to the Company for making payments in respect hereof due to the imposition of exchange controls or other circumstances beyond the Company's control, then the Holder hereof may not so elect to receive payments in the Specified Currency, and any such outstanding election shall be automatically suspended, and payments shall be in U.S. dollars, until the Company determines that the Specified Currency is again available to the Company for making such payments. If this Note is a Certificated Note, payments of interest in U.S. dollars (other than interest payable at Maturity) will be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Debt Security Register on the applicable Regular Record Date, provided that, if the -------- Holder hereof is the Holder of U.S.$10,000,000 (or the equivalent thereof in a Specified Currency other than U.S. dollars determined as provided on the reverse hereof) or more in aggregate principal amount of Registered Notes of like tenor and term, such U.S. dollar interest payments will be made by wire transfer of immediately available funds, but only if appropriate wire transfer instructions have been received in writing by the Paying Agent not less than fifteen calendar days prior to the applicable Interest Payment Date. Simultaneously with any election by the Holder hereof to receive payments in respect hereof in the Specified Currency (if other than U.S. dollars), such Holder shall provide appropriate wire transfer instructions to the Paying Agent and all such payments will be made by wire F-3 transfer of immediately available funds to an account maintained by the payee with a bank located outside the United States. Unless otherwise specified on the face hereof, the principal hereof and any premium and interest hereon payable at Maturity will be paid in immediately available funds upon surrender of this Note at the corporate trust office or agency of the Paying Agent located in the City of Chicago. If this Note is a Global Security, beneficial owners of interest herein will be paid in accordance with the Depositary's and its participants' procedures in effect from time to time. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. This Note shall not become valid or obligatory for any purpose unless and until this Note has been authenticated by First Fidelity Bank, National Association, or its successor, as Trustee. IN WITNESS WHEREOF, the Company has caused this Note to be executed under its corporate seal. Dated: MCDONALD'S CORPORATION By ______________________________________ Vice President and Treasurer Attest __________________________________ [Assistant] Secretary CERTIFICATE OF AUTHENTICATION This is one of the Notes issued under the within-mentioned Indenture. FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Trustee THE FIRST NATIONAL BANK OF CHICAGO, as Authenticating Agent By ______________________________________ Authorized Signatory F-4 MCDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E (FLOATING RATE) This Note is one of a series of duly authorized debt securities of the Company (the "Debt Securities") issued or to be issued in one or more series under an indenture, dated as of March 1, 1987 (the "Indenture") between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as trustee (the "Trustee", which term includes any successor Trustee under the Indenture) to which indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Debt Securities and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Debt Security is one of the series designated on the face hereof limited to an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or the equivalent thereof in one or more foreign or composite currencies, subject to reduction as a result of the sale of other Debt Securities. The U.S. dollar equivalent of the public offering price or purchase price of Notes denominated in currencies other than U.S. dollars will be determined by an agent designated by the Company, which initially shall be The First National Bank of Chicago, [ ] (the "Paying Agent"), on the basis of the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") for such currencies on the applicable trade dates. "Maturity," when used with respect to this Note, means the date on which the principal of this Note or an installment of principal becomes due and payable as provided herein or in the Indenture, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. Unless otherwise specified on the face hereof in the case of Notes represented by a Global Security, the authorized denominations of Registered Notes denominated in U.S. dollars will be U.S.$100,000 and any larger amount that is an integral multiple of U.S.$1,000. The authorized denominations of Registered Notes denominated in a currency other than U.S. dollars will be as set forth on the respective faces thereof. Each Registered Note will be issued initially as either a Book-Entry Note or a Certificated Note. Only Registered Notes denominated and payable in U.S. dollars may be issued as Book-Entry Notes and such Notes will not be exchangeable for Certificated Notes and, except as otherwise provided in the Indenture, will not otherwise be issuable as Certificated Notes. R-1 If the Specified Currency is other than U.S. dollars, the amount of any U.S. dollar payment to be made in respect hereof will be determined by the Paying Agent based on the highest firm bid quotation expressed in U.S. dollars received by the Paying Agent at approximately 11:00 a.m., New York City time, on the second Business Day preceding the applicable payment date (or, if no such rate is quoted on such date, the last preceding date on which such rate was quoted) from three (or, if three are not available, then two) recognized foreign exchange dealers in The City of New York selected by the Paying Agent for the purchase by the quoting dealer, for settlement on such payment date, of the aggregate amount of the Specified Currency payable on such payment date in respect of all Registered Notes denominated in such Specified Currency. All currency exchange costs will be borne by the Holders of such Registered Notes by deductions from such U.S. dollar payments. If no such bid quotations are available, then such payments will be made in the Specified Currency, unless the Specified Currency is unavailable to the Company due to the imposition of exchange controls or to other circumstances beyond the Company's control, in which case payment will be made as described in the next paragraph. Except as set forth below with respect to payments in ECU, if any payment in respect hereof is required to be made in a Specified Currency other than U.S. dollars and such currency is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions of or within the international banking community, then such payment shall be made in U.S. dollars until such currency is again available to the Company or so used. The amount so payable in such foreign currency shall be converted into U.S. dollars on the basis of the most recently available Market Exchange Rate for such currency or as otherwise indicated on the face hereof. Any payment made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture. If any payment in respect hereof is required to be made in European Currency Units ("ECU") and ECU are unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or are no longer used in the European Monetary System, then such payment shall be made in U.S. dollars until ECU are again available to the Company or so used. The amount of such payment in U.S. dollars shall be computed on the basis of the equivalent of the ECU in U.S. dollars as of the second Business Day prior to the date on which such payment is due. The equivalent of the ECU in U.S. dollars as of any date shall be determined by the Paying Agent on the following basis: the component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU as of the last date on which the ECU was used in the European Monetary System. The equivalent of the R-2 ECU in U.S. dollars shall be calculated by aggregating the U.S. dollar equivalents of the Components. The U.S. dollar equivalent of each of the Components shall be determined by the Paying Agent on the basis of the most recently available Market Exchange Rates for such Components or as otherwise indicated on the face hereof. If the official unit of any component currency is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount of such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall be equal to the amount of the former component currency divided by the number of currencies into which such currency was divided. All determinations referred to above made by the Paying Agent shall be at its respective sole discretion and shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holder hereof. If so specified on the face hereof, the Company may, at its option, redeem this Note in whole, or from time to time in part in accordance with the procedures set forth in the Indenture, on the date or dates designated as the Optional Redemption Date(s) on the face hereof, at the Redemption Price(s) specified on the face hereof declining from a specified premium, if any, to par, together with accrued interest to the date of redemption. The Company may exercise such option by causing the Trustee or the Paying Agent to mail a notice of such redemption at least 30 but not more than 60 days prior to the applicable Optional Redemption Date. In the event of redemption of this Note in part only, a new Note or Notes for the unredeemed portion hereof shall be issued in the name of the Holder hereof upon the cancellation hereof. If so specified on the face hereof, this Note will be repayable prior to its Stated Maturity at the option of the Holder on the Optional Repayment Date(s) shown on the face hereof at the Optional Repayment Price(s) shown on the face hereof, together with accrued interest to the date of repayment. In order for this Note to be repaid, the Paying Agent must receive at least 30 but not more than 45 days prior to an Optional Repayment Date (i) this Note with the form below entitled "Option to Elect Repayment" duly completed; or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or trust company in the United R-3 States of America setting forth the name of the Holder of this Note, the principal amount of the Note to be repaid, the certificate number or a description of the tenor and terms of this Note, a statement that the option to elect repayment is being exercised thereby and a guarantee that this Note with the form below entitled "Option to Elect Repayment" duly completed will be received by the Paying Agent not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter. If the procedure described in clause (ii) of the preceding sentence is followed, this Note with the form duly completed must be received by the Paying Agent by such fifth Business Day. Any tender of this Note for repayment shall be irrevocable. The repayment option may be exercised by the Holder of this Note for less than the entire principal amount of the Note, provided that the principal amount of this -------- Note remaining outstanding after repayment is an authorized denomination. Upon such partial repayment, this Note shall be cancelled and a new Note or Notes for the remaining principal amount hereof shall be issued in the name of the Holder of this Note. Unless otherwise specified on the face hereof, this Note will not be subject to any sinking fund. Any such sinking fund shall be administered in accordance with the terms specified on the face hereof and otherwise as set forth in the Indenture. Notwithstanding anything herein to the contrary, if this Note is an Original Issue Discount Note, the amount payable in the event of redemption or repayment prior to the Stated Maturity hereof, in lieu of the principal amount due at the Stated Maturity hereof, shall be the Amortized Face Amount of this Note as of the redemption date or the date of repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to (a) the Issue Price (as set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Stated Maturity (as set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) at the date as of which the Amortized Face Amount is calculated, but in no event shall the Amortized Face Amount of this Note, if it is an Original Issue Discount Note, exceed its principal amount. This Note will bear interest from its Original Issue Date to the first Interest Reset Date (as defined below) at the Initial Interest Rate set forth on the face hereof. Thereafter, the interest rate hereon for each Interest Reset Period (as defined below) will be determined by reference to the Base Rate or Rates specified on the face hereof, plus or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if any, specified on the face hereof. The Base Rates that may be specified on the face hereof are the CD Rate, the CMT Rate, the R-4 Commercial Paper Rate, the Federal Funds Rate, LIBOR, the Treasury Rate, the Prime Rate or any other Base Rate or formula specified on the face hereof. "H.15(519)" means the publication entitled "Statistical Release H.15(519), Selected Interest Rates" or any successor publication, published by the Board of Governors of the Federal Reserve System. "Composite Quotations" means the daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities" published by the Federal Reserve Bank of New York. As specified on the face hereof, this Note may also have either or both of the following (in each case expressed as a rate per annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the rate at which interest may accrue during any interest period ("Maximum Interest Rate") and (ii) a minimum limitation, or floor, on the rate at which interest may accrue during any interest period ("Minimum Interest Rate"). In addition to any Maximum Interest Rate that may be specified on the face hereof, the interest rate will in no event be higher than the maximum rate permitted by applicable law, as the same may be modified by United States law of general application. The interest rate hereon will be reset daily, weekly, monthly, quarterly, semiannually or annually (such period being the "Interest Reset Period" specified on the face hereof, and the first day of each Interest Reset Period being an "Interest Reset Date"). Unless otherwise specified on the face hereof, the Interest Reset Dates will be, if this Note resets daily, each Business Day; if this Note (unless this Note is a Treasury Rate Note) resets weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets weekly, Tuesday of each week (except as provided below under "Determination of Treasury Rate"); if this Note resets monthly, the third Wednesday of each month; if this Note resets quarterly, the third Wednesday of March, June, September and December of each year; if this Note resets semiannually, the third Wednesday of each of the two months of each year specified on the face hereof; and if this Note resets annually, the third Wednesday of one month of each year specified on the face hereof. If an Interest Reset Date would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that, if the Base Rate specified on the face hereof is LIBOR and such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Unless otherwise specified on the face hereof, the interest payable hereon on each Interest Payment Date shall be the accrued interest from and including the Original Issue Date or the last date to which interest has been paid or duly provided for, as the case may be, to but excluding such Interest Payment Date or Maturity, as the case may be. Unless otherwise specified R-5 on the face hereof, accrued interest shall be calculated by multiplying the principal amount hereof by an accrued interest factor. Such accrued interest factor will be computed by adding the interest factors calculated for each day in the period for which accrued interest is being calculated. Unless otherwise specified on the face hereof, the interest factor (expressed as a decimal calculated to seven decimal places without rounding) for each such day shall be computed by dividing the interest rate in effect on such day by 360 if the Base Rate specified on the face hereof is the CD Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of days in the year, if the Base Rate specified on the face hereof is the Treasury Rate or the CMT Rate. For purposes of making the foregoing calculation, the interest rate in effect on any Interest Reset Date will be the applicable rate as reset on such date. Unless otherwise specified on the face hereof, all percentages resulting from any calculation of the rate of interest hereof will be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five one- millionths of a percentage point rounded upward, and all currency amounts used in or resulting from such calculation will be rounded to the nearest one- hundredth of a unit (with .005 of a unit being rounded upward). Unless otherwise specified on the face hereof and except as provided below, interest will be payable, if this Note resets daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified on the face hereof; if this Note resets quarterly, on the third Wednesday of March, June, September and December of each year; if this Note resets semiannually, on the third Wednesday of each of the two months of each year specified on the face hereof; and if this Note resets annually, on the third Wednesday of one month of each year specified on the face hereof (each such day being an "Interest Payment Date") and, in each case, at Maturity. If an Interest Payment Date (other than at Maturity) would otherwise fall on a day that is not a Business Day, such Interest Payment Date shall be postponed to the next succeeding Business Day, except that, if the Base Rate specified on the face hereof is LIBOR and such Business Day would fall in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity of this Note falls on a day that is not a Business Day, the required payment of principal, premium (if any) and/or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest shall accrue on such payment for the period from and after Maturity to the date of such payment on the next succeeding Business Day. R-6 The Company has appointed and entered into an agreement with an agent (a "Calculation Agent") to calculate the interest rates on Floating Rate Notes. Unless otherwise specified on the face hereof, The First National Bank of Chicago shall be the Calculation Agent. At the request of the Holder hereof, the Calculation Agent will provide to such Holder the interest rate then in effect, and, if determined, the interest rate that will become effective on the next Interest Reset Date. All determinations of interest rates by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holder hereof. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date the rate of interest shall be the rate determined in accordance with the provisions of the applicable heading below. DETERMINATION OF CD RATE If the Base Rate specified on the face hereof is the CD Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "CD Rate" for each Interest Reset Period shall be the rate as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate Determination Date") for negotiable certificates of deposit having the Index Maturity specified on the face hereof, as published in H.15(519) under the heading "CDs (Secondary Market)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CD Rate Determination Date, then the "CD Rate" for such Interest Reset Period will be the rate on such CD Rate Determination Date for negotiable certificates of deposit of the Index Maturity specified on the face hereof as published by the Federal Reserve Bank of New York in its daily statistical release "Composite 3:30 p.m. Quotations for U.S. Government Securities" ("Composite Quotations") under the heading "Certificates of Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest Reset Period will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date, of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major money market banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity on the face hereof in a denomination of $5,000,000; provided, however, that if the three dealers -------- ------- selected as aforesaid by the Calculation R-7 Agent are not quoting offered rates as mentioned in this sentence, the CD Rate for such Interest Reset Period will be the CD Rate in effect on such CD Rate Determination Date, or if none, the Initial Interest Rate. The "Calculation Date" pertaining to any CD Rate Determination Date shall be the earlier of (i) the tenth calendar day after such CD Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. DETERMINATION OF COMMERCIAL PAPER RATE If the Base Rate shown on the face hereof is the Commercial Paper Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Commercial Paper Rate" for each Interest Reset Period will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Commercial Paper Rate Determination Date") and shall be the Money Market Yield (as defined below) on such Commercial Paper Rate Determination Date of the rate for commercial paper having the Index Maturity specified on the face hereof, as such rate shall be published in H.15(519) under the heading "Commercial Paper". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) then the Commercial Paper Rate for such Interest Reset Period shall be the Money Market Yield on such Commercial Paper Rate Determination Date of the rate for commercial paper of the Index Maturity specified on the face hereof as published in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield of the arithmetic mean of the offered rates as of 11:00 a.m., New York City time, on such Commercial Paper Rate Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the Index Maturity specified on the face hereof placed for an industrial issuer whose bonds are rated "AA" or the equivalent by a nationally recognized statistical rating agency; provided, however, that if -------- ------- the three dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the "Commercial Paper Rate" for such Interest Reset Period will be the Commercial Paper Rate in effect on such Commercial Paper Rate Determination Date, or, if none, the Initial Interest Rate. R-8 "Money Market Yield" shall be the yield calculated in accordance with the following formula: Money Market Yield = D x 360 X 100 ----------------- 360 - (D x M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal and "M" refers to the actual number of days in the period for which accrued interest is being calculated. The "Calculation Date" pertaining to any Commercial Paper Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Commercial Paper Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. DETERMINATION OF FEDERAL FUNDS RATE If the Base Rate specified on the face hereof is the Federal Funds Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Federal Funds Rate and Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Federal Funds Rate" for each Interest Reset Period shall be the effective rate on the second Business Day immediately prior to the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination Date") for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such Interest Reset Period shall be the rate on such Federal Funds Rate Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time, on such Calculation Date, such rate is not yet published in either H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall be the arithmetic mean of the rate, as of 9:00 a.m., New York City time, on the Federal Funds Rate Determination Date for the last transaction of not less than $5,000,000 in overnight federal funds arranged by each of three leading brokers of federal funds transactions in The City of New York selected by the Calculation Agent; provided, however, that if the brokers selected as aforesaid by the Calculation - - -------- ------- Agent are not quoting as set forth above, the "Federal Funds Rate" for such Interest Reset Period will be the Federal Funds Rate in effect on such Federal Funds Rate Determination Date, or, if none, the Initial Interest Rate. R-9 The "Calculation Date" pertaining to any Federal Funds Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Federal Funds Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. DETERMINATION OF LIBOR If the Base Rate specified on the face hereof is LIBOR, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified on the face hereof. If LIBOR is indexed to the offered rates for deposits in a currency other than U.S. dollars, the method for determining such rate will be specified on the face hereof. If LIBOR is indexed to the offered rate for U.S. dollar deposits, "LIBOR" for each Interest Reset Period shall be determined by the Calculation Agent as follows: (i) On the second London Business Day prior to the Interest Reset Date for such Interest Reset Period (a "LIBOR Interest Determination Date"), the Calculation Agent will determine (a) if "LIBOR Reuters" is specified on the face hereof, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, that appear on the Designated LIBOR Page specified on the face hereof as of 11:00 a.m., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified on the face hereof or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the rate for deposits in the Index Currency having the Index Maturity designated on the face hereof commencing on the second London Business Day immediately following such LIBOR Interest Determination Date that appears on the Designated LIBOR Page specified on the face hereof as of 11:00 a.m., London time, on such LIBOR Interest Determination Date. If fewer than two such offered rates appear, or if no such rate appears, as applicable, LIBOR in respect of the related LIBOR Interest Determination Date will be determined in accordance with the provisions described in clause (ii) below. (ii) With respect to this LIBOR Note and an Interest Reset Period to which this clause (ii) applies, the R-10 Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in the applicable Principal Financial Center, on such LIBOR Interest Determination Date by three major banks in such Principal Financial Center selected by the Calculation Agent for loans in the Index Currency to leading European banks, having the Index Maturity designated on the face hereof commencing on the second London Business Day immediately following such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the banks so selected by -------- ------- the Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR Interest Determination Date. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified on the face hereof, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is specified on the face hereof or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. "Index Currency" means the currency (including composite currencies) specified on the face hereof as the currency for which LIBOR shall be calculated. If no such currency is specified on the face hereof, the Index Currency shall be U.S. dollars. "Principal Financial Center" will generally be the capital city of the country of the specified Index R-11 Currency, except that with respect to U.S. dollars, Italian lire and ECU, the Principal Financial Center shall be The City of New York, Milan and Luxembourg, respectively. DETERMINATION OF TREASURY RATE If the Base Rate specified on the face hereof is the Treasury Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Treasury Rate" for each Interest Reset Period will be the rate for the auction held on the Treasury Rate Determination Date (as defined below) for such Interest Reset Period of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on the face hereof, as published in H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction average (investment)" or, if not so published by 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Treasury Rate Determination Date, the auction average rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) on such Treasury Rate Determination Date as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the Index Maturity specified on the face hereof are not published or reported as provided above by 3:00 p.m., New York City time, on such Calculation Date, or if no such auction is held on such Treasury Rate Determination Date, then the "Treasury Rate" for such Interest Reset Period shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates as of approximately 3:30 p.m., New York City time, on such Treasury Rate Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified on the face hereof, provided, however, -------- ------- that if the dealers selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for such Interest Reset Period will be the Treasury Rate in effect on such Treasury Rate Determination Date, or, if none, the Initial Interest Rate. The "Treasury Rate Determination Date" for each Interest Reset Period will be the day of the week in which the Interest Reset Date for such Interest Reset Period falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the R-12 following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Rate Determination Date pertaining to the Interest Reset Period commencing in the next succeeding week. If an auction date shall fall on any day that would otherwise be an Interest Reset Date for a Note whose Base Rate is the Treasury Rate, then such Interest Reset Date shall instead be the Business Day immediately following such auction date. The "Calculation Date" pertaining to any Treasury Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Treasury Rate Determination Date, or if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. DETERMINATION OF PRIME RATE If the Base Rate specified on the face hereof is the Prime Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Prime Rate" for each Interest Reset Period will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Prime Rate Determination Date") and shall be the rate published in H.15(519) under the heading "Bank Prime Loan". In the event that such rate is not published prior to 9:00 a.m., New York City time, on the Calculation Date (as defined below), then the "Prime Rate" for such Interest Reset Period shall be determined by the Calculation Agent and shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base lending rate as in effect for that Prime Rate Determination Date. If fewer than four such rates but more than one such rate appear on the Reuters Screen NYMF Page for the Prime Rate Determination Date, the "Prime Rate" will be determined by the Calculation Agent and will be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Determination Date by four major money center banks in The City of New York selected by the Calculation Agent. If fewer than two such rates appear on the Reuters Screen NYMF Page, the Prime Rate will be determined by the Calculation Agent on the basis of the rates furnished in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of at least U.S. $500,000,000 and being subject to supervision or examination by Federal or State authority, selected by the Calculation Agent to provide such rate or rates; R-13 provided, however, that if the banks selected as aforesaid are not quoting as - - -------- ------- mentioned in this sentence, the Prime Rate for such Interest Reset Period will be the Prime Rate in effect on such Prime Rate Determination Date, or, if none, the Initial Interest Rate. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace the NYMF page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). The "Calculation Date" pertaining to a Prime Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Prime Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. DETERMINATION OF CMT RATE If the Base Rate specified on the face hereof is the CMT Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. Unless otherwise specified on the face hereof, the "CMT Rate" for each Interest Reset Period will be determined by the Calculation Agent and shall be the rate (i) in the case where the Designated CMT Telerate Page (as defined below) is 7055, as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CMT Determination Date") or (ii) in the case where the Designated CMT Telerate Page is 7052, for the week or the month, as specified on the face hereof, ended immediately preceding the week in which the CMT Determination Date occurs, in either case, for the Index Maturity specified on the face hereof as displayed on the Designated CMT Telerate Page under the caption ". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M." If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified on the face hereof as published in the relevant H.15(519) opposite the caption "U.S. Government Securities, Treasury Constant Maturities". If such rate is no longer published, or if not published by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified on the face hereof (or other United States Treasury rate for such Index Maturity) as may then be published by either the Board of R-14 Governors of the Federal Reserve System or the United States Department of Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for the Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the higher quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Index Maturity specified on the face hereof and a remaining term to maturity of not less than such Index Maturity minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the "CMT Rate" for such Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for The Treasury Notes with an original maturity of the number of years that is the next highest to the Index Maturity specified on the face hereof and a remaining term to maturity closest to the Index Maturity specified on the face hereof and in an amount of at least $100 million. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference Dealers selected by the - - -------- ------- Calculation Agent are quoting as described herein, the "CMT Rate" will be the CMT Rate in effect on such CMT Determination Date, or, if none, the Initial Interest Rate. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Index Maturity specified on the face hereof, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. R-15 "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated on the face hereof (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified on the face hereof, the Designated CMT Telerate Page shall be 7052, for the most recent week. The "Calculation Date" pertaining to any CMT Determination Date shall be the earlier of (i) the tenth calendar day after such CMT Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. If this Note is a Global Security, ownership of beneficial interests herein will be limited to participants in the Depositary or persons that hold interests through such participants, and the transfer of beneficial interests herein will be effected only through records maintained by the Depositary (and with respect to interests of participants in the Depositary) and by participants in the Depositary or persons that may hold interests through such participants (with respect to persons other than participants in the Depositary). As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for a like aggregate principal amount of Registered Notes of different authorized denominations, as requested by the Person surrendering the same. If this Note is a Global Security, this Note is exchangeable only if (x) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for this Note or if at any time the Depositary ceases to be in good standing under the Securities Exchange Act of 1934, as amended, and the Company does not appoint a successor Depositary within 90 days after the Company receives such notice or becomes aware that such Depositary is no longer in good standing, or (y) the Company in its sole discretion determines that this Note shall be exchanged for Certificated Notes in definitive form, provided that the definitive Notes so issued in exchange for this Note shall be in authorized denominations and be of like aggregate principal amount and tenor and terms as the portion of this Note to be exchanged. Except as provided above, owners of beneficial interests in this Note (if a Global Security) will not be entitled to have this Note or Notes represented by this Note registered in their names or receive physical delivery of Notes in definitive form and will not be considered the Holders hereof for any purpose under the Indenture. R-16 As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable on the Debt Security Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the registrar (the "Registrar") which initially shall be The First National Bank of Chicago, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company, the Registrar and the Paying Agent duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Registered Notes of this series, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the Holder hereof for all purposes, whether or not this Note be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. If an Event of Default with respect to the Debt Securities of this series shall have occurred and be continuing, the principal of all the Debt Securities of this series may be declared due and payable in this manner and with the effect provided in the Indenture. In case this Note shall at any time become mutilated, destroyed, stolen or lost and this Note or evidence of the loss, theft, or destruction hereof (together with such indemnity and such other documents or proof as may be required by the Company or the Registrar) shall be delivered to the Registrar, a new Registered Note of like tenor and principal amount will be issued by the Company in exchange for, or in lieu of, this Note. All expenses and reasonable charges associated with procuring such indemnity and with the preparation, authentication and delivery of a new Registered Note shall be borne by the Holder of this Note. The Indenture permits, with certain exceptions as therein provided, the modification or amendment thereof and the modification of the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66-2/3% in aggregate principal amount of the Debt Securities at the time Outstanding of all series to be affected R-17 (voting as one class). The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debt Securities of any series at the time Outstanding, on behalf of the Holders of all the Debt Securities of such series, to waive certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued in exchange or substitution for this Note whether or not notation in regard thereto is made upon such Note. Holders of Debt Securities may not enforce their rights pursuant to the Indenture or the Note except as provided in the Indenture. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, and the coin or currency, herein prescribed. This Note shall be deemed to be a contract made and to be performed solely in the State of New York and for all purposes be governed by, and construed in accordance with, the laws of said State without regard to the conflicts of law rules of said State. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. R-18 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT - ______Custodian________ TEN ENT - as tenants by the entireties (Cust) (Minor) JT TEN - as joint tenants with right of survivorship and not as tenants Under Uniform Gifts to in common Minors Act _______________________ (State) Additional abbreviations may also be used though not in the above list ________________________________________________ OPTION TO ELECT REPAYMENT The undersigned hereby irrevocably requests and instructs the Company to repay $________ principal amount of the within Note, pursuant to its terms, on the "Optional Repayment Date" first occurring after the date of receipt of the within Note as specified below, together with interest thereon accrued to the date of repayment, to the undersigned at: ________________________________________________________________________________ ________________________________________________________________________________ (Please Print or Type Name and Address of the Undersigned) and to issue to the Undersigned, pursuant to the terms of the Indenture, a new Note or Notes representing the remaining principal amount of this Note. For this Option to Elect Repayment to be effective, this Note with the Option to Elect Repayment duly completed must be received by the Company within the relevant time period set forth above at its office or agency in the Borough of Manhattan, the City and State of New York, located initially at the office of the Paying Agent at The First National Bank of Chicago, [ ], Attention: Corporate Trust Operations. Dated: ___________________________________________________ NOTE: THE SIGNATURE TO THIS OPTION TO ELECT REPAYMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE WITHIN NOTE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please insert Social Security or Other Identifying Number of Assignee [_____________________________________] _______________________________________________________________________________ Please Print or Type Name and Address Including Zip Code of Assignee _______________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing ______________________________________________________________________ attorney to transfer such Note on the books of McDonald's Corporation with full power of substitution in the premises. Dated: ______________________ ________________________________________ Signature ________________________________________ NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the Note in every particular, without alteration or enlargement or any change whatsoever. R-19 EX-4.(E) 7 SERIES E TEMPORARY GLOBAL FIXED RATE NOTE Exhibit 4(e) SERIES E TEMPORARY GLOBAL FIXED RATE NOTE MCDONALD'S CORPORATION TEMPORARY GLOBAL NOTE BEARER FIXED RATE PRINCIPAL AMOUNT No. TRANCHE NO. representing MEDIUM-TERM NOTES, SERIES E Due From 184 Days to 60 Years from Date of Issue THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS, REPRESENTING (AND EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A PERMANENT GLOBAL NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO STATED MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) SET FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. Issue Price: Original Issue Date: Interest Rate: Stated Maturity: Interest Payment Dates: (Applicable only if other than February 15 and August 15 of each year) Specified Currency: (If other than U.S. dollars) Authorized Denominations: (Applicable only if other than U.S. $25,000 and increments of U.S. $5,000 or if Specified Currency is other than U.S. dollars) Optional Redemption: [ ] Yes [ ] No Optional Redemption Dates: Redemption Prices: [ ] The Redemption Price shall initially be % of the principal amount of the Note to be redeemed and shall decline at each anniversary of the initial Optional Redemption Date by % of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount; provided, however, that if this Note is an -------- ------- Original Issue Discount Note, the Redemption Price shall be the Amortized Face Amount of the principal amount to be redeemed. [ ] Other: Sinking Fund: [ ] Yes [ ] No Sinking Fund Dates: Sinking Fund Amounts: Amortizing Note: [ ] Yes [ ] No Amortization Schedule: Optional Repayment: [ ] Yes [ ] No Optional Repayment Dates: Optional Repayment Prices: Original Issue Discount Note: [ ] Yes [ ] No Total Amount of OID: Yield to Stated Maturity: Initial Accrual Period OID: Calculation Agent (if other than Principal Paying Agent): MCDONALD'S CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), for value received, hereby promises to pay to bearer upon presentation and surrender hereof the principal amount set forth on the Schedule of Exchanges hereto on the Stated Maturity shown above and to pay accrued interest on said principal amount at the Interest Rate specified above from the Original Issue Date shown above (the "Original Issue Date") or from the most recent date to which interest has been paid or duly provided for, semiannually in arrears (unless otherwise specified on the face hereof) on February 15 and August 15 of each year (each an "Interest Payment Date") and on the Stated Maturity shown above, or upon earlier redemption or repayment, until said principal amount is paid or duly provided for in accordance with the terms hereof; but, in the case of principal, only after exchange of this Note for interests in a Permanent Global Note (as defined below), as provided herein and in the Indenture (as defined on the reverse hereof) and, in the case of interest due on or before the exchange of this Note for interests in a Permanent Global Note, any interest payable will be paid to each of Euroclear and Cedel (each as defined below) with respect to that portion of this Note held for its account, but only upon receipt in each case, as of the relevant Interest Payment Date, of a Certificate of Non-U.S. Beneficial Ownership (as defined on the reverse hereof). Each of Euroclear and Cedel will undertake in such circumstances to credit such interest received by it in respect of this Note to the respective accounts having an interest therein. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of New York, (b) the City of Chicago or (c) if the Specified Currency for this Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg) and (ii) if the Specified Currency for this Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). This Note will be deposited with a common depositary in London (the "Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System ("Euroclear") and Cedel Bank, societe anonyme ("Cedel"), for credit to the accounts designated by or on behalf of the purchasers hereof. On or after the 40th day following the issuance of this Note, beneficial interests in this Note will be exchangeable for interests in a definitive Global Security in bearer form, without Coupons attached (a "Permanent Global Note"), in a denomination F-2 equal to the aggregate principal amount of all interests in this Note so exchanged, only upon receipt (at such time or in connection with an Interest Payment Date prior to such day) of a Certificate of Non-U.S. Beneficial Ownership. Each Permanent Global Note will be deposited with the Depositary for credit to the account or accounts designated by or on behalf of the beneficial owner or owners thereof. If the beneficial owner of a Bearer Note represented by an interest in a Permanent Global Note gives 30 days' notice to the Principal Paying Agent through either Euroclear or Cedel, such Permanent Global Note shall be exchanged in its entirety, at no expense to the beneficial owners of interests therein, for definitive individual Bearer Notes, with appropriate Coupons attached, in any authorized denomination or denominations. References herein to "Bearer Notes" shall, except where otherwise indicated, include interests in a Permanent Global Note as well as individual Bearer Notes and any appurtenant Coupons. Upon any exchange of any portion of this Note for an interest in a Permanent Global Note, the portion of the principal amount hereof so exchanged shall be endorsed by the Principal Paying Agent on the Schedule of Exchanges hereto, and the principal amount hereof shall be reduced for all purposes by the amount so exchanged. Except as otherwise provided herein or in the Indenture, until exchanged in whole for an interest in a Permanent Global Note, this Note shall in all respects be entitled to the same benefits and be subject to the same terms and conditions of and the Company shall be subject to the same restrictions as those contained on the Permanent Global Note and in the Indenture. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. This Note shall not become valid or obligatory for any purpose unless and until this Note has been authenticated by First Fidelity Bank, National Association, or its successor as Trustee. F-3 IN WITNESS WHEREOF, the Company has caused this Note to be executed under its corporate seal. Dated: MCDONALD'S CORPORATION By___________________________________ Vice President and Treasurer [Seal] Attest_______________________________ [Assistant] Secretary CERTIFICATE OF AUTHENTICATION This is one of the Notes issued under the Indenture mentioned within. FIRST FIDELITY BANK, NATIONAL ASSOCIATION as Trustee MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON OFFICE, as Authenticating Agent By__________________________________ Authorized Officer F-4 MCDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E (FIXED RATE) This Note represents one or more Bearer Notes having the same Original Issue Date and otherwise identical in terms of a series of a duly authorized issue of securities of the Company designated as specified in the title hereof limited in aggregate initial public offering price or purchase price of up to U.S.$584,662,000 (subject to reduction as a result of the sale of other Debt Securities by the Company), and issued and to be issued in either registered or bearer form under an indenture, dated as of March 1, 1987 (the "Indenture"), between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as Trustee (the "Trustee"). This Note is governed by the terms and conditions of the Permanent Global Note to be issued in exchange for this Note, which terms and conditions are incorporated herein by reference mutatis mutandis and, except as otherwise provided herein, shall be ------- -------- binding on the Company, the Holder hereof and the Holders of the Bearer Notes represented hereby as if fully set forth herein. Capitalized terms used in this Note that are defined in the Indenture or the Permanent Global Note and are not otherwise defined herein shall have the meanings assigned to them therein. "Maturity," when used with respect to this Note, means the date on which principal of this Note or an installment of principal becomes due and payable as provided herein or in the Indenture, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. Any payment of principal, premium or interest required to be made in respect hereof on a date that is not a Business Day need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date, and no additional interest shall accrue as a result of such delayed payment. Except as set forth on the Permanent Global Note regarding payments made in currencies other than the Specified Currency when the Specified Currency is unavailable to the Company, the principal hereof and any premium and interest hereon will be paid by the Company in such coin or currency as specified above as at the time of payment shall be legal tender for the payment of public and private debts (the "Specified Currency"), at the office of any paying agent located outside the United States as the Company may appoint from time to time (the "Paying Agents"). The Company has initially appointed Morgan Guaranty Trust Company of New York, 60 Victoria Embankment, London EC4Y OJP as Principal Paying Agent. R-1 As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is a certificate, in the form adopted by the Company, as to beneficial ownership by persons other than United States persons or as to other qualifying ownership by or through financial institutions in compliance with applicable U.S. Treasury regulations. This Note shall be deemed to be a contract made and to be performed solely in the State of New York, and for all purposes shall be governed by, and construed in accordance with, the laws of said State without regard to the conflicts of law rules of said State. R-2 SCHEDULE OF EXCHANGES The following exchanges of a portion of this Note for interests in a Permanent Global Note and the following payments of interest in respect of this Note have been made. Principal Amount Date of Exchanged for Remaining Notation made Exchange or an Interest in Principal on behalf of Interest Interest a Permanent Amount of the Principal Payment Paid Global Note this Note Paying Agent - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- - - ------------- -------- -------------- --------- ------------- R-3 EX-4.(F) 8 SERIES E TEMPORARY GLOBAL FLOATING RATE NOTE Exhibit 4(f) SERIES E TEMPORARY GLOBAL FLOATING RATE NOTE McDONALD'S CORPORATION BEARER TEMPORARY GLOBAL NOTE No. (FLOATING RATE) PRINCIPAL AMOUNT representing TRANCHE NO. ____ MEDIUM-TERM NOTES, SERIES E Due From 184 days to 60 Years from Date of Issue THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS, REPRESENTING (AND EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A PERMANENT GLOBAL NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. IF APPLICABLE, THE "TOTAL AMOUNT OF OID", "YIELD TO STATED MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) SET FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. Issue Price: Original Issue Date: Initial Interest Rate: Stated Maturity: Specified Currency: (If other than U.S. dollars) Authorized Denominations: (Applicable only if other than U.S.$25,000 and increments of $5,000 or if Specified Currency is other than U.S. dollars) Base Rate: [_] CD Rate [_] CMT Rate [_] Commercial Paper [_] Federal Funds Rate [_] LIBOR [_] Treasury Rate [_] Prime Rate [_] Other (see attached)
If Base Rate is LIBOR, specify: LIBOR Reuters: Designated LIBOR Page: LIBOR Telerate: Interest Reset Period: Index Currency: Index Maturity: Interest Payment Dates: Spread Multiplier: Spread (+/-): Maximum Interest Rate: Minimum Interest Rate: Optional Redemption: [_] Yes [_] No Optional Redemption Dates: Redemption Prices: [_] The Redemption Price shall initially be % of the principal amount of the Note to be redeemed and shall decline at each anniversary of the initial Optional Redemption Date by % of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount; provided, however, that if this Note is an Original Issue Discount Note, -------- ------- the Redemption Price shall be the Amortized Face Amount of the principal amount to be redeemed. [_] Other: Sinking Fund: [_] Yes [_] No Sinking Fund Dates: Sinking Fund Amounts: Amortizing Note: [_] Yes [_] No Amortization Schedule: Optional Repayment: [_] Yes [_] No Optional Repayment Dates: Optional Repayment Prices: Original Issue Discount Note: [_] Yes [_] No Total Amount of OID: Yield to Stated Maturity: Initial Accural Period OID: Calculation Agent (if other than Principal Paying Agent): McDONALD'S CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), for value received, hereby promises to pay to bearer upon presentation and surrender hereof the principal amount set forth on the Schedule of Exchanges hereto on the Stated Maturity shown above and to pay accrued interest on said principal amount at the Initial Interest Rate shown above from the Original Issue Date shown above until the first Interest Reset Date shown above following the Original Issue Date and thereafter at the Base Rate shown above, adjusted by the Spread and/or Spread Multiplier, if any, shown above, determined in accordance with the provisions on the reverse of the Permanent Global Note (as defined below) to be exchanged for this Note, until said principal amount is paid or duly provided for in accordance with the terms hereof; but, in the case of principal, only after exchange of this Note for interests in a Permanent Global Note, as provided herein and in the Indenture (as defined on the reverse hereof) and, in the case of interest due on or before the exchange of this Note for interests in a Permanent Global Note, any interest payable will be paid to each of Euroclear and Cedel (each as defined below) with respect to that portion of this Note held for its account, but only upon receipt in each case, as of the relevant Interest Payment Date, of a Certificate of Non-U.S. Beneficial Ownership (as defined on the reverse hereof). Each of Euroclear and Cedel will undertake in such circumstances to credit such interest received by it in respect of this Note to the respective accounts having an interest therein. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of New York, (b) the City of Chicago or (c) if the Specified Currency for this Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg); (ii) if the Specified Currency for this Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made) and (iii) if this Note is a LIBOR Note, a London Business Day (as defined below). "London Business Day" means any day (i) if the Index Currency (as defined on the face hereof) is other than ECU, on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). This Note will be deposited with a common depositary in London (the "Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as operator of the Euroclear System F-2 ("Euroclear") and Cedel Bank, societe anonyme ("Cedel"), for credit to the accounts designated by or on behalf of the purchasers hereof. On or after the 40th day following the issuance of this Note, beneficial interests in this Note will be exchangeable for interests in a definitive Global Security in bearer form, without Coupons attached (a "Permanent Global Note"), in a denomination equal to the aggregate principal amount of all interests in this Note so exchanged, only upon receipt (at such time or in connection with an Interest Payment Date prior to such day) of a Certificate of Non-U.S. Beneficial Ownership. Each Permanent Global Note will be deposited with the Depositary for credit to the account or accounts designated by or on behalf of the beneficial owner or owners thereof. If the beneficial owner of a Bearer Note represented by an interest in a Permanent Global Note gives 30 days' notice to the Principal Paying Agent through either Euroclear or Cedel, such Permanent Global Note shall be exchanged in its entirety, at no expense to the beneficial owners of interests therein, for definitive individual Bearer Notes, with appropriate Coupons attached, in any authorized denomination or denominations. References herein to "Bearer Notes" shall, except where otherwise indicated, include interests in a Permanent Global Note as well as individual Bearer Notes and any appurtenant Coupons. Upon any exchange of any portion of this Note for an interest in a Permanent Global Note, the portion of the principal amount hereof so exchanged shall be endorsed by the Principal Paying Agent on the Schedule of Exchanges hereto, and the principal amount hereof shall be reduced for all purposes by the amount so exchanged. Except as otherwise provided herein or in the Indenture, until exchanged in whole for an interest in a Permanent Global Note, this Note shall in all respects be entitled to the same benefits and be subject to the same terms and conditions of and the Company shall be subject to the same restrictions as those contained on the Permanent Global Note and in the Indenture. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. This Note shall not become valid or obligatory for any purpose unless and until this Note has been authenticated by First Fidelity Bank, National Association, or its successor as Trustee. F-3 IN WITNESS WHEREOF, the Company has caused this Note to be executed under its corporate seal. Dated: McDONALD'S CORPORATION By___________________________________ Vice President and Treasurer [Seal] Attest_______________________________ [Assistant] Secretary CERTIFICATE OF AUTHENTICATION This is one of the Notes issued under the Indenture mentioned within. FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Trustee MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON OFFICE, as Authenticating Agent By__________________________________ Authorized Officer F-4 McDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E (FLOATING RATE) This Note represents one or more Bearer Notes having the same Original Issue Date and otherwise identical in terms of a series of a duly authorized issue of securities of the Company designated as specified in the title hereof limited in aggregate initial public offering price or purchase price of up to U.S.$584,662,000 reduction as a result of the sale of other Debt securities by the Company), and issued and to be issued in either registered or bearer form under an indenture, dated as of March 1, 1987 (the "Indenture"), between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as Trustee (the "Trustee"). This Note is governed by the terms and conditions of the Permanent Global Note to be issued in exchange for this Note, which terms and conditions are incorporated herein by reference mutatis mutandis ------- -------- and, except as otherwise provided herein, shall be binding on the Company, the Holder hereof and the Holders of the Bearer Notes represented hereby as if fully set forth herein. Capitalized terms used in this Note that are defined in the Indenture or the Permanent Global Note and are not otherwise defined herein shall have the meanings assigned to them therein. "Maturity," when used with respect to this Note, means the date on which the principal of this Note or an installment of principal becomes due and payable as provided herein or in the Indenture, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. Any payment of principal, premium or interest required to be made in respect hereof on a date that is not a Business Day need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date, except that if the Base Rate specified on the face hereof is LIBOR, if such Business Day would fall in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day. Except as set forth on the Permanent Global Note regarding payments made in currencies other than the Specified Currency when the Specified Currency is unavailable to the Company, the principal hereof and any premium and interest hereon will be paid by the Company in such coin or currency as specified above as at the time of payment shall be legal tender for the payment of public and private debts (the "Specified Currency"), at the office of any paying agent located outside the United States as the Company may appoint from time to time (the "Paying Agents"). The Company has initially appointed Morgan Guaranty R-1 Trust Company of New York, 60 Victoria Embankment, London EC4Y OJP as Principal Paying Agent. As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is a certificate, in the form adopted by the Company, as to beneficial ownership by persons other than United States persons or as to other qualifying ownership by or through financial institutions in compliance with applicable U.S. Treasury regulations. This Note shall be deemed to be a contract made and to be performed solely in the State of New York, and for all purposes shall be governed by, and construed in accordance with, the laws of said State without regard to the conflicts of law rules of said State. R-2 SCHEDULE OF EXCHANGES The following exchanges of a portion of this Note for interests in a Permanent Global Note and the following payments of interest in respect of this Note have been made.
Principal Amount Date of Exchanged for Remaining Notation made Exchange or an Interest in Principal on behalf of Interest Interest a Permanent Amount of the Principal Payment Paid Global Note this Note Paying Agent ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- ------------- ----------- -------- -------------- --------- -------------
R-3 EX-4.(G) 9 SERIES E PERMANENT GLOBAL FIXED RATE NOTE Exhibit 4(g) SERIES E PERMANENT GLOBAL FIXED RATE NOTE BEARER PRINCIPAL AMOUNT No. - MCDONALD'S CORPORATION PERMANENT GLOBAL NOTE (FIXED RATE) representing MEDIUM-TERM NOTE, SERIES E Due from 184 days to 60 Years from Date of Issue THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE DENOMINATION OF U.S. $ 25,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE OF U.S. $5,000 (OR SUCH OTHER DENOMINATIONS AS ARE SPECIFIED BELOW). THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNIED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO STATED MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) SET FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. Issue Price: Original Issue Date: Interest Rate: Stated Maturity: Interest Payment Dates: (Applicable only if other than February 15 and August 15 of each year) Regular Record Dates: (Applicable only if other than February 1 and August 1 of each year) Specified Currency: (applicable only if other than U.S. dollars) Option to Receive Payments in Specified Currency: [ ] Yes [ ] No (Applicable only if Specified Currency is other than U.S. dollars) Authorized Denominations: (Applicable only if other than U.S. $25,000 and increments of U.S. $5,000 or if Specified Currency is other than U.S. dollars) Optional Redemption: [ ] Yes [ ] No Optional Redemption Dates: Redemption Prices: [ ] The Redemption Price shall initially be % of the principal amount of the Note to be redeemed and shall decline at each anniversary of the initial Optional Redemption Date by % of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount; provided, however, that if this -------- ------- Note is an Original Issue Discount Note, the Redemption Price shall be the Amortized Face Amount of the principal amount to be redeemed. [ ] Other: Sinking Fund: [ ] Yes [ ] No Amortizing Note: [ ] Yes [ ] No Sinking Fund Dates: Amortization Schedule: Sinking Fund Amounts: Optional Repayment: [ ] Yes [ ] No Original Issue Discount Note: [ ] Yes [ ] No Optional Repayment Dates: Optional Repayment Prices: McDONALD'S CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), for value received, hereby promises to pay to bearer upon presentation and surrender hereof the principal amount endorsed on the Schedule of Issuances, Exchanges and Aggregate Principal Amount hereto on the Stated Maturity shown above and to pay accrued interest on said principal sum at the Interest Rate specified above from the Original Issue Date specified above (the "Original Issue Date"), or from the most recent date to which interest has been paid or duly provided for, semiannually in arrears (unless otherwise specified on the face hereof) on February 15 and August 15 of each year (each an "Interest Payment Date") and on the Stated Maturity shown above, or upon earlier redemption or repayment, until said principal amount is paid or duly provided for in accordance with the terms hereof. Interest on this Note, if any, will be computed on the basis of a 360-day year of twelve 30-day months. Any payment of principal, premium or interest required to be made in respect hereof on a date that is not a Business Day (as defined below) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date, and no additional interest shall accrue as a result of such delayed payment. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of New York, (b) the City of Chicago or (c) if the Specified Currency for this Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg) and (ii) if the Specified Currency for this Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). This Note is exchangeable in whole or from time to time in part without charge for individual Bearer Notes, with appropriate Coupons attached, in the denomination of U.S.$25,000 or any larger amount that is an integral multiple of U.S.$5,000 (or such other denominations as are specified above), upon 30 days' notice to the Trustee given through either Euroclear or Cedel. Upon any exchange of any portion of this Note for individual Bearer Notes, the portion of the principal amount hereof so exchanged shall be endorsed by the Paying Agent in the Schedule of Issuances, Exchanges and Aggregate Principal Amount hereto, and the principal amount hereof shall be reduced for all purposes by the amount so exchanged. F-2 Except as otherwise provided herein or in the Indenture, until exchanged in full for individual Bearer Notes, this Note shall in all respects be entitled to the same benefits and subject to the same terms and conditions of, and the Company shall be subject to the same restrictions as those contained on the individual Bearer Notes and in the Indenture. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. This Note shall not become valid or obligatory for any purpose unless and until this Note has been authenticated by First Fidelity Bank, National Association, or its successor, as Trustee. IN WITNESS WHEREOF, the Company has caused this Note to be executed under its corporate seal. Dated: McDONALD'S CORPORATION By_____________________________________ Vice President and Treasurer [seal] Attest_________________________________ [Assistant] Secretary CERTIFICATE OF AUTHENTICATION This is one of the Notes issued under the within-mentioned Indenture. FIRST FIDELITY BANK, NATIONAL ASSOCIATION as Trustee MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON OFFICE, as Authenticating Agent By____________________________________ Authorized Officer F-3 McDONALDS CORPORATION MEDIUM-TERM NOTE, SERIES E (FIXED RATE) General ------- This Note is one of a series of duly authorized debt securities of the Company (the "Debt Securities") issued or to be issued in one or more series under an indenture dated as of March 1, 1987 (the "Indenture") between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as trustee (the "Trustee," which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Debt Securities and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Debt Security is one of a series designated on the face hereof limited to an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or the equivalent thereof in one or more foreign or composite currencies, subject to reduction as a result of the sale of other Debt Securities. The U.S. dollar equivalent of the public offering price or purchase price of Notes denominated in currencies other than U.S. dollars will be determined by the Paying Agent (as defined below), on the basis of the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") for such currencies on the applicable trade dates; provided, however, that in the -------- ------- case of ECU, the Market Exchange Rate shall be the rate of exchange determined by the Commission of the European Communities, or any successor publication on the applicable trade dates. "Maturity," when used with respect to this Note, means the date on which the principal of this Note or an installment of principal becomes due and payable as provided herein or in the Indenture whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. The authorized denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000 and any larger amount that is an integral multiple of U.S.$5,000, unless otherwise specified on the face hereof. The authorized denominations of Bearer Notes denominated in currencies other R-1 than U.S. dollars will be as set forth on the respective faces thereof. If so specified on the face hereof, this Note will be redeemable at the option of the Company in whole or from time to time in part, on the dates designated as the Optional Redemption Dates on the face hereof, upon the Company's giving the Trustee at least 45 days' notice, at the Redemption Prices determined as provided on the face hereof. Notice of any such redemption will be given to record Holders of Notes as set forth below at least 30 but not more than 60 days prior to any Optional Redemption Date. Unless otherwise specified on the face hereof, the Bearer Notes will not be subject to any sinking fund. Any such sinking fund shall be administered in accordance with the terms specified on the face hereof and otherwise as set forth in the Indenture. If the Company has or will become obligated to pay additional amounts on the Bearer Notes as described below as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings, which change or amendment is enacted or becomes effective (regardless of when announced) on or after the Original Issue Date, and such obligation cannot be avoided by the Company taking reasonable measures available to it, then the Company may, at its option, redeem the Bearer Notes in whole, but not in part, at any time on giving at least 30 but not more than 60 days' notice as set forth below, which notice shall be irrevocable, calculated without premium, at 100% of the principal amount, plus accrued interest to the redemption date; provided, -------- however, that if this Bearer Note is an Original Issue Discount Note, the ------- redemption price shall be limited to the sum of (i) the aggregate principal amount hereof multiplied by the Issue Price hereof (expressed as a percentage of the aggregate principal amount) and (ii) the original issue discount accrued hereon from the Original Issue Date to the date fixed for redemption, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of notice of redemption). No such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay such additional amounts were a payment in respect of the Bearer Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee a certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the R-2 Company so to redeem have occurred, and an opinion of counsel to the effect that the Company has or will become obligated to pay such additional amounts as a result of such change or amendment. If so specified on the face hereof, this Note will be repayable prior to its Stated Maturity at the option of the Holder on the Optional Repayment Dates shown on the face hereof at the Optional Repayment Prices shown on the face hereof, together with accrued interest to the date of repayment. In order for this Note to be repaid, the Principal Paying Agent (as specified below) must receive the Note at least 30 but not more than 45 days prior to an Optional Repayment Date. Any tender of this Note for repayment shall be irrevocable. The repayment option may be exercised by the Holder hereof for less than the entire principal amount hereof, provided that the principal amount of the Note remaining -------- outstanding after repayment is an authorized denomination. Upon such partial repayment, this Note shall be cancelled and a new Note or Notes for the remaining principal amount hereof shall be issued to the Holder of this Note. Payment of Additional Amounts ----------------------------- The Company will, subject to the exceptions and limitations set forth below, pay such additional amounts to the Holder of this Note that is a United States Alien (as defined below) such amounts as may be necessary so that every net payment on this Note, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed by the United States (or any political subdivision or taxing authority thereof or therein) upon or as a result of such payment, will not be less than the amount provided in this Note to be then due and payable. However, the Company will not be required to make any such payment of additional interest to such Holder for or on account of: (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor or beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, a trust, a partnership or a corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been engaged in trade or business or present therein or having or having had a permanent establishment therein or (ii) such Holder's R-3 past or present status as a personal holding company, foreign personal holding company or private foundation or other tax-exempt organization with respect to the United States or as a corporation that accumulates earnings to avoid United States federal income tax; (b) any estate, inheritance, gift, sales, transfer or personal property tax or any similar tax, assessment or other governmental charge; (c) any tax, assessment or other governmental charge imposed by reason of the presentation by the Holder of this Note for payment on a date more than 10 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (d) any tax, assessment or other governmental charge that is payable otherwise than by withholding from a payment on this Note; (e) any tax, assessment or other governmental charge required to be withheld by any Paying Agent from any payment of principal or interest on this Note, if such payment can be made without such withholding by any other Paying Agent in Western Europe; (f) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with any applicable certification, identification, documentation, information or other reporting requirement concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Note if, without regard to any tax treaty, such compliance is required by statute or by regulation of the United States or of any political subdivision or taxing authority thereof or therein as a pre-condition to relief or exemption from such tax, assessment or other governmental charge; or (g) any tax, assessment or other governmental charge imposed by reason of such Holder's past or present status as (i) a controlled foreign corporation that is related to the Company through stock ownership or (ii) the actual or constructive owner of 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote; or (h) any combination of items (a), (b), (c), (d), (e), (f) or (g). R-4 nor shall such additional amounts be paid with respect to a payment on this Note to a United States Alien that is a fiduciary or partnership or other than the sole beneficial owner of this Note or such Coupon to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the additional amounts had such beneficiary, settlor, member or beneficial owner been the Holder of this Note. The term "United States Alien" means any Person that, for United States federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or foreign partnership one or more of the members of which is, for United States federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. If the Company shall determine that any payment made outside the United States by the Company or any of its Paying Agents in respect of this Note or any Coupon (an "Affected Security") would, under any present or future laws or regulations of the United States, be subject to any certification, identification, documentation, information or other reporting requirement of any kind, the effect of which requirement is the disclosure to the Company, any Paying Agent or any governmental authority of the nationality, residence or identity of a beneficial owner of such Affected Security that is a United States Alien (other than such a requirement (a) that would not be applicable to a payment made by the Company or any of its Paying Agents (i) directly to the beneficial owner or (ii) to a custodian, nominee or other agent of the beneficial owner or (b) that can be satisfied by such custodian, nominee or other agent certifying to the effect that the beneficial owner is a United States Alien; provided that, in any case referred to in clause (a)(ii) or (b), -------- payment by the custodian, nominee or agent to the beneficial owner is not otherwise subject to any such requirement), then the Company shall elect either (x) to redeem such Affected Securities in whole, but not in part, at their Redemption Price, or (y) if the conditions described in the next succeeding paragraph are satisfied, to pay the additional amounts specified in such paragraph. The Company shall make such determination as soon as practicable and publish prompt notice thereof (the "Determination Notice") stating the effective date of such certification, documentation, identification, information or other reporting requirement, whether the Company elects to redeem the Affected Securities or to pay the additional amounts specified in the next succeeding paragraph and (if applicable) the last date by which the redemption of the Affected Securities must take R-5 place, as provided in the next succeeding sentence. If any Affected Securities are to be redeemed pursuant to this paragraph, the redemption shall take place on such date, not later than one year after the publication of the Determination Notice, as the Company shall specify by notice given to the Principal Paying Agent at least 60 days before the redemption date. Notice of such redemption shall be given to the Holders of the Affected Securities at least 30 but not more than 60 days prior to the Redemption Date. Notwithstanding the foregoing, the Company shall not so redeem the Affected Securities if the Company shall subsequently determine not less than 30 days prior to the redemption date, that subsequent payments on the Affected Securities would not be subject to any such certification, identification, documentation, information or other reporting requirement, in which case the Company shall publish prompt notice of such subsequent determination and any earlier redemption notice given pursuant to this paragraph shall be revoked and of no further effect. Prior to the publication of any Determination Notice pursuant to this paragraph, the Company shall deliver to the Trustee a certificate stating that the Company is obligated to make such determination and setting forth a statement of facts showing that the conditions precedent to the obligation of the Company to redeem the Affected Securities or to pay the additional amounts specified in the next succeeding paragraph have occurred, and an opinion of counsel to the effect that such conditions have occurred. If and so long as the certification, identification, documentation, information or other reporting requirement referred to in the preceding paragraph would be fully satisfied by payment of a backup withholding tax or similar charge, the Company may elect to pay such additional amounts as may be necessary so that every net payment made outside the United States following the effective date of such requirement by the Company or any of its Paying Agents in respect of any Affected Security of which the beneficial owner is a United States Alien (but without any requirement that the nationality, residence or identity of such beneficial owner be disclosed to the Company, any Paying Agent or any governmental authority), after deduction or withholding for or on account of such backup withholding tax or similar charge will not be less than the amount provided in such Affected Security to be then due and payable. However, the Company may elect not to pay such Additional Amounts in respect of any backup withholding tax or similar charge, which (a) would not be applicable to a payment of principal of or interest on any Affected Security made by the Company or any one of its paying agents (i) directly to the beneficial owner or to a custodian, nominee or other agent of the beneficial owner of such Affected Security or (ii) if such custodian, nominee or other R-6 agent were to certify to the effect that such beneficial owner is a United States Alien or (b) is imposed as a result of presentation of such Affected Security for payment more than 10 days after the date on which such payment became due and payable or on which payment thereof is duly provided for, whichever occurred later. If the Company elects to pay the additional amounts pursuant to this paragraph, then the Company shall have the right to redeem the Affected Securities at any time in whole, but not in part, at their Redemption Prices, without reducing such Redemption Prices for applicable withholding taxes subject to the provisions of the last three sentences of the immediately preceding paragraph. If the Company elects to pay the additional amounts pursuant to this paragraph and the condition specified in the first sentence of this paragraph should no longer be satisfied, then the Company shall redeem the Affected Securities pursuant to the applicable provisions of the preceding paragraph. Any redemption payments made by the Company pursuant to the two immediately preceding sentences shall be subject to the continuing obligation of the Company to pay the additional amounts pursuant to this paragraph. Except as set forth below, the principal hereof and any premium and interest hereon will be paid by the Company (unless otherwise specified above) in such coin or currency specified above as at the time of payment shall be legal tender for the payment of public and private debts (the "Specified Currency"). Payment of principal shall be made only against presentation and surrender of this Note, subject to any applicable laws or regulations, at the specified offices outside the United States of the Paying Agents listed below, and interest payable in respect of an Interest Payment Date will be paid to each of Euroclear and Cedel with respect to that portion of this Note held for its account. No payment in respect of this Note will be made upon presentation of this Note at any office or agency of the Trustee or any other paying agency maintained by the Company in the United States, nor will any such payment be made by transfer to an account, or by mail to an address, in the United States. The interest payable hereon on each Interest Payment Date will equal the amount of interest accrued from and including the immediately preceding Interest Payment Date in respect of which interest has been paid or duly made available for payment (or from and including the date of issue, if no interest has been paid hereon) to but excluding the related Interest Payment Date or Maturity, as the case may be. The Company has initially appointed as its Paying Agents for Bearer Notes of this series the offices listed below: R-7 Principal Paying Agent: Morgan Guaranty Trust Company of New York 60 Victoria Embankment London EC4Y OJP Paying Agent: Banque Generale du Luxembourg S.A. 14 Rue Aldringen L-2951 Luxembourg Luxembourg The Company reserves the right at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents and to approve any change in the office through which any Paying Agent acts, provided that there will at all times be a Paying -------- Agent (which may be the Trustee) in at least one city in Europe which, so long as Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of the exchange shall so require, shall include (or be) Luxembourg. Notice of any such termination or appointment and of any changes in the specified offices of the Trustee or any Paying Agent will be given to the Holder hereof as described below. Payment in Currencies Other Than the Specified Currency ------------------------------------------------------- Except as set forth below with respect to payments in ECU, if payment in respect of this Note is required to be made in a specified currency other than U.S. dollars (a "Specified Currency") and such currency is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments shall be made in U.S. dollars until such currency is again available to the Company or so used. The amounts so payable on any date in such currency shall be converted into U.S. dollars on the basis of the most recently available Market Exchange Rate for such currency or as otherwise indicated on the face hereof. Any payment made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture. Notwithstanding the foregoing, if a Specified Currency is unavailable to the Company solely because such currency no longer constitutes legal tender because it has been replaced by the ECU or the new single currency of the European Union once monetary union takes effect pursuant to Article 1091 of the Treaty establishing the European Community, the amounts so payable in respect of such Note shall, beginning with the date such replacement becomes effective, be made in the relevant new single currency of the European Union; the amounts so payable on any date shall be converted into such single currency on the basis of the conversion officially in effect in the European Union on the effective date of such replacement. If payment in respect of this Note is required to be made in ECU and the ECU are not then used in the European Monetary System (the "EMS"), then the Paying Agent shall, without liability on its part, choose a component currency R-8 (the "Payment Currency") of the ECU in which all payments in respect hereof shall be made until the ECU are again so used. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of the fourth Luxembourg business day prior to the date on which such payment is due. Notice of the Payment Currency selected by the Trustee shall be given as described below. Any payment made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture. Notwithstanding the foregoing, on the first Luxembourg business day on which the ECU are no longer used in the EMS, the Trustee shall, without liability on its part, choose a Payment Currency in which all payments with respect to Bearer Notes and Coupons denominated in ECU having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of such first Luxembourg business day. Any payment made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture. The equivalent of the ECU in the relevant Payment Currency as of any date (the "Day of Valuation") shall be determined by the Luxembourg Stock Exchange on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU when the ECU was most recently used in the EMS or for the settlement of transactions by public institutions of or within the European Community. The equivalent of the ECU in the Payment Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components, and then, using the rate used for determining the U.S. dollar equivalents of the Components in the Payment Currency as set forth below, calculating the equivalent in the Payment Currency of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of each of the Components shall be determined by the Luxembourg Stock Exchange on the basis of the middle spot delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee (with the approval of the Company), in the country of issue of the Component in question. If the official unit of any component currency of the ECU is altered by way of combination or subdivision, the number of units of that currency as a Component shall be R-9 divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall be equal to the amount of the former component currency divided by the number of currencies into which that currency was divided. If no direct quotations are available for a Component on a Day of Valuation from any of the banks selected by the Trustee (with the approval of the Company) for this purpose, because foreign exchange markets are closed in the country of issue of that Component, or for any other reason, in computing the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall (except as provided below) use the most recent direct quotations for such Component obtained by it, provided -------- that such most recent quotations may be used only if they were prevailing in the country of issue not more than two Luxembourg business days before such Day of Valuation. Beyond such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such Component and for the U.S. dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee (with the approval of the Company), in a country other than the country of issue of such Component. Notwithstanding the foregoing, within such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if the Trustee and the Company judge that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated on the basis of such most recent direct quotations. Unless otherwise specified by the Trustee, if there is more than one market for dealing in any component currency by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a nonresident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. All determinations referred to above made by the Trustee or the Luxembourg Stock Exchange shall be at their respective sole discretion (except to the extent expressly provided herein that any determination made by the Trustee is R-10 subject to the approval of the Company) and shall, in the absence of manifest error, be conclusive for all purposes and binding on Holders of the Bearer Notes and any Coupons, and the Trustee shall have no liability therefor. If an Event of Default with respect to the Notes shall have occurred and be continuing, the principal of all Notes may be declared due and payable in the manner and with the effect provided in the Indenture. If this Note is an Original Issue Discount Note, the amount payable in the event of redemption or repayment prior to its Stated Maturity shall be the Amortized Face Amount of this Note as of the date of redemption or the date of repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to (a) the Issue Price (set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Stated Maturity (set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) by such date of redemption or repayment, but in no event shall the Amortized Face Amount of this Note exceed its principal amount. As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for up to a like aggregate principal amount of Bearer Notes of different authorized denominations, as requested by the Person surrendering the same. No service charge shall be made for any such exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Replacement of Permanent Global Notes ------------------------------------- In case this Note shall at any time become mutilated, destroyed, stolen or lost, it may be replaced at the specified office of the Principal Paying Agent in London; or, so long as the Bearer Notes are listed on the Luxembourg Stock Exchange, at the specified office of the Paying Agent in Luxembourg, upon payment by the claimant of such expenses as may be incurred in connection therewith and, in the case of destruction, theft or loss, on such terms as to evidence thereof and indemnity as the Company or the Trustee may reasonably require. Mutilated or defaced Bearer Notes must be surrendered before replacements will be issued. R-11 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66-2/3% in aggregate principal amount of the Debt Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debt Securities of any series at the time Outstanding, on behalf of the Holders of all the Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders hereof and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Debt Security. Holders of Debt Securities of this series may not enforce their rights pursuant to the Indenture or such Debt Securities except as provided in the Indenture. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed. The Company may, without the consent of the Holders of the Notes, consolidate with, merge into, or transfer substantially all of its assets to, a corporation that is a U.S. Person, provided that the successor corporation assumes all obligations of the Company under the Notes and certain other conditions are met. Except as provided above, the obligation to pay the principal hereof (and premium, if any) and interest hereon in the designated currency of payment is of the essence. To the fullest extent possible under applicable law, judgments in respect of this Note shall be given in such currency. The obligation of the Company to make such payments in the designated currency of payment shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the designated currency of payment that the Holder of this Note may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any R-12 premium and cost of exchange) on the business day in the country of issue of the designated currency of payment or in the international banking community (in the case of a composite currency) immediately following the day on which such Holder receives such payment. If the amount in the designated currency of payment that may be so purchased is for any reason less than the amount originally due, the Company shall, as a separate and independent obligation, pay such additional amounts in the designated currency of payment as may be necessary to compensate for any such shortfall. All notices to Holders of this Note will be deemed to have been duly given if published on two Business Days in a leading London daily newspaper (which is expected to be the Financial Times) and, so long as --------------- the Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, in Luxembourg in a newspaper of general circulation in Luxembourg (which is expected to be the Luxemburger Wort). Such notices shall be deemed to have been given on ---------------- the date of the first such publication. This Note shall be deemed to be a contract made and to be performed solely in the State of New York, and for all purposes shall be governed by, and construed in accordance with, the laws of said State without regard to the conflicts of law rules of said State. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. R-13 SCHEDULE OF ISSUANCES, EXCHANGES AND AGGREGATE PRINCIPAL AMOUNT The following issuances and exchanges of a part of this Note have been made, and the aggregate principal amount of Bearer Notes represented by this Note at any time is as shown in the last entry of Column III hereof unless one or more entries have been made in Column IV hereof reflecting exchanges for individual Bearer Notes, in which event such aggregate principal amount is as shown in the last entry of Column V hereof. I. II. III. IV. V. VI. Principal Notation Amount Aggregate made on Aggregate Exchanged Principal behalf Settlement Principal Principal for Indivi- Amount of the Date or Date Amount Amount dual Bearer Remaining Principal of Exchange Issued Issued Notes After Exchange Paying Agent - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ - - ------------ --------- --------- ----------- -------------- ------------ R-14 SCHEDULE OF INTEREST PAYMENTS The following payments of interest in respect of this Note have been made. Date of Notation made Interest Interest on behalf of the Payment Paid Principal Paying Agent -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- -------- -------- ---------------------- R-15 EX-4.(H) 10 SERIES E PERMANENT GLOBAL FLOATING RATE NOTE Exhibit 4(h) SERIES E PERMANENT GLOBAL FLOATING RATE NOTE BEARER McDONALD'S CORPORATION BEARER PRINCIPAL AMOUNT No. PERMANENT GLOBAL NOTE (Floating Rate) representing MEDIUM-TERM NOTES, SERIES E Due From 184 Days to 60 Years from Date of Issue THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE DENOMINATION OF U.S.$25,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE OF U.S.$5,000 (OR SUCH OTHER DENOMINATIONS AS ARE SPECIFIED BELOW). THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO STATED MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED TO UNDER THE APPROXIMATE METHOD) SET FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. Issue Price: Original Issue Date: Initial Interest Rate: Stated Maturity: Specified Currency: (Applicable only if other than U.S. dollars) Authorized Denominations: (Applicable only if other than U.S.$25,000 and increments of U.S.$5,000 or if Specified Currency is other than U.S. dollars) Base Rate: [_] CD Rate [_] Commercial Paper [_] CMT Rate [_] Federal Funds Rate [_] LIBOR [_] Treasury Rate [_] Prime Rate [_] Other (see attached) If Base Rate is CMT Rate, specify Designated CMT Telerate Page: If Base Rate is LIBOR, specify: LIBOR Reuters: Designated LIBOR Page: LIBOR Telerate: Interest Reset Period: Index Currency: Index Maturity: Interest Reset Dates: (Applicable only if other than as described on the reverse hereof) Interest Payment Dates: Interest Accrual: (Applicable only if other than as described on the reverse hereof) Spread Multiplier: Spread (+/-): Maximum Interest Rate: Minimum Interest Rate: Optional Redemption: [_] Yes [_] No Optional Redemption Dates: Redemption Prices: [_] The Redemption Price shall initially be % of the principal amount of the Note to be redeemed and shall decline at each anniversary of the initial Redemption Date by % of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount; provided, however, that if this Note is an Original Issue Discount Note, the Redemption Price shall be the Amortized Face Amount of the principal amount to be redeemed. [_] Other: Sinking Fund: [_] Yes [_] No Amortizing Note: [_] Yes [_] No Sinking Fund Dates: Amortization Schedule: Sinking Fund Amounts: Optional Repayment: [_] Yes [_] No Original Issue Discount Note: Optional Repayment Dates: Total Amount of OID: Optional Repayment Prices: Yield to Stated Maturity: Initial Accural Period OID: Calculation Agent (if other than Principal Paying Agent): F-1 McDONALD'S CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), for value received, hereby promises to pay to bearer upon presentation and surrender hereof the principal amount endorsed on the Schedule of Issuances, Exchanges and Aggregate Principal Amount hereto on the Stated Maturity shown above and to pay accrued interest on said principal amount at the Initial Interest Rate shown above from the Original Issue Date shown above until the first Interest Reset Date shown above following the Original Issue Date and thereafter at the Base Rate shown above, adjusted by the Spread and/or Spread Multiplier, if any, shown above, determined as described on the reverse hereof, until said principal amount is paid or duly provided for in accordance with the terms hereof. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of New York, (b) the City of Chicago or (c) if the Specified Currency for this Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg); (ii) if the Specified Currency for this Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made) and (iii) if this Note is a LIBOR Note, a London Business Day (as defined below). "London Business Day" means any day (i) if the Index Currency (as defined on the face hereof) is other than ECU, on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). This Note is exchangeable in whole or from time to time in part without charge for individual Bearer Notes, with appropriate Coupons attached, if any, in the denomination of U.S.$25,000 or any larger amount that is an integral multiple of U.S.$5,000 (or such other denominations as are specified above), upon 30 days' notice to the Trustee given through either Euroclear or Cedel. Upon any exchange of any portion of this Note for individual Bearer Notes, the portion of the principal amount hereof so exchanged shall be endorsed by the Trustee in the Schedule of Issuances, Exchanges and Aggregate Principal Amount hereto, and the principal amount hereof shall be reduced for all purposes by the amount so exchanged. Except as otherwise provided herein or in the Indenture, until exchanged in full for individual Bearer Notes, this Note shall in all respects be entitled to the same benefits and subject to the same terms and conditions of, and the Company F-2 shall be subject to the same restrictions as those contained on the individual Bearer Notes and in the Indenture. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. This Note shall not become valid or obligatory for any purpose unless and until this Note has been authenticated by First Fidelity Bank, National Association, or its successor, as Trustee. IN WITNESS WHEREOF, the Company has caused this Note to be executed under its corporate seal. Dated: McDONALD'S CORPORATION By_____________________________________ Vice President and Treasurer [seal] Attest________________________________ [Assistant] Secretary CERTIFICATE OF AUTHENTICATION This is one of the Notes issued under the within-mentioned Indenture. FIRST FIDELITY BANK, NATIONAL ASSOCIATION as Trustee MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON OFFICE, as Authenticating Agent By__________________________________ Authorized Signatory F-3 McDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E (FLOATING RATE) General ------- This Note is one of a series of duly authorized debt securities of the Company (the "Debt Securities") issued or to be issued in one or more series under an indenture dated as of March 1, 1987 (the "Indenture") between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as trustee (the "Trustee", which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, dues and immunities thereunder of the Company, the Trustee and the Holders of the Debt Securities and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Debt Security is one of a series designated on the face hereof limited to an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or the equivalent thereof in one or more foreign or composite currencies, subject to reduction as a result of the sale of other Debt Securities. The U.S. dollar equivalent of the public offering price or purchase price of Notes denominated in currencies other than U.S. dollars will be determined by an agent designated by the Company, which initially shall be Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York (the "Paying Agent"), on the basis of the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") for such currencies on the applicable trade dates; provided, however, that in the case of -------- ------- ECU, the Market Exchange Rate shall be the rate of exchange determined by the Commission of the European Communities (or any successor thereof) as published in the Official Journal of the European Communities, or any successor publication, on the applicable trade dates. "Maturity," when used with respect to this Note, means the date on which the principal of this Note or an installment of principal becomes due and payable as provided herein or in the Indenture, whether at Stated Maturity or by declaration of acceleration, call for redemption or otherwise. The authorized denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000 and any larger amount that is an integral multiple of U.S.$5,000, unless otherwise specified on the face hereof. The authorized denominations of Bearer Notes R-1 denominated in currencies other than U.S. dollars will be as set forth on the respective faces thereof. If so specified on the face hereof, this Note will be redeemable at the option of the Company in whole or from time to time in part, on the dates designated as the Optional Redemption Dates on the face hereof, upon the Company's giving the Trustee and the Principal Paying Agent at least 45 days' notice, at the Redemption Price determined as provided on the face hereof. Notice of any such redemption will be given to record Holders of Notes, as set forth below, upon at least 30 but not more than 60 days prior to any Optional Redemption Date. Unless otherwise specifed on the face hereof, the Bearer Notes will not be subject to any sinking fund. Any such sinking fund shall be administered in accordance with the terms specified on the face hereof and otherwise as set forth in the Indenture. If the Company has or will become obligated to pay additional amounts on the Bearer Notes as described below as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings, which change or amendment is enacted or becomes effective (regardless of when announced) on or after Original Issue Date and such obligation cannot be avoided by the Company taking reasonable measures available to it, then the Company may, at its option, redeem the Bearer Notes in whole, but not in part, at any time on giving at least 30 but not more than 60 days' notice as set forth below, which notice shall be irrevocable, calculated without premium, at 100% of their principal amount, plus accrued interest to the redemption date; provided, -------- however, that if this Note is an Original Issue Discount Note, the ------- redemption price hereof shall be limited to the sum of (i) the aggregate principal amount hereof multiplied by the Issue Price hereof (expressed as a percentage of the aggregate principal amount) and (ii) the original issue discount accrued hereon from the Original Issue Date to the date fixed for redemption, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of notice or redemption). No such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay such additional amounts were a payment in respect of the Bearer Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee a certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred, and an opinion of counsel to the effect that the R-2 Company has or will become obligated to pay such additional amounts as a result of such change or amendment. If so specified on the face hereof, this Note will be repayable prior to its Stated Maturity at the option of the Holder on the Optional Repayment Dates shown on the face hereof at the Optional Repayment Prices shown on the face hereof, together with accrued interest to the date of repayment. In order for this Note to be repaid, the Principal Paying Agent (as specified below) must receive the Note at least 30 but not more than 45 days prior to an Optional Repayment Date. Any tender of this Note for repayment shall be irrevocable. The repayment option may be exercised by the Holder hereof for less than the entire principal amount hereof, provided that the principal amount of the Note remaining -------- outstanding after repayment is an authorized denomination. Upon such partial repayment, this Note shall be cancelled and a new Note or Notes for the remaining principal amount hereof shall be issued to the Holder of this Note. Payment of Additional Amounts ----------------------------- The Company will, subject to the exceptions and limitations set forth below, pay such additional amounts to the Holder of this Note that is a United States Alien (as defined below) such amounts as may be necessary so that every net payment on this Note, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed by the United States (or any political subdivision or taxing authority thereof or therein) upon or as a result of such payment, will not be less than the amount provided in this Note to be then due and payable. However, the Company will not be required to make any such payment of additional interest to such Holder for or on account of: (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, a trust, a partnership or a corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been engaged in trade or business or present therein or having or having had a permanent establishment therein or (ii) such Holder's past or present status as a personal holding company, foreign personal holding company or private foundation or other tax-exempt organization with respect to the United States or as a corporation that accumulates earnings to avoid United States federal income tax; R-3 (b) any estate, inheritance, gift, sales, transfer or personal property tax or any similar tax, assessment or other governmental charge; (c) any tax, assessment or other governmental charge imposed by reason of the presentation by the Holder of this Note for payment on a date more than 10 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurrs later; (d) any tax, assessment or other governmental charge that is payable otherwise than by withholding from a payment on this Note; (e) any tax, assessment or other governmental charge required to be withheld by any Paying Agent from any payment of principal or interest on this Note, if such payment can be made without such withholding by any other Paying Agent in Western Europe; (f) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with any applicable certification, identification, documentation, information or other reporting requirement concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Note if, without regard to any tax treaty, such compliance is required by statute or regulation of the United States or of any political subdivision or taxing authority thereof or therein as a pre- condition to relief or exemption from such tax, assessment or other governmental charge; (g) any tax, assessment or other governmental charge imposed by reason of such Holder's past or present status as (i) a controlled foreign corporation that is related to the Company through stock ownership or (ii) the actual or constructive owner of 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote; or (h) any combination of items (a), (b), (c), (d), (e), (f) or (g); nor shall such additional amounts be paid with respect to a payment on this Note to a United States Alien that is a fiduciary or partnership or other than the sole beneficial owner of this Note or such Coupon to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the additional amounts had such beneficiary, settlor, member or beneficial owner been the Holder of this Note. R-4 The term "United States Alien" means any person that, for United States federal income tax purposes, is a foreign corporation, a non- resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. Except as set forth below, the principal hereof and any premium and interest hereon will be paid by the Company (unless otherwise specified above) in such coin or currency specified above as at the time of payment shall be legal tender for the payment of public and private debts (the "Specified Currency"). Payments of principal shall be made only against presentation and surrender of this Note, subject to any applicable laws or regulations, at the specified offices outside the United States of the Paying Agents listed below, and interest payable in respect of an Interest Payment Date will be paid to each of Euroclear and Cedel with respect to that portion of this Note held for its account. No payment in respect of this Note will be made upon presentation of this Note at any office or agency of the Trustee or any other paying agency maintained by the Company in the United States, nor will any such payment be made by transfer to an account, or by mail to an address, in the United States. The Company has initially appointed as its Paying Agents for Bearer Notes of this Series the offices listed below: Principal Paying Agent: Morgan Guaranty Trust Company of New York 60 Victoria Embankment London EC4Y 0JP Paying Agent: Banque Generale du Luxembourg S.A. 14 Rue Aldringen L-2951 Luxembourg Luxembourg The Company reserves the right at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents and to approve any change in the office through which any Paying Agent acts, provided that there will at all times be a Paying Agent (which may be the Trustee) in at least one city in Europe, which, so long as Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of the exchange shall so require, shall include (or be) R-5 Luxembourg. Notice of any such termination or appointment and of any changes in the specified offices of the Trustee or any Paying Agent will be given to the Holders hereof as described below. This Note will bear interest from its Original Issue Date to the first Interest Reset Date (as defined below) at the Initial Interest Rate set forth on the face hereof. Thereafter, the interest rate hereon for each Interest Reset Period (as defined below) will be determined by reference to an interest rate basis (the "Base Rate"), plus or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one basis point equals one one- hundredth of a percentage point) that may be specified on the face hereof, and the "Spread Multiplier" is the percentage that may be specified on the face hereof. The face of this Note will designate one or more of the following Base Rates as applicable hereto: (i) the CD Rate (a "CD Rate Note"), (ii) the CMT Rate (a "CMT Rate Note"), (iii) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (iv) the Federal Funds Rate (a "Federal Funds Rate Note"), (v) LIBOR (a "LIBOR Note"), (vi) the Treasury Rate (a "Treasury Rate Note"), (vii) the Prime Rate (a "Prime Rate Note") or (viii) such other Base Rate or formula as is set forth on the face hereof. The "Index Maturity" is the period of maturity of the instrument, obligation or index from which the Base Rate is calculated. "H.15(519)" means the publication entitled "Statistical Release H.15(519), Selected Interest Rates", or any successor publication, published by the Board of Governors of the Federal Reserve System. "Composite Quotations" means the daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities" published by the Federal Reserve Bank of New York. Unless otherwise specified on the face hereof, the interest payable hereon shall be the accrued interest from and including the Original Issue Date or the last date to which interest has been paid or duly provided for, as the case may be, to but excluding the applicable Interest Payment Date or Maturity, as the case may be. Unless otherwise specified on the face hereof, accrued interest will be calculated by multiplying the principal amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factors calculated for each day in the period for which accrued interest is being calculated. Unless otherwise specified on the face hereof, the interest factor (expressed as a decimal calculated to seven decimal places without rounding) for each such day shall be computed by dividing the interest rate in effect on such day by 360 if the Base Rate specified on the face hereof is the CD Rate, the Commercial Paper Rate, the Federal Funds Rate, LIBOR or the Prime Rate, or by the actual number of days in the year if the Base Rate specified on the face hereof is the Treasury Rate or the CMT Rate. For purposes of making the foregoing calculation, the interest rate in effect on any Interest Reset Date will be R-6 the applicable rate as reset on such date. Unless otherwise specified on the face hereof, all percentages resulting from any calculation of the rate of interest hereon will be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage point rounded upward, and all currency amounts used in or resulting from such calculation will be rounded to the nearest one-hundredth of a unit (with .005 of a unit being rounded upward). As specified on the face hereof, the interest rate hereon will be reset daily, weekly, monthly, quarterly, semiannually or annually (such period being the "Interest Reset Period" and the first day of each Interest Reset Period being an "Interest Reset Date"). Unless otherwise specified on the face hereof, the Interest Reset Date will be, if this Note resets daily, each Business Day; if this Note is not a Treasury Rate Note and it resets weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets weekly, Tuesday of each week (except as provided below under "Determination of Treasury Rate"); if this Note resets monthly, the third Wednesday of each month; if this Note resets quarterly, the third Wednesday of March, June, September and December of each year; if this Note resets semiannually, the third Wednesday of each of the two months of each year specified on the face hereof; and if this Note resets annually, the third Wednesday of one month of each year specified on the face hereof. If an Interest Reset Date for this Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that if this Note is a LIBOR Note and such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Notwithstanding the foregoing, the interest rate hereon during any interest period shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, shown on the face hereof. In addition to any Maximum Interest Rate that may be applicable hereto, the interest rate hereon during any interest period will in no event be higher than the maximum rate permitted by applicable law as the same may be modified by United States law of general application. This Note will be governed by the law of the State of New York and, under such law, the maximum rate of interest, with certain exceptions, is currently 25% per annum on a simple interest basis. Unless otherwise indicated on the face hereof and except as provided below, interest will be payable, if this Note resets daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified on the face hereof; if this Note resets quarterly, on the third Wednesday of March, June, September and December of each year; if this Note resets semiannually, on the third Wednesday of each of the two months of each year specified on the face hereof; and if this Note resets annually, on the R-7 third Wednesday of one month of each year specified on the face hereof (each such day being an "Interest Payment Date") and, in each case, at Maturity. If any Interest Payment Date (other than at Maturity) would otherwise be a day that is not a Business Day, such Interest Payment Date shall be postponed to the next succeeding Business Day, except that, if the Base Rate specified on the face hereof is LIBOR and such Business Day would fall in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity of this Note falls on a day that is not a Business Day, the required payment of principal, premium (if any) and/or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest shall accrue on such payment for the period from and after Maturity to the date of such payment on the next succeeding Business Day. The Company will appoint, and enter into an agreement with, an agent ("Calculation Agent") to calculate interest rates on this Note. All determinations of interest rates by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holder hereof. Unless otherwise specified on the face hereof, Morgan Guaranty Trust Company of New York shall be the Calculation Agent for this Note. At the request of the Holder hereof, the Calculation Agent will provide to such Holder the interest rate then in effect, and, if determined, the interest rate that will become effective on the next Interest Reset Date. In addition, such information will be communicated to the Luxembourg Stock Exchange and will be made available at the offices of the Paying Agent in Luxembourg and at the Luxembourg Stock Exchange. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date the rate of interest hereon shall be the rate determined in accordance with the provisions under the applicable heading below. Determination of CD Rate ------------------------ If the Base Rate specified on the face hereof is the CD Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "CD Rate" for each Interest Reset Period shall be the rate as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate Determination Date") for negotiable certificates of deposit having the Index Maturity specified on the face hereof, as published in H.15(519) under the heading "CDs (Secondary Market)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as R-8 defined below) pertaining to such CD Rate Determination Date, then the "CD Rate" for such Interest Reset Period will be the rate on such CD Rate Determination Date for negotiable certificates of deposit of the Index Maturity specified on the face hereof as published in Composite Quotations under the heading "Certificates of Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest Reset Period will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date, of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major money market banks of the highest credit standing (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity specified on the face hereof in a denomination of $5,000,000; provided, however, that if the three dealers selected as aforesaid by the -------- ------- Calculation Agent are not quoting offered rates as mentioned in this sentence, the "CD Rate" for such Interest Reset Period will be the CD Rate in effect on such CD Rate Determination Date, or, if none, the Initial Interest Rate. The "Calculation Date" pertaining to any CD Rate Determination Date shall be the earlier of (i) the tenth calendar day after such CD Rate Determination Date or,if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of Commercial Paper Rate -------------------------------------- If the Base Rate specified on the face hereof is the Commercial Paper Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Commercial Paper Rate" for each Interest Reset Period will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Commercial Paper Rate Determination Date") and shall be the Money Market Yield (as defined below) on such Commercial Paper Rate Determination Date of the rate for commercial paper having the Index Maturity specified on the face hereof, as such rate shall be published in H.15(519) under the heading "Commercial Paper". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Commercial Paper Rate Determination Date, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield on such Commercial Paper Rate Determination Date of the rate for R-9 commercial paper of the Index Maturity specified on the face hereof as published in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 a.m., New York City time, on such Commercial Paper Rate Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the Index Maturity specified on the face hereof placed for an industrial issuer whose bonds are rated "AA" or the equivalent thereof by a nationally recognized statistical rating agency; provided, however, -------- ------- that if the three dealers selected as aforesaid by the Calculation Agent are not quoting offered rates as mentioned in this sentence, the "Commercial Paper Rate" for such Interest Reset Period will be the Commercial Paper Rate in effect on such Commercial Paper Rate Determination Date, or, if none, the Initial Interest Rate. "Money Market Yield" shall be a yield calculated in accordance with the following formula: D x 360 Money Market Yield = ----------------- x 100 360 - (D x M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number of days in the period for which accrued interest is being calculated. The "Calculation Date" pertaining to any Commercial Paper Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Commercial Paper Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of Federal Funds Rate ----------------------------------- If the Base Rate specified on the face hereof is the Federal Funds Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Federal Funds Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Federal Funds Rate" for each Interest Rate Period shall be the effective rate on the second Business Day immediately prior to the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination Date") for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)". In the event that such rate is not published prior to 3:00 p.m., New York City R-10 time, on the Calculation Date (as defined below) pertaining to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such Interest Reset Period shall be the rate on such Federal Funds Rate Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall be the arithmetic mean of the rate, as of 9:00 a.m., New York City time, on the Federal Funds Rate Determination Date for the last transaction of not less than $5,000,000 in overnight federal funds arranged by each of three leading brokers of federal funds transactions in The City of New York selected by the Calculation Agent for such Federal Funds Rate Note; provided, however, that if the brokers selected -------- ------- as aforesaid by the Calculation Agent are not quoting as set forth above, the "Federal Funds Rate" for such Interest Reset Period will be the Federal Funds Rate in effect on such Federal Funds Rate Determination Date, or, if none, the Initial Interest Rate. The "Calculation Date" pertaining to any Federal Funds Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Federal Funds Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of LIBOR ---------------------- If the Base Rate specified on the face hereof is LIBOR, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified on the face hereof. If LIBOR is indexed to the offered rates for deposits in a currency other than U.S. dollars the method for determining such rate will be specified on the face hereof. If LIBOR is indexed to the offered rates for U.S. dollar deposits, "LIBOR" for each Interest Reset Period will be determined by the Calculation Agent as follows: (i) On the second London Business Day prior to the Interest Reset Date for such Interest Reset Period (a "LIBOR Interest Determination Date"), the Calculation Agent will determine (a) if "LIBOR Reuters" is specified on the face hereof, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, that appear on the Designated LIBOR Page specified on the face R-11 hereof as of 11:00 a.m., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is specified on the face hereof or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the rate for deposits in the Index Currency having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date that appears on the Designated LIBOR Page specified on the face hereof as of 11:00 a.m., London time, on such LIBOR Interest Determination Date. If fewer than two such offered rates appear, or if no such rate appears, as applicable, LIBOR in respect of the related LIBOR Interest Determination Date will be determined in accordance with the provisions described in clause (ii) below. (ii) With respect to a LIBOR Note and an Interest Reset Period to which this clause (ii) applies, the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation Agent, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in the applicable Principal Financial Center, on such LIBOR Interest Determination Date by three major banks in such Principal Financial Center selected by the Calculation Agent for loans in the Index Currency to leading European banks, having the Index Maturity designated on the face hereof commencing on the second London Business Day immediately following such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the banks so -------- ------- selected by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR Interest Determination Date. R-12 "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified on the face hereof, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is specified on the face hereof or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. "Index Currency" means the currency (including composite currencies) specified on the face hereof as the currency for which LIBOR shall be calculated. If no such currency is specified on the face hereof, the Index Currency shall be U.S. dollars. "Principal Financial Center" will generally be the capital city of the country of the specified Index Currency, except that with respect to U.S. dollars, Italian lire and ECU, the Principal Financial Center shall be The City of New York, Milan and Luxembourg, respectively. Determination of Treasury Rate ------------------------------ If the Base Rate specified on the face hereof is the Treasury Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Treasury Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Treasury Rate" for each Interest Reset Period will be the rate for the auction held on the Treasury Rate Determination Date (as defined below) for such Interest Reset Period of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on the face hereof as such rate shall be published in H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction average (investment)" or, in the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Treasury Rate Determination Date, the auction average rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) on such Treasury Rate Determination Date as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the Index Maturity specified on the face hereof are not published or reported as provided above by 3:00 p.m., New York City time, on such Calculation Date, or if no such auction is held on such Treasury Rate Determination Date, then the "Treasury Rate" for such Interest Reset Period shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) R-13 of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified on the face hereof; provided, however, that if the dealers -------- ------- selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for such Interest Reset Period will be the Treasury Rate in effect on such Treasury Rate Determination Date, or, if none, the Initial Interest Rate. The "Treasury Rate Determination Date" for each Interest Reset Period will be the day of the week in which the Interest Reset Date for such Interest Reset Period falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Rate Determination Date pertaining to the Interest Reset Period commencing in the next succeeding week. If an auction date shall fall on any day that would otherwise be an Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead be the Business Day immediately following such auction date. The "Calculation Date" pertaining to any Treasury Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Treasury Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of Prime Rate --------------------------- If the Base Rate specified on the face hereof is the Prime Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Prime Rate" for each Interest Reset Period will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Prime Rate Determination Date") and shall be the rate published in H.15(519) under the heading "Bank Prime Loan". In the event that such rate is not published prior to 9 a.m., New York City time, on the Calculation Date (as defined below), then the "Prime Rate" for such Interest Reset Period shall be determined by the Calculation Agent and shall be the arithmetic R-14 mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base lending rate as in effect for that Prime Rate Determination Date. If fewer than four such rates but more than one such rate appear on the Reuters Screen NYMF Page for the Prime Rate Determination Date, the "Prime Rate" will be determined by the Calculation Agent and will be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Determination Date by four major money center banks in The City of New York selected by the Calculation Agent. If fewer than two such rates appear on the Reuters Screen NYMF Page, the Prime Rate will be determined by the Calculation Agent on the basis of the rates furnished in The City of New York by the appropriate number of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of at least U.S.$500,000,000 and being subject to supervision or examination by Federal or State authority, selected by the Calculation Agent to provide such rate or rates; provided, however, that if the banks selected as aforesaid are not -------- ------- quoting as mentioned in this sentence, the Prime Rate for such Interest Reset Period will be the Prime Rate in effect on such Prime Rate Determination Date, or, if none, the Initial Interest Rate. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace the NYMF page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). The "Calculation Date" pertaining to a Prime Rate Determination Date will be the earlier of (i) the tenth calendar day after such Prime Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of CMT Rate ------------------------- If the Base Rate specified on the face hereof is the CMT Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. Unless otherwise specified herein, the "CMT Rate" for each Interest Reset Period will be determined by the Calculation Agent and shall be the rate (i) in the case where the Designated CMT Telerate Page (as defined below) is 7055, as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CMT Determination Date") or (ii) in the case where the Designated CMT Telerate Page is 7052, for the week or R-15 the month, as specified on the face hereof, ended immediately preceding the week in which the CMT Determination Date occurs, in either case, for the Index Maturity as displayed on the Designated CMT Telerate page under the caption ". . . Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . . Mondays Approximately 3:45 P.M." If such rate is no longer displayed on the relevant page, or if not dispalyed by 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified on the face hereof as published in the relevant H.15(519) opposite the caption "U.S. Government Securities, Treasury Constant Maturities". If such rate is no longer published, or if not published by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified on the face hereof (or other United States Treasury rate for such Index Maturity) as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for the Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the higher quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Index Maturity specified on the face hereof and a remaining term to maturity of not less than such Index Maturity minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the "CMT Rate" for such Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest R-16 quotation (or, in the event of equality, one of the lowest)), for the Treasury Notes with an original maturity of the number of years that is the next highest to the Index Maturity specified on the face hereof and a remaining term to maturity closest to the Index Maturity specified on the face hereof and in an amount of at least $100 million. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference -------- ------- Dealers selected by the Calculation Agent are quoting as described herein, the "CMT Rate" will be the CMT Rate in effect on such CMT Determination Date, or, if none, the Initial Interest Rate. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Index Maturity specified on the face hereof, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated on the face hereof (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified on the face hereof, the Designated CMT Telerate Page shall be 7052, for the most recent week. The "Calculation Date" pertaining to any CMT Determination Date shall be the earlier of (i) the tenth calendar day after such CMT Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Payment in Currencies other than the Specified Currency ------------------------------------------------------- Except as set forth below with respect to payments in ECU, if payment in respect of this Note is required to be made in a specified currency other than U.S. dollars (a "Specified Currency") and such currency is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments shall be made in U.S. dollars until such currency is again available to the Company or so used. The amounts so payable on any date in such currency shall be converted into U.S. dollars on the basis of the most recently available Market Exchange Rate for such currency or as otherwise indicated on the face hereof. Any payment made R-17 under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture. Notwithstanding the foregoing, if a Specified Currency is unavailable to the Company solely because such currency no longer constitutes legal tender because it has been replaced by the ECU or the new single currency of the European Union once monetary union takes effect pursuant to Article 109l of the Treaty establishing the European Community, the amounts so payable in respect of such Note shall, beginning with the date such replacement becomes effective, be made in the relevant new single currency of the European Union; the amounts so payable on any date shall be converted into such single currency on the basis of the conversion officially in effect in the European Union on the effective date of such replacement. If payment in respect of this Note is required to be made in ECU and the ECU are not then used in the European Monetary System (the "EMS"), then the Trustee shall, without liability on its part, choose a component currency (the "Payment Currency") of the ECU in which all payments in respect hereof shall be made until the ECU are again so used. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of the fourth Luxembourg business day prior to the date on which such payment is due. Notice of the Payment Currency selected by the Trustee shall be given as described below. Any payment made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture. Notwithstanding the foregoing, on the first Luxembourg business day on which the ECU are no longer used in the EMS, the Trustee shall, without liability on its part, choose a Payment Currency in which all payments with respect to Bearer Notes and Coupons denominated in ECU having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of such first Luxembourg business day. Any payment made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture. The equivalent of the ECU in the relevant Payment Currency as of any date (the "Day of Valuation") shall be determined by the Luxembourg Stock Exchange on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU when the ECU was most recently used in the EMS or for the settlement of transactions by public institutions of or within the European Community. The equivalent of the ECU in the Payment Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components, and then, using the rate used for determining the U.S. dollar equivalents of the Components in the Payment Currency as set forth below, calculating the equivalent in the Payment Currency of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of each of the Components shall be determined by the Luxembourg Stock Exchange on the basis of the middle spot delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee (with the approval of the Company), in the country of issue of the Component in question. R-18 If the official unit of any component currency of the ECU is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall be equal to the amount of the former component currency divided by the number of currencies into which that currency was divided. If no direct quotations are available for a Component on a Day of Valuation from any of the banks selected by the Trustee (with the approval of the Company) for this purpose, because foreign exchange markets are closed in the country of issue of that Component, or for any other reason, in computing the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall (except as provided below) use the most recent direct quotations for such Component obtained by it, provided -------- that such most recent quotations may be used only if they were prevailing in the country of issue not more than two Luxembourg business days before such Day of Valuation. Beyond such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such Component and for the U.S. dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee (with the approval of the Company), in a country other than the country of issue of such Component. Notwithstanding the foregoing, within such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if the Trustee and the Company judge that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated on the basis of such most recent direct quotations. Unless otherwise specified by the Trustee, if there is more than one market for dealing in any component currency by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a nonresident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. All determinations referred to above made by the Trustee or the Luxembourg Stock Exchange shall be at their respective sole discretion (except to the extent expressly provided herein that any determination made by the Trustee is subject to the R-19 approval of the Company) and shall, in the absence of manifest error, be conclusive for all purposes and binding on Holders of the Bearer Notes and any Coupons, and the Trustee shall have no liability therefor. If an Event of Default with respect to the Notes shall have occurred and be continuing, the principal of all Notes may be declared due and payable in the manner and with the effect provided in the Indenture. If this Note is an Original Issue Discount Note, the amount payable in the event of redemption or repayment prior to its Stated Maturity shall be the Amortized Face Amount of this Note as of the date of redemption or the date of repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to (a) the Issue Price (set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Stated Maturity (set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) by such date of redemption or repayment, but in no event shall the Amortized Face Amount of this Note exceed its principal amount. As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for up to a like aggregate principal amount of Bearer Notes of different authorized denominations, as requested by the Person surrendering the same. No service charge shall be made for any such exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Replacement of Permanent Global Notes ------------------------------------- In case this Note shall at any time become mutilated, destroyed, stolen or lost, it may be replaced at the specified office of the Principal Paying Agent in London; or, so long as the Bearer Notes are listed on the Luxembourg Stock Exchange, at the specified office of the Paying Agent in Luxembourg, upon payment by the claimant of such expenses as may be incurred in connection therewith and, in the case of destruction, theft or loss, on such terms as to evidence thereof and indemnity as the Company or the Trustee may reasonably require. Mutilated or defaced Bearer Notes must be surrendered before replacements will be issued. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities of each series to be affected R-20 under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66-2/3% in aggregate principal amount of the Debt Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debt Securities of any series at the time Outstanding, on behalf of the Holders of all the Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders hereof and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. Holders of Debt Securities of this series may not enforce their rights pursuant to the Indenture or such Debt Securities except as provided in the Indenture. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed. The Company may, without the consent of the Holders of the Notes, consolidate with, merge into, or transfer substantially all of its assets to, a corporation that is a U.S. Person, provided that the successor corporation assumes all obligations of the Company under the Notes and certain other conditions are met. Except as provided above, the obligation to pay the principal hereof (and premium, if any) and interest hereon in the designated currency of payment is of the essence. To the fullest extent possible under applicable law, judgments in respect of this Note shall be given in such currency. The obligation of the Company to make such payments in the designated currency of payment shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the designated currency of payment that the Holder of this Note may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any premium and cost of exchange) on the business day in the country of issue of the designated currency of payment or in the international banking community (in the case of a composite currency) immediately following the day on which such Holder receives such payment. If the amount in the designated currency of payment that may be so purchased is for any reason less than the amount originally due, the Company shall, as a separate and independent obligation, pay such additional amounts R-21 in the designated currency of payment as may be necessary to compensate for any such shortfall. All notices to Holders of this Note will be deemed to have been duly given if published on two Business Days in a leading London daily newspaper (which is expected to be the Financial Times) and, so long as --------------- the Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, in Luxembourg in a newspaper of general circulation in Luxembourg (which is expected to be the Luxemburger Wort). Such notices shall be deemed to have been given on ---------------- the date of the first such publication. This Note shall be deemed to be a contract made and to be performed solely in the State of New York, and for all purposes shall be governed by, and construed in accordance with, the laws of said State without regard to the conflicts of law rules of said State. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. R-22 SCHEDULE OF ISSUANCES, EXCHANGES AND AGGREGATE PRINCIPAL AMOUNT The following issuances and exchanges of a part of this Note have been made, and the aggregate principal amount of Bearer Notes represented by this Note at any time is as shown in the last entry of Column III hereof unless one or more entries have been made in Column IV hereof reflecting exchanges for individual Bearer Notes, in which event such aggregate principal amount is as shown in the last entry of Column V hereof. I. II. III. IV. V. VI. Notation Principal made Amount Aggregate on behalf Aggregate Exchanged Principal of the Settlement Principal Principal for Indivi- Amount Principal Date of Date Amount Amount dual Bearer Remaining Paying of Exchange Issued Issued Notes After Exchange Agent - - ------------ ------------ ------------ ------------ -------------- -------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- - - ------------ ------------ ------------ ------------ ------------ ---------- R-23 SCHEDULE OF INTEREST PAYMENTS ----------------------------- The following payments of interest in respect of this Note have been made. Notation made Date of on behalf of Interest Interest the Principal Payment Paid Paying Agent -------- -------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- --------- --------- ------------- R-24 EX-4.(I) 11 SERIES E FIXED RATE BEARER NOTE Exhibit 4(i) SERIES E FIXED RATE BEARER NOTE MCDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E BEARER PRINCIPAL AMOUNT PRINCIPAL AMOUNT No. (FIXED RATE) Due from 184 Days to 60 Years from Date of Issue ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO STATED MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) SET FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. Issue Price: Original Issue Date: Interest Rate: Stated Maturity: Interest Payment Dates: (Applicable only if other than February 15 and August 15 of each year) Specified Currency: (Applicable only if other than U.S. dollars) Authorized Denominations: (Applicable only if other than U.S.$25,000 and investments of U.S.$5,000 or if Specified Currency is other than U.S. dollars) Original Redemption: [_] Yes [_] No Optional Redemption Dates: Redemption Prices: [_] The Redemption Price shall initially be % of the principal amount of the Note to be redeemed and shall decline at each anniversary of the initial Optional Redemption Date by % of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount; provided, however, that if this -------- ------- Note is an Original Issue Discount Note, the Redemption Price shall be the Amortized Face Amount of the principal amount to be redeemed. [_] Other: Sinking Fund: [_] Yes [_] No Sinking Fund Dates: Sinking Fund Amounts: Amortizing Note: [_] Yes [_] No Amortization Schedule: Optional Repayment: [_] Yes [_] No Optional Repayment Dates: Optional Repayment Prices: Original Issue Discount Note: [_] Yes [_] No Total Amount of OID: Yield to Stated Maturity: Initial Accrual Period OID: Calculation Agent (if other than Principal Paying Agent): McDONALD'S CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), for value received, hereby promises to pay to bearer, upon presentation and surrender hereof, the principal amount of _________________________________ (Specified Currency) on the Stated Maturity shown above and to pay accrued interest thereon to the bearer of the interest coupons attached hereto (the "Coupons") at the Interest Rate shown above, semiannually in arrears (unless otherwise specified on this face hereof) on February 15 and August 15 of each year (each an "Interest Payment Date"), commencing with the February 15 or August 15 following the Original Issue Date shown above upon presentation and surrender of the Coupons as they shall severally mature, and on the Stated Maturity shown above, or upon earlier redemption or repayment, until said principal amount is paid or duly provided for in accordance with the terms hereof. Interest on this Note, if any, will be computed on the basis of a 360-day year of twelve 30-day months. Any payment of principal, premium or interest required to be made in respect hereof on a date that is not a Business Day (as defined below) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on such date, and no additional interest shall accrue as a result of such delayed payment. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of New York, (b) the City of Chicago or (c) if the Specified Currency for this Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg) and (ii) if the Specified Currency for this Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). Except under certain circumstances for Notes having Specified Currencies other than U.S. dollars, payments of the principal hereof and any premium and interest hereon will be made only in the Specified Currency. Payments in respect of this Note and any Coupon will be made only against surrender of this Note or such Coupon at the offices of the Paying Agents outside the United States listed on the reverse hereof. At the direction of the Holder of this Note or any Coupon, and subject to applicable laws and regulations, such payments will be made by check drawn on a bank in The City of New York mailed to an address outside the United States furnished by the Holder hereof or, at the option of the Holder hereof, by wire transfer (pursuant to written instructions supplied by the Holder hereof) to an account F-2 maintained by the payee with a bank located outside the United States. No payment in respect of this Note or any Coupon will be made upon presentation of this Note or such Coupon at any office or agency of the Trustee or any other paying agency maintained by the Company in the United States, nor will any such payment be made by transfer to an account, or by mail to an address, in the United States. Notwithstanding the foregoing, if U.S. dollar payments in respect of this Note or any Coupons at the offices of all Paying Agents outside the United States become illegal or are effectively precluded because of the imposition of exchange controls or similar restrictions on the full payment or receipt of such amounts in U.S. dollars, the Company will appoint an office or agency (which may be the Trustee) in the United States at which such payments may be made. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. This Note shall not become valid or obligatory for any purpose unless and until this Note has been authenticated by First Fidelity Bank, National Association, or its successor, as Trustee. F-3 IN WITNESS WHEREOF, the Company has caused this Note to be executed under its corporate seal. Dated: McDONALD'S CORPORATION By______________________________________ Vice President and Treasurer [Seal] Attest:_______________________________ [Assistant] Secretary CERTIFICATE OF AUTHENTICATION This is one of the Bearer Notes issued under the within-mentioned Indenture. FIRST FIDELITY BANK, NATIONAL ASSOCIATION, as Trustee MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON OFFICE, as Authenticating Agent By_____________________________________ Authorized Signatory F-4 MCDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E (FIXED RATE) General ------- This Note is one of a series of duly authorized debt securities of the Company (the "Debt Securities") issued or to be issued in one or more series under an indenture dated as of March 1, 1987 (the "Indenture") between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as trustee (the "Trustee", which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Debt Securities and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Debt Security is one of a series designated on the face hereof limited to an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or the equivalent thereof in one or more foreign or composite currencies, subject to reduction as a result of the sale of other Debt Securities. The U.S. dollar equivalent of the public offering price or purchase price of Notes denominated in currencies other than U.S. dollars will be determined by an agent designated by the Company, which initially shall be Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York (the "Paying Agent") on the basis of the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") for such currencies on the applicable trade dates; provided, however, that in the case of ECU, the Market Exchange -------- ------- Rate shall be the rate of exchange determined by the Commission of the European Communities, or any successor publication, on the applicable trade dates. "Maturity", when used with respect to this Note, means the date on which the principal of this Note or an installment of principal becomes due and payable as provided herein or in the Indenture, whether at Stated Maturity or by declaration of acceleration, call for redemption of otherwise. The authorized denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000 and any larger amount that is an integral multiple of U.S.$5,000, unless otherwise specified on the face hereof. The authorized denominations of Bearer Notes denominated in currencies other than U.S. dollars will be as set forth on the respective faces thereof. R-1 If so specified on the face hereof, this Note will be redeemable at the option of the Company in whole or from time to time in part, on any date on or after the date designated as the Initial Redemption Date on the face hereof, upon the Company's giving the Trustee at least 45 days' notice, at the Redemption Price determined as provided on the face hereof. If redeemed prior to its Stated Maturity, this Note must be presented for payment together with all unmatured Coupons, if any, appertaining hereto, failing which the amount of any missing unmatured Coupon will be deducted from the sum due for payment. The Bearer Notes will not be subject to any sinking fund. Any such sinking fund shall be administered in accordance with the terms specified on the face hereof and otherwise as set forth in the Indenture. If the Company has or will become obligated to pay additional amounts on the Bearer Notes as described below as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings, which change or amendment is enacted or becomes effective (regardless of when announced) on or after the Original Issue Date, and such obligation cannot be avoided by the Company taking reasonable measures available to it, then the Company may, at its option, redeem the Bearer Notes in whole, but not in part, at any time on giving at least 30 but not more than 60 days' notice as set forth below, which notice shall be irrevocable, calculated without premium, at 100% of their principal amount, plus accrued interest to the redemption date; provided, however, that if this -------- ------- Note is an Original Issue Discount Note, the redemption price hereof shall be limited to the sum of (i) the aggregate principal amount hereof multiplied by the Issue Price hereof (expressed as a percentage of the aggregate principal amount) and (ii) the original issue discount accrued hereon from the Original Issue Date to the date fixed for redemption, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of notice of redemption). No such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay such additional amounts were a payment in respect of the Bearer Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee a certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred, and an opinion of counsel to the effect that the Company has or will become obligated to pay such additional amounts as a result of such change or amendment. R-2 If so specified on the face hereof, this Note will be repayable prior to its Stated Maturity at the option of the Holder on the Optional Repayment Dates shown on the face hereof at the Optional Repayment Prices shown on the face hereof, together with accrued interest to the date of repayment. In order for this Note to be repaid, the Principal Paying Agent (as specified below) must receive the Note at least 30 but not more than 45 days prior to an Optional Repayment Date. Any tender of this Note for repayment shall be irrevocable. The repayment option may be exercised by the Holder hereof for less than the entire principal amount hereof, provided that -------- the principal amount of the Note remaining outstanding after repayment is an authorized denomination. Upon such partial repayment, this Note shall be cancelled and a new Note or Notes for the remaining principal amount hereof shall be issued to the Holder of this Note. Payment of Additional Amounts ----------------------------- The Company will, subject to the exceptions and limitations set forth below, pay such additional amounts to the Holder of this Note or any Coupon that is a United States Alien (as defined below) such amounts as may be necessary so that every net payment on this Note or such Coupon, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed by the United States (or any political subdivision or taxing authority thereof or therein) upon or as a result of such payment, will not be less than the amount provided in this Note or such Coupon to be then due and payable. However, the Company will not be required to make any such payment of additional interest to such Holder for or on account of: (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or a possessor of a power over, such Holder, if such Holder is an estate or a trust, or such Holder, if such Holder is an estate, a trust, a partnership or a corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been engaged in trade or business or present therein or having or having had a permanent establishment therein or (ii) such Holder's past or present status as a personal holding company, foreign personal holding company or private foundation or other tax-exempt organization with respect to the United States or as a corporation that accumulates earnings to avoid United States federal income tax; R-3 (b) any estate, inheritance, gift, sales, transfer or personal property tax or any similar tax, assessment or other governmental charge; (c) any tax, assessment or other governmental charge imposed by reason of the presentation by the Holder of this Note or such Coupon for payment on a date more than 10 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (d) any tax, assessment or other governmental charge that is payable otherwise than by withholding from a payment on this Note or such Coupon; (e) any tax, assessment or other governmental charge required to be withheld by any Paying Agent from any payment of principal or interest on this Note or such Coupon, if such payment can be made without such withholding by any other Paying Agent in Western Europe; (f) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with any applicable certification, identification, documentation, information or other reporting requirement concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Note or such Coupon if, without regard to any tax treaty, such compliance is required by statute or by regulation of the United States or of any political subdivision or taxing authority thereof or therein as a pre-condition to relief or exemption from such tax, assessment or other governmental charge; or (g) any tax, assessment or other governmental charge imposed by reason of such Holder's past or present status as (i) a controlled foreign corporation that is related to the Company through stock ownership or (ii) the actual or constructive owner of 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote; or (h) any combination of items (a), (b), (c), (d), (e), (f) or (g); nor shall such additional amounts be paid with respect to a payment on this Note or such Coupon to a United States Alien that is a fiduciary or partnership or other than the sole beneficial owner of this Note or such Coupon to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to R-4 the additional amounts had such beneficiary, settlor, member or beneficial owner been the Holder of this Note or such Coupon. The term "United States Alien" means any person that, for United States federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign partnership one or more of the members of which is, for United States federal income tax purposes, a foreign corporation, a non- resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. If the Company shall determine that any payment made outside the United States by the Company or any of its Paying Agents in respect of this Note or any Coupon (an "Affected Security") would, under any present or future laws or regulations of the United States, be subject to any certification, identification, documentation, information or other reporting requirement of any kind, the effect of which requirement is the disclosure to the Company, any Paying Agent or any governmental authority of the nationality, residence or identity of a beneficial owner of such Affected Security that is a United States Alien (other than such a requirement (a) that would not be applicable to a payment made by the Company or any of its Paying Agents (i) directly to the beneficial owner or (ii) to a custodian, nominee or other agent of the beneficial owner or (b) that can be satisfied by such custodian, nominee or other agent certifying to the effect that the beneficial owner is a United States Alien, provided, that, in any case -------- referred to in clause (a)(ii) or (b), payment by the custodian, nominee or agent to the beneficial owner is not otherwise subject to any such requirement), then the Company shall elect either (x) to redeem such Affected Securities in whole, but not in part, at their Redemption Price, or (y) if the conditions described in the next succeeding paragraph are satisfied, to pay the additional amounts specified in such paragraph. The Company shall make such determination as soon as practicable and publish prompt notice thereof (the "Determination Notice") stating the effective date of such certification, identification, documentation, information or other reporting requirement, whether the Company elects to redeem the Affected Securities or to pay the additional amounts specified in the next succeeding paragraph and (if applicable) the last date by which the redemption of the Affected Securities must take place, as provided in the next succeeding sentence. If any Affected Securities are to be redeemed pursuant to this paragraph, the redemption shall take place on such date, not later than one year after the publication of the Determination Notice, as the Company shall specify by notice given to the Principal Paying Agent at least 60 days before the redemption date. Notice of such redemption shall be given to the Holders of the Affected Securities at least 30 but not more than 60 days prior to the redemption date. Notwithstanding the foregoing, the R-5 Company shall not so redeem the Affected Securities if the Company shall subsequently determine, not less than 30 days prior to the redemption date, that subsequent payments on the Affected Securities would not be subject to any such certification, identification, documentation, information or other reporting requirement, in which case the Company shall publish prompt notice of such subsequent determination and any earlier redemption notice given pursuant to this paragraph shall be revoked and of no further effect. Prior to the publication of any Determination Notice pursuant to this paragraph, the Company shall deliver to the Trustee a certificate stating that the Company is obligated to make such determination and setting forth a statement of facts showing that the conditions precedent to the obligation of the Company to redeem the Affected Securities or to pay the additional amounts specified in the next succeeding paragraph have occurred, and an opinion of counsel to the effect that such conditions have occurred. If and so long as the certification, identification, documentation, information or other reporting requirement referred to in the preceding paragraph would be fully satisfied by payment of a backup withholding tax or similar charge, the Company may elect to pay such additional amounts as may be necessary so that every net payment made outside the United States following the effective date of such requirement by the Company or any of its Paying Agents in respect of any Affected Security of which the beneficial owner is a United States Alien (but without any requirement that the nationality, residence or identity of such beneficial owner be disclosed to the Company, any Paying Agent or any governmental authority), after deduction or withholding for or on account of such backup withholding tax or similar charge will not be less than the amount provided for in such Affected Security to be then due and payable. However, the Company may elect not to pay such additional amounts in respect of any backup withholding tax or similar charge, which (a) would not be applicable to a payment of principal of or interest on any Affected Security made by the Company or any one of its paying agents (i) directly to the beneficial owner or to a custodian, nominee or other agent of the beneficial owner of such Affected Security or (ii) if such custodian nominee or other agent were to certify to the effect that such beneficial owner is a United States Alien or (b) is imposed as a result of presentation of such Affected Security for payment more than 10 days after the date on which such payment became due and payable or on which payment thereof is duly provided for, whichever occurred later. If the Company elects to pay the additional amounts pursuant to this paragraph, then the Company shall have the right to redeem the Affected Securities at any time in whole, but not in part, at their Redemption Prices, without reducing such Redemption Prices for applicable withholding taxes, subject to the provisions of the last three sentences of the immediately preceding paragraph. If the Company elects to pay additional R-6 amounts pursuant to this paragraph and the condition specified in the first sentence of this paragraph should no longer be satisfied, then the Company shall redeem the Affected Securities pursuant to the applicable provisions of the preceding paragraph. Any redemption payments made by the Company pursuant to the two immediately preceding sentences shall be subject to the continuing obligation of the Company to pay the additional amounts pursuant to this paragraph. The interest payable hereon on each Interest Payment Date will equal the amount of interest accrued from and including the immediately preceding Interest Payment Date in respect of which interest has been paid or duly made available for payment (or from and including the date of issue, if no interest has been paid hereon) to but excluding the related Interest Payment Date or Maturity, as the case may be. The Company has initially appointed as its Paying Agent for Bearer Notes of this Series the office listed below: Principal Paying Agent: Morgan Guaranty Trust Company of New York 60 Victoria Embankment London EC4Y 0JP Paying Agent: Banque General du Luxembourg S.A. 14 Rue Aldringen L-2951 Luxembourg Luxembourg The Company reserves the right at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents and to approve any change in the office through which any Paying Agent acts, provided that there will at all times be a Paying Agent (which may be the Trustee) in at least one city in Europe which, so long as Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of the exchange shall so require, shall include (or be) Luxembourg. Notice of any such termination or appointment and of any changes in the specified offices of the Trustee or any Paying Agent will be given to the Holder hereof as described below. Payment in Currencies Other Than the Specified Currency ------------------------------------------------------- Except as set forth below with respect to payments in ECU, if payment in respect of this Note or any Coupon is required to be made in a specified currency other than U.S. dollars (a "Specified Currency") and such currency is unavailable to the Company due to the imposition of exchange controls or other R-7 circumstances beyond the Company's control or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments shall be made in U.S. dollars until such currency is again available to the Company or so used. The amounts so payable on any date in such currency shall be converted into U.S. dollars on the basis of the most recently available Market Exchange Rate for such currency or as otherwise indicated on the face hereof. Any payment made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture. If payment in respect of this Note or any Coupon is required to be made in ECU and the ECU are not then used in the European Monetary System (the "EMS"), then the Trustee shall, without liability on its part, choose a component currency (the "Payment Currency") of the ECU in which all payments in respect hereof shall be made until the ECU are again so used. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of the fourth Luxembourg business day prior to the date on which such payment is due. Notice of the Payment Currency selected by the Trustee shall be given as described below. Any payment made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture. Notwithstanding the foregoing, on the first Luxembourg business day on which the ECU is no longer used in the EMS, the Trustee shall, without liability on its part, choose a Payment Currency in which all payments with respect to Bearer Notes and Coupons denominated in ECU having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of such first Luxembourg business day. Any payment made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture. The equivalent of the ECU in the relevant Payment Currency as of any date (the "Day of Valuation") shall be determined by the Luxembourg Stock Exchange on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU when the ECU was most recently used in the EMS or for the settlement of transactions by public institutions of or within the European Community. The equivalent of the ECU in the Payment Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components, and then, using the rate used for determining the U.S. dollar equivalents of the Components in the Payment Currency as set forth below, R-8 calculating the equivalent in the Payment Currency of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of each of the Components shall be determined by the Luxembourg Stock Exchange on the basis of the middle spot delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee (with the approval of the Company), in the country of issue of the Component in question. If the official unit of any component currency of the ECU is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall be equal to the amount of the former component currency divided by the number of currencies into which that currency was divided. If no direct quotations are available for a Component on a Day of Valuation from any of the banks selected by the Trustee (with the approval of the Company) for this purpose, because foreign exchange markets are closed in the country of issue of that Component, or for any other reason, in computing the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall (except as provided below) use the most recent direct quotations for such Component obtained by it, provided that such most recent quotations may -------- be used only if they were prevailing in the country of issue not more than two Luxembourg business days before such Day of Valuation. Beyond such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such Component and for the U.S. dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee (with the approval of the Company), in a country other than the country of issue of such Component. Notwithstanding the foregoing, within such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if the Trustee and the Company judge that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated on the basis of such most recent direct quotations. Unless otherwise specified by the R-9 Trustee, if there is more than one market for dealing in any component currency by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a nonresident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. All determinations referred to above made by the Trustee or the Luxembourg Stock Exchange shall be at their respective sole discretion (except to the extent expressly provided herein that any determination made by the Trustee is subject to the approval of the Company) and shall, in the absence of manifest error, be conclusive for all purposes and binding on Holders of the Bearer Notes and any Coupons, and the Trustee shall have no liability therefor. If an Event of Default with respect to the Notes shall have occurred and be continuing, the principal of all Notes may be declared due and payable in the manner and with the effect provided in the Indenture. If this Note is an Original Issue Discount Note, the amount payable in the event of redemption or repayment prior to its Stated Maturity shall be the Amortized Face Amount of this Note as of the date of redemption or the date of repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to (a) the Issue Price (set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Stated Maturity (set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) by such date of redemption or repayment, but in no event shall the Amortized Face Amount of this Note exceed its principal amount. As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for a like aggregate principal amount of Bearer Notes of different authorized denominations, as requested by the Person surrendering the same. No service charge shall be made for any such exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. In case this Note or any Coupon shall at any time become mutilated, destroyed, stolen or lost, it may be replaced at the specified office of the Principal Paying Agent in London; or, so long as the Bearer Notes are listed on the Luxembourg Stock Exchange, at the specified office of the Paying Agent in Luxembourg, upon payment by the claimant of such expenses as may R-10 be incurred in connection therewith and, in the case of destruction, theft or loss, on such terms as to evidence thereof and indemnity as the Company or the Trustee may reasonably require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before replacements will be issued. The Indenture permits with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66-2/3% in aggregate principal amount of the Debt Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debt Securities of any series at the time Outstanding, on behalf of the Holders of all the Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders hereof and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. Holders of Debt Securities of this series may not enforce their rights pursuant to the Indenture or such Debt Securities except as provided in the Indenture. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed. The Company may, without the consent of the Holders of the Notes, consolidate with, merge into, or transfer substantially all of its assets to, a corporation that is a U.S. Person, provided that the successor corporation assumes all obligations of the Company under the Notes and certain other conditions are met. Except as provided above, the obligation to pay the principal hereof (and premium if any) and interest hereon in the designated currency of payment is of the essence. To the fullest extent possible under applicable law, judgments in respect of this Note shall be given in such currency. The obligation of the Company to make such payments in the designated currency of payment shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the designated currency of payment that the Holder of this Note may, in accordance with normal R-11 banking procedures, purchase with the sum paid in such other currency (after any premium and cost of exchange) on the business day in the country of issue of the designated currency of payment or in the international banking community (in the case of a composite currency) immediately following the day on which such Holder receives such payment. If the amount in the designated currency of payment that may be so purchased is for any reason less than the amount originally due, the Company shall, as a separate and independent obligation, pay such additional amounts in the designated currency of payment as may be necessary to compensate for any such shortfall. All notices to Holders of this Note will be deemed to have been duly given if published on two Business Days in a leading London daily newspaper (which is expected to be the Financial Times) and, so long as the --------------- Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, in Luxembourg in a newspaper of general circulation in Luxembourg (which is expected to be the Luxemburger Wort). Such notices ----------- ---- shall be deemed to have been given on the date of the first such publication. This Note shall be deemed to be a contract made and to be performed solely in the State of New York, and for all purposes shall be governed by, and construed in accordance with, the laws of said State without regard to the conflicts of law rules of said State. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. R-12 EX-4.(J) 12 SERIES E FLOATING RATE BEARER NOTE Exhibit 4(j) SERIES E FLOATING RATE BEARER NOTE McDONALD'S CORPORATION BEARER PRINCIPAL AMOUNT No. MEDIUM-TERM NOTE, SERIES E (Floating Rate) Due from 184 Days to 60 Years from Date of Issue ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. IF APPLICABLE, THE "TOTAL AMOUNT OF OID," "YIELD TO STATED MATURITY" AND "INITIAL ACCRUAL PERIOD OID" (COMPUTED UNDER THE APPROXIMATE METHOD) SET FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES. Issue Price: Original Issue Date: Initial Interest Rate: Stated Maturity: Specified Currency: (Applicable only if other than U.S. dollars) Authorized Denominations: (Applicable only if other than U.S. $25,000 and increments of U.S. $5,000 Specified Currency is other than U.S. dollars) Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] CMT Rate [ ] Federal Funds Rate [ ] LIBOR [ ] Treasury Rate [ ] Prime Rate [ ] Other (see attached) If Base Rate is CMT Rate, specify Designated CMT Telerate Page: If Base Rate is LIBOR, specify: LIBOR Reuters: Designated LIBOR Page: LIBOR Telerate: Interest Reset Period: Index Currency: Index Maturity: Interest Payment Dates: Spread Multiplier: Spread (+/-): Maximum Interest Rate: Minimum Interest Rate: Optional Redemption: [ ] Yes [ ] No Optional Redemption Dates: Redemption Prices: [ ] The Redemption Price shall initially be % of the principal amount of the Note to be redeemed and shall decline at each anniversary of the initial Optional Redemption Date by % of the principal amount to be redeemed until the Redemption Price is 100% of such principal amount; provided, however, that if this Note is an Original Issue Discount -------- ------- Note, the Redemption Price shall be the Amortized Face Amount of the principal amount to be redeemed. [ ] Other: Sinking Fund: Amortizing Note: Sinking Fund Dates: Amortization Schedule: Sinking Fund Amounts: Optional Repayment: Original Issue Discount Note: Optional Repayment Dates: Total Amount of OID: Optional Repayment Prices: Yield to Stated Maturity: Initial Accural Period OID: Calculation Agent (if other than Principal Paying Agent): F-1 McDONALD'S CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), for value received, hereby promises to pay to bearer, upon presentation and surrender hereof, the principal amount of ______________________________ (Specified Currency) on the Stated Maturity shown above, and to pay accrued interest thereon in arrears to the bearer of the interest coupons attached hereto (the "Coupons") upon surrender thereof as they shall severally mature at the rates per annum and on the dates, determined as described on the reverse hereof, until said principal amount is paid or duly provided for in accordance with the terms hereof. For purposes of this Note, "Business Day" means any day, other than a Saturday or Sunday, that is (i) neither a legal holiday nor a day on which banking institutions are authorized or required by law, regulation or executive order to close in (a) The City of New York, (b) the City of Chicago or (c) if the Specified Currency for this Note is other than U.S. dollars, the principal financial center of the country issuing such Specified Currency (which, in the case of ECU, shall be Luxembourg); (ii) if the Specified Currency for this Note is ECU, not a day designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as day on which payments in ECU shall not be made); and (iii) if this Note is a LIBOR Note, a London Business Day (as defined below). "London Business Day" means any day (i) if the Index Currency (as defined below) is other than ECU, on which dealings in such Index Currency are transacted in the London interbank market or (ii) if the Index Currency is ECU, that is not designated as an ECU Non-Settlement Day by the ECU Banking Association (or otherwise generally regarded in the ECU interbank market as a day on which payments in ECU shall not be made). Except under certain circumstances for Notes having Specified Currencies other than U.S. dollars, payments of the principal hereof and any premium and interest hereon will be made only in the Specified Currency. Payments in respect of this Note and any Coupon will be made only against surrender of this Note or such Coupon, at the offices of the Paying Agents outside the United States listed on the reverse hereof. At the direction of the Holder of this Note or any Coupon, and subject to applicable laws and regulations, such payments will be made by check drawn on a bank in The City of New York mailed to an address outside the United States furnished by the Holder hereof or, at the option of the Holder hereof, by wire transfer (pursuant to written instructions supplied by the Holder hereof) to an account maintained by the payee with a bank located outside the United States. No payment in respect of this Note or any Coupon will be made upon presentation of this Note or such Coupon at any office or agency of the Trustee or any other F-2 paying agency maintained by the Company in the United States, nor will any such payment be made by transfer to an account, or by mail to an address, in the United States. Notwithstanding the foregoing, if U.S. dollar payments in respect of this Note or any Coupons at the offices of all Paying Agents outside the United States become illegal or are effectively precluded because of the imposition of exchange controls or similar restrictions on the full payment or receipt of such amounts in U.S. dollars, the Company will appoint an office or agency (which may be the Trustee) in the United States at which such payments may be made. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE. This Note shall not become valid or obligatory for any purpose unless and until this Note has been authenticated by First Fidelity Bank, National Association, or its successor, as Trustee. F-3 IN WITNESS WHEREOF, the Company has caused this Note to be executed under its corporate seal. Dated: McDONALD'S CORPORATION By_____________________________________ Vice President and Treasurer [Seal] Attest:________________________________ [Assistant] Secretary CERTIFICATE OF AUTHENTICATION This is one of the Bearer Notes issued under the Indenture mentioned within. FIRST FIDELITY BANK, NATIONAL ASSOCIATION as Trustee MORGAN GUARANTY TRUST COMPANY OF NEW YORK, LONDON OFFICE, as Authenticating Agent By_____________________________________ Authorized Signatory F-4 McDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E (FLOATING RATE) General ------- This Note is one of a series of duly authorized debt securities of the Company (the "Debt Securities") issued or to be issued in one or more series under an indenture dated as of March 1, 1987 (the "Indenture") between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as trustee (the "Trustee", which term includes any successor Trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Debt Securities and of the terms upon which the Debt Securities are, and are to be, authenticated and delivered. This Debt Security is one of a series designated on the face hereof limited to an aggregate initial public offering price or purchase price of up to U.S.$584,662,000 or the equivalent thereof in one or more foreign or composite currencies, subject to reduction as a result of the sale of other Debt Securities. The U.S. dollar equivalent of the public offering price or purchase price of Notes denominated in currencies other than U.S. dollars will be determined by an agent designated by the Company, which initially shall be Morgan Guaranty Trust Company of New York, 60 Wall Street, New York, New York (the "Paying Agent"), on the basis of the noon buying rate in The City of New York for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York (the "Market Exchange Rate") for such currencies on the applicable trade dates; provided, however, that in the case of -------- ------- ECU, the Market Exchange Rate shall be the rate of exchange determined by the Commission of the European Communities (or any successor thereof) as published in the Official Journal of the European Communities, or any successor publication, on the applicable issue dates. "Maturity," when used with respect to this Note, means the date on which the principal of this Note or an installment of principal becomes due and payable as provided herein or in the Indenture, whether at Stated Maturity or by R-1 declaration of acceleration, call for redemption or otherwise. The authorized denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000 and any larger amount that is an integral multiple of U.S.$5,000, unless otherwise specified on the face hereof. The authorized denominations of Bearer Notes denominated in currencies other than U.S. dollars will be as set forth on the respective faces thereof. If so specified on the face hereof, this Note will be redeemable at the option of the Company in whole or from time to time in part, on the dates designated as the Optional Redemption Dates on the face hereof, upon the Company's giving the Trustee and the Principal Paying Agent at least 45 days' notice, at the Redemption Price determined as provided on the face hereof. Notice of any such redemption will be given to record Holders of Notes, as set forth below, upon at least 30 but not more than 60 days prior to any Optional Redemption Date. If redeemed prior to its Stated Maturity, this Note must be presented for payment together with all unmatured Coupons, if any, appertaining hereto, failing which the amount of any missing unmatured Coupon will be deducted from the sum due for payment. Unless otherwise specified on the face hereof, the Bearer Notes will not be subject to any sinking fund. Any such sinking fund shall be administered in accordance with the terms specified on the face hereof and otherwise as set forth in the Indenture. If the Company has or will become obligated to pay additional amounts on the Bearer Notes as described below as a result of any change in, or amendment to, the laws (or any regulations or rulings promulgated thereunder) of the United States or any political subdivision or taxing authority thereof or therein affecting taxation, or any change in official position regarding the application or interpretation of such laws, regulations or rulings, which change or amendment is enacted or becomes effective (regardless of when announced) on or after the Original Issue Date, and such obligation cannot be avoided by the Company taking reasonable measures available to it, then the Company may, at its option, redeem the Bearer Notes in whole, but not in part, at any time on giving at least 30 but not more than 60 days' notice as set forth below, which notice shall be irrevocable, calculated without premium, at 100% of their principal amount, plus accrued interest to the redemption date; provided, -------- however, that if this Note is an Original Issue Discount Note, the ------- redemption price hereof shall be limited to the sum of (i) the aggregate principal amount hereof multiplied by the Issue Price hereof (expressed as a percentage of the aggregate principal amount) and (ii) the original issue discount accrued hereon from the Original Issue R-2 Date to the date fixed for redemption, which amortization shall be calculated using the "interest method" (computed in accordance with generally accepted accounting principles in effect on the date of notice of redemption). No such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay such additional amounts were a payment in respect of the Bearer Notes then due. Prior to the publication of any notice of redemption pursuant to this paragraph, the Company shall deliver to the Trustee a certificate stating that the Company is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Company so to redeem have occurred, and an opinion of counsel to the effect that the Company has or will become obligated to pay such additional amounts as a result of such change or amendment. If so specified on the face hereof, this Note will be repayable prior to its Stated Maturity at the option of the Holder on the Optional Repayment Dates shown on the face hereof at the Optional Repayment Prices shown on the face hereof, together with accrued interest to the date of repayment. In order for this Note to be repaid, the Principal Paying Agent (as specified below) must receive the Note at least 30 but not more than 45 days prior to an Optional Repayment Date. Any tender of this Note for repayment shall be irrevocable. The repayment option may be exercised by the Holder hereof for less than the entire principal amount hereof, provided that the principal amount of the Note remaining -------- outstanding after repayment is an authorized denomination. Upon such partial repayment, this Note shall be cancelled and a new Note or Notes for the remaining principal amount hereof shall be issued to the Holder of this Note. Payment of Additional Amounts ----------------------------- The Company will, subject to the exceptions and limitations set forth below, pay such additional amounts to the Holder of this Note or any Coupon that is a United States Alien (as defined below) such amounts as may be necessary so that every net payment on this Note or such Coupon, after deduction or withholding for or on account of any present or future tax, assessment or other governmental charge imposed by the United States (or any political subdivision or taxing authority thereof or therein) upon or as a result of such payment, will not be less than the amount provided in this Note or such Coupon to be then due and payable. However, the Company will not be required to make any such payment of additional interest to such Holder for or an account of: R-3 (a) any tax, assessment or other governmental charge that would not have been imposed but for (i) the existence of any present or former connection between such Holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder, if such Holder is an estate, a trust, a partnership or a corporation) and the United States, including, without limitation, such Holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been engaged in trade or business or present therein or having or having had a permanent establishment therein or (ii) such Holder's past or present status as a personal holding company, foreign personal holding company or private foundation or other tax-exempt organization with respect to the United States or as a corporation that accumulates earnings to avoid United States federal income tax; (b) any estate, inheritance, gift, sales, transfer or personal property tax or any similar tax, assessment or other governmental charge; (c) any tax, assessment or other governmental charge imposed by reason of the presentation by the Holder of this Note or such Coupon for payment on a date more than 10 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later; (d) any tax, assessment or other governmental charge that is payable otherwise than by withholding from a payment on this Note or such Coupon; (e) any tax, assessment or other governmental charge required to be withheld by any Paying Agent from any payment of principal or interest on this Note or such Coupon, if such payment can be made without such withholding by any other Paying Agent in Western Europe; (f) any tax, assessment or other governmental charge that would not have been imposed but for the failure to comply with any applicable certification, identification, documentation, information or other reporting requirement concerning the nationality, residence, identity or connection with the United States of the Holder or beneficial owner of this Note or such Coupon if, without regard to any tax treaty, such compliance is required by statute or by regulation of the United States or of any political subdivision or taxing authority thereof or therein as a pre-condition R-4 to relief or exemption from such tax, assessment or other governmental charge; or (g) any tax, assessment or other governmental charge imposed by reason of such Holder's past or present status as (i) a controlled foreign corporation that is related to the Company through stock ownership or (ii) the actual or constructive owner of 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote; or (h) any combination of items (a), (b), (c), (d), (e), (f) or (g); nor shall such additional amounts be paid with respect to a payment on this Note or such Coupon to a United States Alien that is a fiduciary or partnership or other than the sole beneficial owner of this Note or such Coupon to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to the additional amounts had such beneficiary, settlor, member or beneficial owner been the Holder of this Note or such Coupon. The term "United States Alien" means any Person that, for United States federal income tax purposes, is a foreign corporation, a non-resident alien individual, a non-resident alien fiduciary of a foreign estate or trust or foreign partnership one or more of the members of which is, for United States federal income tax purposes, a foreign corporation, a non-resident alien individual or a non-resident alien fiduciary of a foreign estate or trust. The Company has initially appointed as its Paying Agents for Bearer Notes of this Series the offices listed below: Principal Paying Agent: Morgan Guaranty Trust Company of New York 60 Victoria Embankment London EC4Y 0JP Paying Agent: Banque Generale du Luxembourg S.A. 14 Rue Aldringen L-2951 Luxembourg Luxembourg The Company reserves the right at any time to vary or terminate the appointment of any Paying Agent and to R-5 appoint additional or other Paying Agents and to approve any change in the office through which any Paying Agent acts, provided that there will -------- at all times be a Paying Agent (which may be the Trustee) in at least one city in Europe, which, so long as Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of the exchange shall so require, shall include (or be) Luxembourg. Notice of any such termination or appointment and of any changes in the specified offices of the Trustee or any Paying Agent will be given to the Holder hereof as described below. This Note will bear interest from its Original Issue Date to the first Interest Reset Date (as defined below) at the Initial Interest Rate set forth on the face hereof. Thereafter, the interest rate hereon for each Interest Reset Period (as defined below) will be determined by reference to an interest rate basis (the "Base Rate"), plus or minus the Spread, if any, and/or multiplied by the Spread Multiplier, if any. The "Spread" is the number of basis points (one basis point equals one one- hundredth of a percentage point) that may be specified on the face hereof, and the "Spread Multiplier" is the percentage that may be specified on the face hereof. The face of this Note will designate one or more of the following Base Rates as applicable hereto: (i) the CD Rate (a "CD Rate Note"), (ii) the CMT Rate (a "CMT Rate Note") (iii) the Commercial Paper Rate (a "Commercial Paper Rate Note"), (iv) the Federal Funds Rate (a "Federal Funds Rate Note"), (v) LIBOR (a "LIBOR Note"), (vi) the Treasury Rate (a "Treasury Rate Note"), (vii) the Prime Rate (a "Prime Rate Note") or (viii) such other Base Rate or formula as is set forth on the face hereof. The "Index Maturity" is the period of maturity of the instrument, obligation or index from which the Base Rate is calculated. "H.15(519)" means the publication entitled "Statistical Release H.15(519), Selected Interest Rates", or any successor publication, published by the Board of Governors of the Federal Reserve System. "Composite Quotations" means the daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities" published by the Federal Reserve Bank of New York. Unless otherwise specified on the face hereof, the interest payable hereon shall be the accrued interest from and including the Original Issue Date or the last date to which interest has been paid or duly provided for, as the case may be, to but excluding the applicable Interest Payment Date or Maturity, as the case may be. Unless otherwise specified on the face hereof, accrued interest will be calculated by multiplying the principal amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factors calculated for R-6 each day in the period for which accrued interest is being calculated. Unless otherwise specified on the face hereof, the interest factor (expressed as a decimal calculated to seven decimal places without rounding) for each such day shall be computed by dividing the interest rate in effect on such day by 360 if the Base Rate specified on the face hereof is the CD Rate, the Commercial Paper Rate, the Federal Funds Rate LIBOR or the Prime Rate, or by the actual number of days in the year if the Base Rate specified on the face hereof is the Treasury Rate or the CMT Rate. For purposes of making the foregoing calculation, the interest rate in effect on any Interest Reset Date will be the applicable rate as reset on such date. Unless otherwise specified on the face hereof, all percentages resulting from any calculation of the rate of interest hereon will be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage point rounded upward, and all currency amounts used in or resulting from such calculation will be rounded to the nearest one-hundredth of a unit (with .005 of a unit being rounded upward). As specified on the face hereof, the interest rate hereon will be reset daily, weekly, monthly, quarterly, semiannually or annually (such period being the "Interest Reset Period", and the first day of each Interest Reset Period being an "Interest Reset Date"). Unless otherwise specified on the face hereof, the Interest Reset Date will be, if this Note resets daily, each Business Day; if this Note is not a Treasury Rate Note and it resets weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets weekly, Tuesday of each week (except as provided below under "Determination of Treasury Rate"); if this Note resets monthly, the third Wednesday of each month; if this Note resets quarterly, the third Wednesday of March, June, September and December of each year; if this Note resets semiannually, the third Wednesday of each of two months of each year specified on the face hereof; and if this Note resets annually, the third Wednesday of one month of each year specified on the face hereof. If an Interest Reset Date for this Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day, except that if this Note is a LIBOR Note and such Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Notwithstanding the foregoing, the interest rate hereon during any interest period shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, shown on the face hereof. In addition to any Maximum Interest Rate that may be applicable hereto, the interest rate hereon during any interest period will in no event be higher than the maximum rate permitted by applicable law as the same may be modified R-7 by United States law of general application. This Note will be governed by the law of the State of New York and, under such law, the maximum rate of interest, with certain exceptions, is currently 25% per annum on a simple interest basis. Unless otherwise indicated on the face hereof and except as provided below, interest will be payable, if this Note resets daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year, as specified on the face hereof; if this Note resets quarterly, on the third Wednesday of March, June, September and December of each year; if this Note resets semiannually, on the third Wednesday of each of the two months of each year specified on the face hereof; and if this Note resets annually, on the third Wednesday of one month of each year specified on the face hereof (each such day being an "Interest Payment Date") and, in each case, at Maturity. If any Interest Payment Date (other than at Maturity) would otherwise be a day that is not a Business Day, such Interest Payment Date shall be postponed to the next succeeding Business Day, except that, if the Base Rate specified on the face hereof is LIBOR and such Business Day would fall in the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding Business Day. If the Maturity of this Note falls on a day that is not a Business Day, the required payment of principal, premium (if any) and/or interest will be made on the next succeeding Business Day as if made on the date such payment was due, and no interest shall accrue on such payment for the period from and after Maturity to the date of such payment on the next succeeding Business Day. The Company will appoint, and enter into an agreement with, an agent ("Calculation Agent") to calculate interest rates on this Note. All determinations of interest rates by the Calculation Agent shall, in the absence of manifest error, be conclusive for all purposes and binding on the Holder hereof. Unless otherwise specified on the face hereof, Morgan Guaranty Trust Company of New York shall be the Calculation Agent for this Note. At the request of the Holder hereof, the Calculation Agent will provide to such Holder the interest rate then in effect, and, if determined, the interest rate that will become effective on the next Interest Reset Date. In addition, such information will be communicated to the Luxembourg Stock Exchange and will be made available at the offices of the Paying Agent in Luxembourg and at the Luxembourg Stock Exchange. R-8 Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date the rate of interest hereon shall be the rate determined in accordance with the provisions under the applicable heading below. Determination of CD Rate ------------------------ If the Base Rate specified on the face hereof is the CD Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CD Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "CD Rate" for each Interest Reset Period shall be the rate as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate Determination Date") for negotiable certificates of deposit having the Index Maturity specified on the face hereof, as published in H.15(519) under the heading "CDs (Secondary Market)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CD Rate Determination Date, then the "CD Rate" for such Interest Reset Period will be the rate on such CD Rate Determination Date for negotiable certificates of deposit of the Index Maturity specified on the face hereof as published in Composite Quotations under the heading "Certificates of Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest Reset Period will be calculated by the Calculation Agent and will be the arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date, of three leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major money market banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity specified on the face hereof in a denomination of $5,000,000; provided, however, that if the three dealers selected as aforesaid by the -------- ------- Calculation Agent are not quoting offered rates as mentioned in this sentence, the "CD Rate" for such Interest Reset Period will be the CD Rate in effect on such CD Rate Determination Date, or, if none, the Initial Interest Rate. The "Calculation Date" pertaining to any CD Rate Determination Date shall be the earlier of (i) the tenth calendar day after such CD Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. R-9 Determination of Commercial Paper Rate -------------------------------------- If the Base Rate specified on the face hereof is the Commercial Paper Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Commercial Paper Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Commercial Paper Rate" for each Interest Reset Period will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Commercial Paper Rate Determination Date") and shall be the Money Market Yield (as defined below) on such Commercial Paper Rate Determination Date of the rate for commercial paper having the Index Maturity specified on the face hereof, as such rate shall be published in H.15(519) under the heading "Commercial Paper". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Commercial Paper Rate Determination Date, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield on such Commercial Paper Rate Determination Date of the rate for commercial paper of the Index Maturity specified on the face hereof as published in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such Interest Reset Period shall be the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 a.m., New York City time, on such Commercial Paper Rate Determination Date of three leading dealers of commercial paper in The City of New York selected by the Calculation Agent for commercial paper of the Index Maturity specified on the face hereof placed for an industrial issuer whose bonds are rated "AA" or the equivalent thereof by a nationally recognized statistical rating agency; provided, however, that if the three dealers selected as aforesaid by the -------- ------- Calculation Agent are not quoting offered rates as mentioned in this sentence, the "Commercial Paper Rate" for such Interest Reset Period will be the Commercial Paper Rate in effect on such Commercial Paper Rate Determination Date, or, if none, the Initial Interest Rate. "Money Market Yield" shall be a yield calculated in accordance with the following formula: Money Market Yield = D x 360 x 100 --------------- 360 - (D x M) where "D" refers to the applicable per annum rate for commercial paper quoted on a bank discount basis and expressed as a decimal, and "M" refers to the actual number R-10 of days in the period for which accrued interest is being calculated. The "Calculation Date" pertaining to any Commercial Paper Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Commercial Paper Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of Federal Funds Rate ----------------------------------- If the Base Rate specified on the face hereof is the Federal Funds Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Federal Funds Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Federal Funds Rate" for each Interest Reset Period shall be the effective rate on the second Business Day immediately prior to the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination Date") for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)". In the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such Interest Reset Period shall be the rate on such Federal Funds Rate Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York City time, on such Calculation Date such rate is not yet published in either H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall be the arithmetic mean of the rate, as of 9:00 a.m., New York City time, on the Federal Funds Rate Determination Date for the last transaction of not less than $5,000,000 in overnight federal funds arranged by each of three leading brokers of federal funds transactions in The City of New York selected by the Calculation Agent for such Federal Funds Rate Note; provided, however, that if the brokers selected -------- ------- as aforesaid by the Calculation Agent are not quoting as set forth above, the "Federal Funds Rate" for such Interest Reset Period will be the Federal Funds Rate in effect on such Federal Funds Rate Determination Date, or, if none, the Initial Interest Rate. The "Calculation Date" pertaining to any Federal Funds Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Federal Funds Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day R-11 immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of LIBOR ---------------------- If the Base Rate specified on the face hereof is LIBOR, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to LIBOR and the Spread and/or Spread Multiplier, if any, specified on the face hereof. If LIBOR is indexed to the offered rates for deposits in a currency other than U.S. dollars the method for determining such rate will be specified on the face hereof. If LIBOR is indexed to the offered rates for U.S. dollar deposits, "LIBOR" for each Interest Reset Period will be determined by the Calculation Agent as follows: (i) On the second London Business Day prior to the Interest Reset Date for such Interest Reset Period (a "LIBOR Interest Determination Date"), the Calculation Agent will determine (a) if "LIBOR Reuters" is specified on the face hereof, the arithmetic mean of the offered rates (unless the specified Designated LIBOR Page by its terms provides only for a single rate, in which case such single rate shall be used) for deposits in the Index Currency having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, that appear on the Designated LIBOR Page specified on the face hereof as of 11:00 a.m., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear (unless, as aforesaid, only a single rate is required) on such Designated LIBOR Rate, or (b) if "LIBOR Telerate" is specified on the face hereof or if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the rate for deposits in the Index Currency having the Index Maturity designated on the face hereof, commencing on the second London Business Day immediately following such LIBOR Interest Determination Date that appears on the Designated LIBOR Page specified on the face hereof as of 11:00 a.m., London time, on such LIBOR Interest Determination Date. If fewer than two such offered rates appear, or if no such rate appears, as applicable, LIBOR in respect of the related LIBOR Interest Determination Date will be determined in accordance with the provisions described in clause (ii) below. (ii) With respect to this LIBOR Note and an Interest Reset Period to which this clause (ii) applies, the Calculation Agent will request the principal London offices of each of four major reference banks in the London interbank market, as selected by the Calculation R-12 Agent, to provide the Calculation Agent with its offered quotation for deposits in the Index Currency for the period of the Index Maturity designated on the face hereof commencing on the second London Business Day immediately following such LIBOR Interest Determination Date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time. If at least two such quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR determined on such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted at approximately 11:00 a.m., in the applicable Principal Financial Center, on such LIBOR Interest Determination Date by three major banks in such Principal Financial Center selected by the Calculation Agent for loans in the Index Currency to leading European banks, having the Index Maturity designated on the face hereof commencing on the second London Business Day immediately following such LIBOR Interest Determination Date and in a principal amount that is representative for a single transaction in such Index Currency in such market at such time; provided, however, that if the banks so selected by the -------- ------- Calculation Agent are not quoting as mentioned in this sentence, LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR in effect on such LIBOR Interest Determination Date. "Designated LIBOR Page" means either (a) if "LIBOR Reuters" is specified on the face hereof, the display on the Reuters Monitor Money Rates Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is specified on the face hereof or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified as the method for calculating LIBOR, the display on the Dow Jones Telerate Service for the purpose of displaying the London interbank rates of major banks for the applicable Index Currency. "Index Currency" means the currency (including composite currencies) specified on the face hereof as the currency for which LIBOR shall be calculated. If no such currency is specified on the face hereof, the Index Currency shall be U.S. dollars. "Principal Financial Center" will generally be the capital city of the country of the specified Index Currency, except that with respect to U.S. dollars, Italian lire and ECU, the Principal Financial Center R-13 shall be The City of New York, Milan and Luxembourg, respectively. Determination of Treasury Rate ------------------------------ If the Base Rate specified on the face hereof is the Treasury Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Treasury Rate and the Spread or Spread Multiplier, if any, specified on the face hereof. The "Treasury Rate" for each Interest Reset Period will be the rate for the auction held on the Treasury Rate Determination Date (as defined below) for such Interest Reset Period of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on the face hereof, as such rate shall be published in H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction average (investment)" or, in the event that such rate is not published prior to 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such Treasury Rate Determination Date, the auction average rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) on such Treasury Rate Determination Date as otherwise announced by the United States Department of the Treasury. In the event that the results of the auction of Treasury bills having the Index Maturity specified on the face hereof are not published or reported as provided above by 3:00 p.m., New York City time, on such Calculation Date, or if no such auction is held on such Treasury Rate Determination Date, then the "Treasury Rate" for such Interest Reset Period shall be calculated by the Calculation Agent and shall be a yield to maturity (expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean of the secondary market bid rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified on the face hereof; provided, however, that if the dealers -------- ------- selected as aforesaid by the Calculation Agent are not quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for such Interest Reset Period will be the Treasury Rate in effect on such Treasury Rate Determination Date, or, if none, the Initial Interest Rate. The "Treasury Rate Determination Date" for each Interest Reset Period will be the day of the week in which the Interest Reset Date for such Interest Reset Period falls on which Treasury bills would normally be auctioned. Treasury bills are normally sold at auction on Monday of each R-14 week, unless that day is a legal holiday, in which case the auction is normally held on the following Tuesday, except that such auction may be held on the preceding Friday. If, as the result of a legal holiday, an auction is so held on the preceding Friday, such Friday will be the Treasury Rate Determination Date pertaining to the Interest Reset Period commencing in the next succeeding week. If an auction date shall fall on any day that would otherwise be an Interest Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead be the Business Day immediately following such auction date. The "Calculation Date" pertaining to any Treasury Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Treasury Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of Prime Rate --------------------------- If the Base Rate specified on the face hereof is the Prime Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the Prime Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. The "Prime Rate" for each Interest Reset Period will be determined by the Calculation Agent as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "Prime Rate Determination Date") and shall be the rate published in H.15(519) under the heading "Bank Prime Loan." In the event that such rate is not published prior to 9:00 a.m., New York City time, on the Calculation Date (as defined below), then the "Prime Rate" for such Interest Reset Period shall be determined by the Calculation Agent and shall be the arithmetic mean of the rates of interest publicly announced by each bank that appears on the Reuters Screen NYMF Page (as defined below) as such bank's prime rate or base lending rate as in effect for that Prime Rate Determination Date. If fewer than four such rates but more than one such rate appear on the Reuters Screen NYMF Page for the Prime Rate Determination Date, the "Prime Rate" will be determined by the Calculation Agent and will be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by a 360-day year as of the close of business on such Prime Rate Determination Date by four major money center banks in The City of New York selected by the Calculation Agent. If fewer than two such rates appear on the Reuters Screen NYMF Page, the Prime Rate will be determined by the Calculation Agent on the basis of the rates furnished in The City of New York by the appropriate number R-15 of substitute banks or trust companies organized and doing business under the laws of the United States, or any State thereof, having total equity capital of at least U.S. $500,000,000 and being subject to supervision of examination by Federal or State authority, selected by the Calculation Agent to provide such rate or rates; provided, however, that if the banks -------- ------- selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate for such Interest Reset Period will be the Prime Rate in effect on such Prime Rate Determination Date, or, if none, the Initial Interest Rate. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace the NYMF page on that service for the purpose of displaying prime rates or base lending rates of major United States banks). The "Calculation Date" pertaining to a Prime Rate Determination Date shall be the earlier of (i) the tenth calendar day after such Prime Rate Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. DETERMINATION OF CMT RATE ------------------------- If the Base Rate specified on the face hereof is the CMT Rate, this Note will bear interest for each Interest Reset Period at the interest rate calculated with reference to the CMT Rate and the Spread and/or Spread Multiplier, if any, specified on the face hereof. Unless otherwise specified on the face hereof, the "CMT Rate" for each Interest Reset Period will be determined by the Calculation Agent and shall be the rate (i) in the case where the Designated CMT Telerate Page (as defined on the face hereof) is 7055, as of the second Business Day prior to the Interest Reset Date for such Interest Reset Period (a "CMT Determination Date") or (ii) in the case where the Designated CMT Telerate Page is 7052, for the week or the month, as specified on the face hereof, ended immediately preceding the week in which the CMT Determination Date occurs, in either case, for the Index Maturity as displayed on the Designated CMT Telerate Page under the caption."...Treasury Constant Maturities ... Federal Reserve Board Release H.15 ... Mondays Approximately 3:45 P.M." If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 p.m., New York City time, on the Calculation Date (as defined below) pertaining to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified on the face hereof as R-16 published in the relevant H.15(519) opposite the caption "U.S. Government Securities, Treasury Constant Maturities". If such rate is no longer published, or if not published by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for such Interest Reset Period shall be such treasury constant maturity rate for the Index Maturity specified on the face hereof (or other United States Treasury rate for such Index Maturity) as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 p.m., New York City time, on the Calculation Date relating to such CMT Determination Date, then the "CMT Rate" for the Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the higher quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Index Maturity specified on the face hereof and a remaining term to maturity of not less than such Index Maturity minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the "CMT Rate" for such Interest Reset Period shall be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 p.m., New York City time, on the CMT Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the Treasury Notes with an original maturity of the number of years that is the next highest to the Index Maturity specified on the face hereof and a remaining term to maturity closest to the Index Maturity specified on the face hereof and in an amount of at least $100 million. If three or four (and not five) of such reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer R-17 prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference -------- ------- Dealers selected by the Calculation Agent are quoting as described herein, the "CMT Rate" will be the CMT Rate in effect on such CMT Determination Date, or, if none, the Initial Interest Rate. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Index Maturity specified, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Rate" means the display on the Dow Jones Telerate Service on the page designated on the face hereof (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified on the face hereof, the Designated CMT Telerate Page shall be 7052, for the most recent week. The "Calculation Date" pertaining to any CMT Determination Date shall be the earlier of (i) the tenth calendar day after such CMT Determination Date or, if such day is not a Business Day, the next succeeding Business Day or (ii) the Business Day immediately preceding the applicable Interest Payment Date or Maturity, as the case may be. Payment in Currencies Other Than the Specified Currency ------------------------------------------------------- Except as set forth below with respect to payments in ECU, if payment in respect of this Note or any Coupon is required to be made in a specified currency other than U.S. dollars (a "Specified Currency") and such currency is unavailable to the Company due to the imposition of exchange controls or other circumstances beyond the Company's control or is no longer used by the government of the country issuing such currency or for the settlement of transactions by public institutions of or within the international banking community, then all payments shall be made in U.S. dollars until such currency is again available to the Company or so used. The amounts so payable on any date in such currency shall be converted into U.S. dollars on the basis of the most recently available Market Exchange Rate for such currency or as otherwise indicated on the face hereof. Any payment made under such circumstances in U.S. dollars will not constitute an Event of Default under the Indenture. Notwithstanding the foregoing, if a Specified Currency is unavailable to the Company solely because such currency no longer constitutes legal tender because it has been replaced by the ECU or the new single currency of the European Union once monetary union takes effect pursuant to Article 1091 of the Treaty establishing the European Community, the amounts so payable in respect of such Note shall, beginning with the date such replacement becomes effective, be made in the relevant new single currency of the European Union; the amounts so payable on any date shall be converted into such single currency on the basis of the conversion officially in effect in the European Union on the effective date of such replacement. If payment in respect of this Note or any Coupon is required to be made in ECU and the ECU are not then used in the European Monetary System (the "EMS"), then the Trustee R-18 shall, without liability on its part, choose a component currency (the "Payment Currency") of the ECU in which all payments in respect hereof shall be made until the ECU are again so used. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of the fourth Luxembourg business day prior to the date on which such payment is due. Notice of the Payment Currency selected by the Trustee shall be given as described below. Any payment made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture. Notwithstanding the foregoing, on the first Luxembourg business day on which the ECU are no longer used in the EMS, the Trustee shall, without liability on its part, choose a Payment Currency in which all payments with respect to Bearer Notes and Coupons denominated in ECU having a due date prior thereto but not yet presented for payment are to be made. The amount of each payment in such Payment Currency shall be computed on the basis of the equivalent of the ECU in that currency, determined as described below, as of such first Luxembourg business day. Any payment made under such circumstances in the Payment Currency will not constitute an Event of Default under the Indenture. The equivalent of the ECU in the relevant Payment Currency as of any date (the "Day of Valuation") shall be determined by the Luxembourg Stock Exchange on the following basis. The component currencies of the ECU for this purpose (the "Components") shall be the currency amounts that were components of the ECU when the ECU was most recently used in the EMS or for the settlement of transactions by public institutions of or within the European Community. The equivalent of the ECU in the Payment Currency shall be calculated by, first, aggregating the U.S. dollar equivalents of the Components, and then, using the rate used for determining the U.S. dollar equivalents of the Components in the Payment Currency as set forth below, calculating the equivalent in the Payment Currency of such aggregate amount in U.S. dollars. The U.S. dollar equivalent of each of the Components shall be determined by the Luxembourg Stock Exchange on the basis of the middle spot delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee (with the approval of the Company) in the country of issue of the Component in question. R-19 If the official unit of any component currency of the ECU is altered by way of combination or subdivision, the number of units of that currency as a Component shall be divided or multiplied in the same proportion. If two or more component currencies are consolidated into a single currency, the amounts of those currencies as Components shall be replaced by an amount in such single currency equal to the sum of the amounts of the consolidated component currencies expressed in such single currency. If any component currency is divided into two or more currencies, the amount of that currency as a Component shall be replaced by amounts of such two or more currencies, each of which shall be equal to the amount of the former component currency divided by the number of currencies into which that currency was divided. If no direct quotations are available for a Component on a Day of Valuation from any of the banks selected by the Trustee (with the approval of the Company) for this purpose, because foreign exchange markets are closed in the country of issue of that Component, or for any other reason, in computing the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall (except as provided below) use the most recent direct quotations for such Component obtained by it, provided -------- that such most recent quotations may be used only if they were prevailing in the country of issue not more than two Luxembourg business days before such Day of Valuation. Beyond such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of cross rates derived from the middle spot delivery quotations for such Component and for the U.S. dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as obtained by the Luxembourg Stock Exchange from one or more major banks, selected by the Trustee (with the approval of the Company) in a country other than the country of issue of such Component. Notwithstanding the foregoing, within such period of two Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such Component on the basis of such cross rates if the Trustee and the Company judge that the equivalent so calculated is more representative than the U.S. dollar equivalent calculated on the basis of such most recent direct quotations. Unless otherwise specified by the Trustee, if there is more than one market for dealing in any component currency by reason of foreign exchange regulations or for any other reason, the market to be referred to in respect of such currency shall be that upon which a nonresident issuer of securities denominated in such currency would purchase such currency in order to make payments in respect of such securities. R-20 All determinations referred to above made by the Trustee or the Luxembourg Stock Exchange shall be at their respective sole discretion (except to the extent expressly provided herein that any determination made by the Trustee is subject to the approval of the Company) and shall, in the absence of manifest error, be conclusive for all purposes and binding on Holders of the Bearer Notes and any Coupons, and the Trustee shall have no liability therefor. If an Event of Default with respect to the Notes shall have occurred and be continuing, the principal of all Notes may be declared due and payable in the manner and with the effect provided in the Indenture. If this Note is an Original Issue Discount Note, the amount payable in the event of redemption or repayment prior to its Stated Maturity, shall be the Amortized Face Amount of this Note as of the date of redemption or the date of repayment, as the case may be. The "Amortized Face Amount" of this Note shall be the amount equal to (a) the Issue Price (set forth on the face hereof) plus (b) that portion of the difference between the Issue Price and the principal amount hereof that has accrued at the Yield to Stated Maturity (set forth on the face hereof) (computed in accordance with generally accepted United States bond yield computation principles) by such date of redemption or repayment, but in no event shall the Amortized Face Amount of this Note exceed its principal amount. As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for a like aggregate principal amount of Bearer Notes of different authorized denominations, as requested by the Person surrendering the same. No service charge shall be made for any such exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. In case this Note or any Coupon shall at any time become mutilated, destroyed, stolen or lost, it may be replaced at the specified office of the Principal Paying Agent in London; or, so long as the Bearer Notes are listed on the Luxembourg Stock Exchange, at the specified office of the Paying Agent in Luxembourg, upon payment by the claimant of such expenses as may be incurred in connection therewith and, in the case of destruction, theft or loss, on such terms as to evidence thereof and indemnity as the Company or the Trustee may reasonably require. Mutilated or defaced Bearer Notes or Coupons must be surrendered before replacements will be issued. R-21 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than 66-2/3% in aggregate principal amount of the Debt Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Debt Securities of any series at the time Outstanding, on behalf of the Holders of all the Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders hereof and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. Holders of Debt Securities of this series may not enforce their rights pursuant to the Indenture or such Debt Securities except as provided in the Indenture. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Note at the times, place and rate, and in the coin or currency, herein prescribed. The Company may, without the consent of the Holders of the Notes, consolidate with, merge into, or transfer substantially all of its assets to, a corporation that is a U.S. Person, provided that the successor corporation assumes all obligations of the Company under the Notes and certain other conditions are met. Except as provided above, the obligation to pay the principal hereof (and premium, if any) and interest hereon in the designated currency of payment is of the essence. To the fullest extent possible under applicable law, judgments in respect of this Note shall be given in such currency. The obligation of the Company to make such payments in the designated currency of payment shall, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the designated currency of payment that the Holder of this Note may, in accordance with normal banking procedures, purchase with the sum paid in such other currency (after any premium and cost of exchange) on the business day in the R-22 country of issue of the designated currency of payment or in the international banking community (in the case of a composite currency) immediately following the day on which such Holder receives such payment. If the amount in the designated currency of payment that may be so purchased is for any reason less than the amount originally due, the Company shall, as a separate and independent obligation, pay such additional amounts in the designated currency of payment as may be necessary to compensate for any such shortfall. All notices to Holders of this Note will be deemed to have been duly given if published on two Business Days in a leading London daily newspaper (which is expected to be the Financial Times) and, so long as --------------- the Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange so require, in Luxembourg in a newspaper of general circulation in Luxembourg (which is expected to be the Luxemburger Wort). Such notices shall be deemed to have been given on ---------------- the date of the first such publication. This Note shall be deemed to be a contract made and to be performed solely in the State of New York, and for all purposes shall be governed by, and construed in accordance with, the laws of said State without regard to the conflicts of law rules of said State. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. R-23 TRANCHE NO. ___ MEDIUM TERM NOTE SERIES E NO. ___ Form of Coupon -------------- ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE. MCDONALD'S CORPORATION MEDIUM-TERM NOTE, SERIES E [Coupon Number]/1/ Specified Currency ___ Due __________________ Unless the Bearer Note mentioned below shall have been previously called for redemption or tendered for repayment and the monies therefor shall have been duly provided for, on the date set forth hereon, MCDONALD'S CORPORATION (the "Company") will pay to bearer, upon surrender hereof at such agencies in such place outside the United States of America as the Company may determine from time to time (the "Paying Agents"), interest on the principal amount of such Bearer Note at the applicable interest rate, as provided in such Bearer Note (together with any additional amounts in respect thereof which the Company may be required to pay according to the terms of such Note), in such coin or currency as specified above as at the time of payment shall be legal tender for the payment of public and private debts. Payment on this coupon shall be made, at the option of the bearer hereof and subject to any applicable laws and regulations, by a check mailed to an address outside the United States furnished by such bearer or by wire transfer to an account maintained by the payee with a bank outside the United States. [Such amount constitutes one semiannual installment of interest then payable by the Company on its Medium-Term Note, Series E No. __________.] MCDONALD'S CORPORATION By___________________________________ Chairman of the Board of Directors, President and Chief Executive Officer - - ------------------ /1/ The coupon number, specified currency and due date should appear in the right-hand section of the face of the coupon. [Form of Reverse of Coupon] Principal Paying Agent: ---------------------- Morgan Guaranty Trust Company of New York 60 Victoria Embankment London EC4Y 0JP Paying Agent: ------------ Banque Generale du Luxembourg S.A. 14 Rue Aldringen L-2951 Luxembourg Luxembourg 2 EX-5 13 OPINION & CONSENT OF SHELBY YASTROW Exhibit 5 [LETTERHEAD OF MCDONALD'S CORPORATION] July 7, 1995 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, DC 20549 Ladies and Gentlemen: Re: McDonald's Corporation Registration Statement on Form S-3 In my capacity as Senior Vice President, General Counsel and Secretary of McDonald's Corporation (the "Company"), a Delaware corporation, I have supervised and participated in the legal proceedings and matters relating to the proposed registration of $500,000,000 in initial public offering price of Debt Securities of the Company to be issued under an indenture, dated as of March 1, 1987, as supplemented to the date hereof and as it will be supplemented by Supplemental Indenture No. 22 as contemplated in the Registration Statement (the "Supplemental Indenture" and, together witch such Indenture as supplemented to the date hereof, the "Indenture"), between the Company and First Fidelity Bank, National Association (formerly Fidelity Bank, National Association), as trustee (the "Trustee"). I advise you that in my opinion: 1. The Company is a corporation duly organized and existing under and by virtue of the laws of the State of Delaware and has adequate corporate powers to own and operate its property and to transact the business in which it is engaged. 2. The indenture (exclusive of the Supplemental Indenture) has been duly authorized by all necessary corporate action of the Company and has been duly executed and delivered by the Company. 3. The execution and delivery by the Company of the Supplemental Indenture and the issuance of the Debt Securities in the manner and on the terms set forth in the Registration Statement and in accordance with the terms of the Indenture have been duly authorized by all necessary corporate action of the Company. 4. The Indenture, upon the execution and delivery of the Supplemental Indenture, will constitute the legal, valid, binding and enforceable obligations of the Company, subject to applicable bankruptcy, insolvency and other laws affecting the enforceability of creditors' rights. 5. The Debt Securities, upon the execution and delivery of the Supplemental Indenture and when delivered and paid for as contemplated in the Registration Statement, will constitute legal, valid, binding and enforceable obligations of the Company entitled to all of the benefits of the Indenture, subject to the applicable bankruptcy, insolvency and other laws affecting the enforceability of creditors' rights. I am aware that I am named in the Registration Statement as counsel for the Company and hereby consent to such use of my name and the filing of this opinion with the Commission as an exhibit to the Registration Statement. Very truly yours, /s/ Shelby Yastrow Shelby Yastrow WAG/lb EX-23.(A) 14 CONSENT OF ERNST & YOUNG EXHIBIT 23(A) CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of McDonald's Corporation for the registration of $500,000,000 Debt Securities and to the incorporation by reference therein of our report dated January 26, 1995, with respect to the consolidated financial statements of McDonald's Corporation included in its Annual Report (Form 10-K) for the year ended December 31, 1994, filed with the Securities and Exchange Commission. /s/ Ernst & Young Chicago, Illinois July 7, 1995 EX-25 15 STATEMENT OF ELIGIBILITY EXHIBIT 25 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ___ FIRST FIDELITY BANK, NATIONAL ASSOCIATION (Exact Name of Trustee as Specified in its Charter) 22-1147033 (I.R.S. Employer Identification No.) 202A SOUTH BRIDGE STREET, ELKTON, MARYLAND (Address of Principal Executive Offices) 21921 (Zip Code) FIRST FIDELITY BANK, NATIONAL ASSOCIATION 123 SOUTH BROAD STREET PHILADELPHIA, PA 19109 ATTENTION: CORPORATE TRUST ADMINISTRATION (215) 985-6000 (Name, address and telephone number of Agent for Service) McDONALD'S CORPORATION (Exact Name of Obligor as Specified in its Charter) DELAWARE (State or other jurisdiction of Incorporation or Organization) 36-2361282 (I.R.S. Employer Identification No.) ONE McDONALD'S PLAZA, OAK BROOK, ILLINOIS (Address of Principal Executive Offices) 60521 (Zip Code) MEDIUM TERM NOTES, DUE FROM NINE MONTHS TO 60 YEARS APPLICATION RELATES TO ALL SECURITIES REGISTERED PURSUANT TO THE DELAYED OFFERING REGISTRATION STATEMENT (TITLE OF INDENTURE SECURITIES) 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT: Comptroller of the Currency United States Department of the Treasury Washington, D.C. 20219 Federal Reserve Bank (3rd District) Philadelphia, Pennsylvania 19106 Federal Deposit Insurance Corporation Washington, D.C. 20429 b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 3. VOTING SECURITIES OF THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF THE TRUSTEE: Not applicable - see answer to Item 13. 4. TRUSTEESHIPS UNDER OTHER INDENTURES. IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION: Not applicable - see answer to Item 13. 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR OR UNDERWRITERS. IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS OF THE TRUSTEE IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION. Not applicable - see answer to Item 13. 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER, AND EXECUTIVE OFFICER OF THE OBLIGOR: Not applicable - see answer to Item 13. 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS. FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR, PARTNER, AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER: Not applicable - see answer to Item 13. 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE. FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE TRUSTEE: Not applicable - see answer to Item 13. 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE: Not applicable - see answer to Item 13. 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING STOCK OF THE OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON: Not applicable - see answer to Item 13. 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR. IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE: Not applicable - see answer to Item 13. 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE. EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE TRUSTEE, FURNISH THE FOLLOWING INFORMATION: Not applicable - see answer to Item 13. 13. DEFAULTS BY THE OBLIGOR. (a) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT. None. (b) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT. None. 14. AFFILIATIONS WITH THE UNDERWRITERS. IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. Not applicable - see answer to Item 13. 15. Foreign trustee. IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT. Not applicable - trustee is a national banking association organized under the laws of the United States. 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. __ 1. Copy of Articles of Association of the trustee as now in effect.** __ 2. Copy of the Certificate of the Comptroller of the Currency date dated January 11, 1994, evidencing the authority of the trustee to transact business.* __ 3. Copy of the Certification of Fiduciary Powers of the trustee by the Office of the Comptroller of the Currency dated July 24, 1992.* __ 4. Copy of existing by-laws of the trustee.** __ 5. Copy of each indenture referred to in Item 4, if the obligor is in default. -Not Applicable. X 6. Consent of the trustee required by Section 321(b) of the -- Act. X 7. Copy of report of condition of the trustee at the close of -- business on March 31, 1995, published pursuant to the requirements of its supervising authority. __ 8. Copy of any order pursuant to which the foreign trustee is authorized to act as sole trustee under indentures qualified or to be qualified under the Act. - Not Applicable __ 9. Consent to service of process required of foreign trustees pursuant to Rule 10a-4 under the Act. - Not Applicable _____________________ *Previously filed with the Securities Exchange Commission on February 11, 1994 as an Exhibit to Form T-1 in connection with Registration Statement Number 22-73340 and ** previously filed with the Securities Exchange Commission on April 4,1995 with Registration Statement Number 33-58625 and incorporated herein by reference NOTE The trustee disclaims responsibility for the accuracy or completeness of information contained in this Statement of Eligibility and Qualification not known to the trustee and not obtainable by it through reasonable investigation and as to which information it has obtained from the obligor and has had to rely or will obtain from the principal underwriters and will have to rely. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, First Fidelity Bank, National Association, a national banking association organized and existing under the laws of the United States of America, has duly caused this Statement of Eligibility and Qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Philadelphia and Commonwealth of Pennsylvania, on the 28th day of June, 1995. FIRST FIDELITY BANK, NATIONAL ASSOCIATION By: s/John H. Clapham John H. Clapham --------------- Asst. Vice President EXHIBIT CONSENT OF TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, and in connection with the proposed issue of McDonald`s Corporation, Medium-Term Notes Notes, Due from Nine Months to 60 Years, First Fidelity Bank, National Association, hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. FIRST FIDELITY BANK, NATIONAL ASSOCIATION By: /s/ John H. Clapham -------------------------- John H. Clapham Asst. Vice President Philadelphia, Pennsylvania June 28, 1995 REPORT OF CONDITION EXHIBIT 7 Consolidating domestic and foreign subsidiaries of the First Fidelity Bank, National Association of Elkton in the state of Maryland, at the close of business on March 31,1995, published in response to call made by Comptroller of the Currency, under title 12, United States Code, Section 161. Charter Number 33869 Comptroller of the Currency Northeastern District.
STATEMENT OF RESOURCES AND LIABILITIES ASSETS Thousand of Dollars ----------- Cash and balance due from depository institutions: Noninterest-bearing balances and currency and coin.............. 1,599,546 Interest-bearing balances....................................... 131,786 Securities........................................................ ///////// Hold-to-maturity securities..................................... 3,154,827 Available-for-sale securities................................... 3,271,974 Federal funds sold and securities purchased under agreements...... ////////// to resell in domestic offices of the bank and of it............... ////////// Edge and Agreement subsidiaries, and in IBFs:..................... ////////// Federal funds sold................................................ 10,000 Securities purchased under agreements to resell................... 207,267 Loans and lease financing receivables: Loan and leases, net of unearned income......22,371,585 LESS: Allowance for loan and lease losses.......517,965 LESS: Allocated transfer risk reserve.................0 Loans and leases, net of unearned income, allowance, and reserve........................................................... 21,853,620 Assets held in trading accounts................................... 70,275 Premises and fixed assets (including capitalized leases).......... 390,023 Other real estate owned........................................... 135,803 Investment in unconsolidated subsidiaries and associated.......... ////////// companies......................................................... 13,434 Customer's liability to this bank on acceptances outstanding...... 180,053 Intangible assets................................................. 721,391 Other assets...................................................... 890,755 Total assets...................................................... 32,630,754 LIABILITIES Deposits: In domestic offices.......................................... 25,014,990 Noninterest-bearing......................4,531,531 Interest-bearing........................20,483,459 In foreign offices, Edge and Agreement subsidiaries, and IBFs..................................................... 1,106,660 Noninterest-bearing.........................11,811 Interest-bearing.........................1,094,849 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge and Agreement subsidiaries, and IBFs Federal fund purchased....................................... 1,044,014 Securities sold under agreements to repurchase............... 1,421,199 Demand notes issued to the U.S. Treasury.......................... 0 Trading liabilities............................................... 0 Other borrowed money:............................................. ///////// With original maturity of one year or less........................ 16,956 With original maturity of more than one year.................. 635 Mortgage indebtedness and obligations under capitalized leases.... 16,899 Bank's liability on acceptances executed and outstanding.......... 180,795 Subordinated notes and debentures................................. 175,000 Other liabilities................................................. 620,629 Total liabilities................................................. 29,597,777 Limited-life preferred stock and related surplus.................. 0 EQUITY CAPITAL Perpetual preferred stock and related surplus..................... 160,540 Common Stock...................................................... 452,156 Surplus........................................................... 1,300,080 Undivided profits and capital reserves............................ 1,167,757 Net unrealized holding gains (losses) on available-for-sale ///////// securities....................................................... (47,556) Cumulative foreign currency translation adjustments............... 0 Total equity capital.............................................. 3,032,977 Total liabilities, limited-life preferred stock and equity ///////// capital......................................................... 32,630,754
-----END PRIVACY-ENHANCED MESSAGE-----