<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1998
REGISTRATION STATEMENT NO. 333-
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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
(I.R.S. EMPLOYER IDENTIFICATION
(STATE OR OTHER JURISDICTION OF NUMBER)
INCORPORATION OR ORGANIZATION)
ONE MCDONALD'S PLAZA OAK BROOK, ILLINOIS 60523 (630) 623-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
GLORIA SANTONA
VICE PRESIDENT,
DEPUTY GENERAL COUNSEL
AND SECRETARY
MCDONALD'S CORPORATION
ONE MCDONALD'S PLAZA
OAK BROOK, ILLINOIS 60523
(630) 623-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
GEORGE C. MCKANN GARDNER, CARTON & DOUGLAS 321 NORTH CLARK STREETQUAKER TOWER
CHICAGO, ILLINOIS 60610 (312) 245-8417
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, check the following box and
list the Securities Act 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 Securities Act
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
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE
SECURITIES TO BE TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED(3) PER UNIT(1)(2) PRICE(1)(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities........ $1,000,000,000 100% $1,000,000,000 $295,000
</TABLE>
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(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 $1,000,000,000.
---------------
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 OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED JULY 15, 1998
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1998)
$1,000,000,000
MCDONALD'S CORPORATION
MEDIUM-TERM NOTES, SERIES F
DUE FROM 1 YEAR TO 60 YEARS FROM DATE OF ISSUE
-----------
McDonald's Corporation (the "Company") may use this prospectus supplement to
offer its Medium-Term Notes, Series F with a total initial public offering
price of up to $1,000,000,000 or the equivalent in one or more foreign
currencies, subject to reduction as a result of our sale of other debt
securities.
The following terms may apply to the notes. We will provide the final terms
for each note in a pricing supplement.
. Mature in 1 year to 60 years and may be subject to redemption or repayment
at the option of the Company or the holder.
. Denominated in U.S. dollars unless otherwise specified by the Company.
. Fixed or floating interest rate. The floating interest rate formula may be
based on:
-Treasury Rate
-CD Rate
-Prime Rate
-Commercial Paper Rate
-CMT Rate
-Federal Funds Rate
- Another Base Rate specified in the pricing
-LIBOR supplement
. May be issued as indexed notes.
. Certificated or book-entry form.
. Interest paid on fixed rate notes on February 15 and August 15 of each
year.
. Interest paid on floating rate notes on dates determined at the time of
issuance.
. Minimum denominations of $1,000 increased in multiples of $1,000.
We will receive between $998,500,000 and $992,500,000 of the proceeds from
the sale of the notes after paying the Agent's commissions of between
$1,500,000 and $7,500,000. The exact proceeds to the Company will be set at the
time of issuance. We do not expect that any of the notes will be listed on an
exchange, and a market for any particular series of notes may not develop.
SEE "RISK FACTORS" BEGINNING ON PAGE S-2 FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES.
-----------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
Agents
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
-----------
The date of this prospectus supplement is , 1998.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE +
+CHANGED. THE COMPANY MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION +
+STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. +
+THIS PROSPECTUS SUPPLEMENT IS NOT AN OFFER TO SELL THESE SECURITIES AND IS +
+NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER +
+OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
RISK FACTORS
This prospectus supplement does not describe all of the risks of an
investment in the notes, whether arising because the notes are denominated in
a currency other than the U.S. dollar or because the return on the notes is
linked to one or more interest rate or currency indices or formulas. You
should consult your own financial and legal advisors about the risks entailed
by an investment in the notes and the suitability of your investment in the
notes in light of your particular circumstances. The notes are not an
appropriate investment for investors who are unsophisticated with respect to
foreign currency transactions or transactions involving the type of index or
formula used to determine amount payable. You should also consider carefully,
among other factors, the matters described below.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a note denominated in a currency other than U.S. dollars
entails significant risks. These risks include the possibility of significant
changes in rates of exchange between the U.S. dollar and such currency and the
possibility of the imposition or modification of foreign exchange controls by
either the United States or foreign governments. These risks generally depend
on factors over which we have 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 you should be aware that 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 note. Depreciation of the specified currency
for a 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 you on a U.S. dollar basis.
Except as set forth below, if payment in respect of a note is required to be
made in a currency other than U.S. dollars and such currency is unavailable to
us due to the imposition of exchange controls or other circumstances beyond
our control or is no longer used by the government of the relevant country or
for the settlement of transactions by public institutions of or within the
international banking community, then all payments in respect of such note
will be made in U.S. dollars until such currency is again available to us or
so used. The amounts payable on any date in such currency will 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 so made in U.S. dollars will
not constitute an event of default under the Indentures. Regardless, if a
specified currency is unavailable to us solely because the country of issue
has replaced its currency with the Euro or other currency of the European
Union pursuant to the Treaty establishing the European Community, the amounts
payable will, beginning with the date the replacement becomes effective, be
made in Euro or such other currency. The amounts payable on any date will be
converted into Euro or such other currency on the basis of the conversion rate
officially in effect in the European Union on the effective date of the
replacement.
If payment is required to be made in Euro and Euro are unavailable to us due
to the imposition of exchange controls or other circumstances beyond our
control or are no longer used in the European Monetary System, then all
payments will be made in U.S. dollars until Euro are again available to us or
so used. The amount of each payment in U.S. dollars will be computed on the
basis of the equivalent of the Euro in U.S. dollars, determined as described
below, as of the second Business Day prior to the date on which such payment
is due.
If payments on any series of notes must be made in the European Currency
Unit ("ECU") and the Euro is substituted for the ECU as the unit of account of
the European Community or the European Central Bank, then we may redenominate
all of the notes of that series into Euros by giving holders notice of the
redenomination as described under "Description of Notes--Redenomination"
below.
The paying agent will make all determinations referred to above at its sole
discretion. All determinations will, in the absence of clear error, be binding
on holders of the notes.
S-2
<PAGE>
The information set forth in this prospectus supplement is directed to
prospective purchasers of notes who are U.S. residents. We disclaim any
responsibility to advise any other prospective purchasers with respect to any
matters that may affect the purchase, sale or holding of notes. These persons
should consult their own legal and financial advisors with regard to such
matters.
Any pricing supplement relating to notes having a specified currency other
than U.S. dollars will contain information concerning historical exchange
rates for that currency against the U.S. dollar and a brief description of any
relevant exchange controls.
FOREIGN CURRENCY JUDGMENTS
The notes will be governed by and construed in accordance with the internal
laws of the State of Illinois. Courts in the United States customarily have
not rendered judgments for money damages denominated in any currency other
than the U.S. dollar.
RISKS ASSOCIATED WITH INDEXED NOTES
An investment in indexed notes entails significant risks that are not
associated with an investment in a conventional fixed rate debt security.
Indexation of the interest rate of 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 a note may result in an
amount of principal and/or premium payable that is less than the original
purchase price of the note, including the possibility that no amount will be
paid. The secondary market for indexed notes will be affected by a number of
factors, independent of the creditworthiness of the Company. Such factors
include the volatility of the index selected, the time remaining to the
maturity of the notes, the amount outstanding of the notes and market interest
rates. The value of an index can depend on a number of interrelated factors,
including economic, financial and political events, over which we have no
control. Additionally, if the formula used to determine the amount of
principal, premium and/or interest payable with respect to indexed notes
contains a multiple or leverage factor, the effect of any change in the index
will be increased. The historical experience of an index should not be taken
as an indication of its future performance. The credit ratings assigned to our
medium-term note program are a reflection of our credit status and do not
reflect the impact of the factors discussed above on the market value of
indexed notes. Accordingly, you should consult your own financial and legal
advisors as to the risks entailed by an investment in indexed notes.
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries at March 31, 1998 and is adjusted to give effect to
the issuance on May 11, 1998 of securities totaling $250 million and the
issuance on June 23, 1998 of securities totaling $300 million, and the
application of the proceeds of these issuances.
<TABLE>
<CAPTION>
MARCH 31, 1998
---------------------
AS
OUTSTANDING ADJUSTED
----------- ---------
(IN MILLIONS OF U.S.
DOLLARS)
<S> <C> <C>
Short-term debt, including current portion of long-
term debt............................................ $ 612.2 $ 49.8(1)
Long-term debt, less current portion.................. 5,848.5 5,848.5
$250,000,000 securities, 5.9%, due 2011............... -- 249.6
$300,000,000 securities, 6%, due 2012................. -- 300.0
Shareholders' equity.................................. 9,122.1 9,122.1
--------- ---------
Total capitalization(2)............................... $15,582.8 $15,570.0
========= =========
</TABLE>
- --------
(1) Reflects the application of the net proceeds of $562.4 million from the
issuance of $250 million securities and the issuance of $300 million
securities.
(2) March 31, 1998, the Company had 3.5 billion authorized shares of common
stock, with $.01 par value, of which 830.3 million were issued and 687.4
million were outstanding. There has been no material change in the
consolidated capitalization of the Company since March 31, 1998.
S-3
<PAGE>
IMPORTANT CURRENCY INFORMATION
You are required to pay for each note in the currency specified by the
Company. You may ask an Agent to use its reasonable best efforts to arrange
for the exchange of U.S. dollars into the specified currency to enable you to
pay for such note. You must make this request on or before the third Business
Day preceding the delivery date for such note or by a later date if allowed by
the Agent. Each exchange will be made on the terms and conditions established
by the Agent and all costs will be paid by you.
DESCRIPTION OF NOTES
The following description of terms of the notes supplements the general
description of the debt securities provided in the prospectus. However, the
pricing supplement for each offering of notes will contain the specific
information and terms for that offering. The pricing supplement may also add,
update or change information contained in this prospectus supplement. It is
important for you to consider the information contained in the prospectus, the
prospectus supplement and the pricing supplement in making your investment
decision.
We have provided a glossary at the end of this prospectus supplement to
define any capitalized words we use but do not define in this prospectus
supplement.
GENERAL
We will issue the notes as a series of debt securities under the Senior
Indenture between us and the Trustee. We are limited to issuing notes with a
total initial public offering price or purchase price of up to $1,000,000,000
or the equivalent amount in one or more foreign currencies, including the
Euro. The U.S. dollar equivalent will be determined by a paying agent chosen
by us, which will initially be The First National Bank of Chicago. In order to
determine the equivalent amount in connection with offerings in a foreign or
composite currency, the paying agent will use 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 total price of the notes
we are authorized to offer may be reduced due to our sale of other debt
securities. If payments on any series of notes must be made in the currency of
a country that adopts the Euro, then we may redenominate all of the notes of
that series into Euros by giving holders notice of the redenomination as
described under "Description of Notes--Redenomination" below.
The notes will be offered on a continuous basis and will be issued in fully
registered form only, without coupons.
Each note will be issued either as a "book-entry" note, represented by a
permanent global note registered in the name of The Depository Trust Company
("DTC"), or its nominee, or as a certificate issued in temporary or definitive
form. Except as described below under "Book-Entry System," book-entry notes
will not be issuable in certificated form.
The authorized denominations for notes denominated in U.S. dollars will be
$1,000 and any larger amount that is a multiple of $1,000. The authorized
denominations of notes denominated in some other specified currency will be
described in the pricing supplement.
Each note will mature on any day from 1 year to 60 years from its date of
issue. However, each note may also be subject to redemption at our option and
repayment at the option of the holder.
The pricing supplement relating to a note will describe the following terms:
(a) the specified currency;
(b) whether the note is a fixed rate note, a floating rate note or an
indexed note;
(c) the issue price;
S-4
<PAGE>
(d) the original issue date;
(e) the stated maturity date;
(f) for a fixed rate note, the rate per annum at which it will bear
interest, if any, and the dates on which interest will be payable if
other than February 15 and August 15;
(g) for 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, and any other terms
relating to the particular method of calculating the interest rate for
the note;
(h) whether the note is an Original Issue Discount Note;
(i) for an indexed note, the manner in which the principal amount payable
at the stated maturity date will be determined;
(j) whether the note may be redeemed at our option, or repaid at the
holder's option prior to the stated maturity date as described further
under "Optional Redemption, Repayment and Repurchase" below, and if so,
the terms of the redemption or repayment; and
(k) any other terms that do not conflict with the provisions of the Senior
Indenture.
Interest rates that we offer with respect to the notes may differ depending
on, among other things, the aggregate principal amount of the notes purchased
in any single transaction.
Except as described in this prospectus supplement, there are no covenants
specifically designed to protect you against a reduction in our
creditworthiness in the event of a highly leveraged transaction or to prohibit
other transactions that may adversely affect you.
PAYMENT OF PRINCIPAL AND INTEREST
We will make payments on each note in a currency that we specify. If the
specified currency is other than U.S. dollars, either we or the paying agent
will arrange to convert all payments in respect of the note into U.S. dollars
as described in the following paragraph. If you hold a note denominated in a
currency other than U.S. dollars and the pricing supplement and note so allow,
you may elect to receive all payments in the foreign currency by sending a
written notice to the paying agent not later than 15 days before the
applicable payment date, except under the circumstances described in "Risk
Factors--Exchange Rates and Exchange Controls." Your election will remain in
effect until you revoke it by written notice to the paying agent received not
later than 15 days before the applicable payment date.
The paying agent will determine the amount of any U.S. dollar payment on a
note denominated in a currency other than U.S. dollars based on the highest
firm bid quotation, expressed in U.S. dollars, that it receives at
approximately 11:00 a.m., New York City time two Business Days before the
applicable payment date (if no rate is quoted on that date, the paying agent
will use the last date on which the rate was quoted). To determine the highest
quote, the paying agent will request quotes 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, their affiliates or the paying agent) for
the purchase, and settlement on the applicable payment date, of the total
amount of the specified currency then payable. You will be responsible for all
currency exchange costs, such amount to be deducted from your U.S. dollar
payments. If no bid quotations are available, we will make payments in the
foreign currency, unless the currency is unavailable due to the imposition of
exchange controls or other circumstances beyond our control. In that case, we
will make payments as described under "Risk Factors--Exchange Rates and
Exchange Controls."
U.S. dollar payments of interest on notes are generally payable to the
person in whose name the note is registered at the close of business on the
record date before each interest payment date. However, interest will be
payable at Maturity to the person to whom principal is payable. The first
interest payment on any note originally issued between a record date and an
interest payment date or on an interest payment date will be made
S-5
<PAGE>
on the interest payment date after the next record date. If you hold at least
$10,000,000 (or the equivalent thereof in a specified currency other than U.S.
dollars) in aggregate principal amount of notes, you will be entitled to
receive your U.S. dollar interest payments by wire transfer, but only if the
paying agent has received your wire transfer instructions not later than 15
days before the applicable interest payment date. Simultaneously with your
election to receive payments in a currency other than U.S. dollars, as
discussed earlier, you must provide wire transfer payment instructions to the
paying agent, and all payments made in that currency will be made by wire
transfer to an account maintained by you with a bank located outside the
United States. Any payment due at Maturity will be paid in immediately
available funds upon surrender of your note at the corporate trust office or
an agency of the paying agent located in the City of Chicago. The corporate
trust office for the First National Bank of Chicago is located at One First
National Plaza, Chicago, Illinois.
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 will be
limited to the principal amount of the note multiplied by the sum of its issue
price (expressed as a percentage of the principal amount) plus the original
issue discount amortized from the date the note was issued 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).
Unless otherwise specified in the applicable pricing supplement, the record
date for any interest payment date for a floating rate note will be the date
(whether or not a Business Day) 15 calendar days immediately before the
interest payment date, and for a fixed rate note will be the February 1 or
August 1 (whether or not a Business Day) immediately before the interest
payment date or Maturity, as the case may be.
Interest payments on the notes will equal the amount of interest accrued
from and including the immediately preceding interest payment date on which
interest was paid or made available for payment (or from and including the
date of issue, if no interest has been paid) 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 the date it is originally
issued at the rate per annum stated on its face until the principal amount is
paid or made available for payment. Unless otherwise set forth in the
applicable pricing supplement, we will pay interest on each fixed rate note
semiannually in arrears on each February 15 and August 15 and at Maturity.
Each payment of interest on an interest payment date will include interest
accrued to but excluding such interest payment date. Interest on fixed rate
notes will be computed using a 360-day year of twelve 30-day months.
If any payment date for a fixed rate note falls on a day that is not a
Business Day, we will make the payment on the next Business Day, without
additional interest.
FLOATING RATE NOTES
Each floating rate note will have an interest rate formula. The formula may
be based on:
(a) the CD Rate;
(b) the CMT Rate;
(c) the Commercial Paper Rate;
(d) the Federal Funds Rate;
(e) LIBOR;
(f) the Prime Rate;
(g) the Treasury Rate; or
(h) another Base Rate or formula described in the pricing supplement and in
the note.
S-6
<PAGE>
The pricing supplement will also indicate any Spread and/or Spread
Multiplier, which would be applied to the interest rate formula to determine
the interest rate. Any floating rate note may have a maximum or minimum
interest rate limitation.
We will appoint a calculation agent to calculate interest rates on the
floating rate notes. Unless we choose a different party in the pricing
supplement, the paying agent will be the calculation agent for each note. Upon
request, the calculation agent will provide the current interest rate and, if
different, the interest rate that will become effective on the next Interest
Reset Date.
The interest rate on each floating rate note may be reset daily, weekly,
monthly, quarterly, semiannually or annually (this period is the "Interest
Reset Period", and the first day of each Interest Reset Period is an "Interest
Reset Date"), as specified in the pricing supplement. Unless otherwise
specified in the pricing supplement, the Interest Reset Dates will be:
(a) for floating rate notes that reset daily, each Business Day;
(b) for floating rate notes (other than Treasury Rate notes) that reset
weekly, Wednesday of each week;
(c) for Treasury Rate notes that reset weekly, Tuesday of each week (except
as provided below under "Treasury Rate Notes");
(d) for floating rate notes that reset monthly, the third Wednesday of each
month;
(e) for floating rate notes that reset quarterly, the third Wednesday of
March, June, September and December of each year;
(f) for floating rate notes that reset semianuually, the third Wednesday of
each of the two months of each year specified in the pricing
supplement; and
(g) for floating rate notes that reset annually, the third Wednesday of one
month of each year specified in the pricing supplement.
If an Interest Reset Date for any floating rate note falls on a day that is
not a Business Day, it will be postponed to the following Business Day, except
that, in the case of a LIBOR note, if that Business Day is in the next
calendar month, the Interest Reset Date will be the immediately preceding
Business Day.
Floating rate notes will accrue interest from and including the original
issue date or the last date to which interest has been paid or provided for,
as the case may be, to but excluding the applicable Interest Payment Date, as
described below, or Maturity, as the case may be.
Accrued interest on floating rate notes will be calculated by multiplying
the principal amount of such note (or, in the case of an indexed note, unless
otherwise specified in the pricing supplement, the face amount of such indexed
note) by an accrued interest factor. The 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. The interest factor (expressed
as a decimal calculated to seven decimal places without rounding) for each day
will be computed by dividing the interest rate in effect on that 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 these
calculations, the interest rate in effect on any Interest Reset Date will be
the new reset rate.
The calculation agent will round all percentages resulting from any
calculation of the rate of interest on a floating rate note, 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 any 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 we state otherwise in the applicable prospectus supplement, we will
pay interest on floating rate notes as follows:
(a) for 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;
S-7
<PAGE>
(b) for notes that reset quarterly, on the third Wednesday of March, June,
September, and December of each year;
(c) for notes that reset semiannually, on the third Wednesday of each of
two months of each year specified in the pricing supplement; and
(d) for notes that reset annually, on the third Wednesday of one month of
each year specified in the pricing supplement.
Each of the above dates is an "Interest Payment Date". We will also pay
interest on all notes at Maturity.
If an Interest Payment Date (other than at Maturity) for any floating rate
note falls on a day that is not a Business Day, it will be postponed to the
following Business Day, except that, in the case of a LIBOR note, if that
Business Day would fall in the next calendar month, the Interest Payment Date
will be the immediately preceding Business Day.
If the Maturity for a floating rate note falls on a day that is not a
Business Day, we will make the payment on the next Business Day, without
additional interest.
References below to information services include any successor information
services.
CD Rate Notes
Each CD Rate note will bear interest at a specified rate that will be reset
periodically based on the CD Rate and any Spread and/or Spread Multiplier.
"CD Rate" means, with respect to any Interest Determination Date, the rate
on that Interest Determination Date for negotiable certificates of deposit
having the specified Index Maturity as published in H.15(519) under the
heading "CDs (Secondary Market)".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) prior to 9:00 a.m. on the
Calculation Date, then the CD Rate will be the rate for negotiable
certificates of deposit having the specified Index Maturity as published in
Composite Quotations under the heading "Certificates of Deposit".
(b) If the rate is not published either in H.15(519) or in Composite
Quotations by 3:00 p.m. on that Calculation Date, the CD Rate will be the
average of the secondary market offered rates, as of 10:00 a.m., of three
leading nonbank dealers of 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 with a remaining
maturity closest to the specified Index Maturity in a denomination of
$5,000,000.
(c) If fewer than three dealers are providing quotes, the rate will be
the same as the rate used in the prior interest period.
Commercial Paper Rate Notes
Each Commercial Paper Rate note will bear interest at a specified rate that
will be reset periodically based on the Commercial Paper Rate and any Spread
and/or Spread Multiplier.
"Commercial Paper Rate" means, with respect to any Interest Determination
Date, the Money Market Yield of the rate on that Interest Determination Date
for commercial paper having the specified Index Maturity as published in
H.15(519) under the heading "Commercial Paper--Nonfinancial".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) prior to 9:00 a.m. on the
Calculation Date, then the Commercial Paper Rate will be the Money Market
Yield of the rate for commercial paper having the specified Index Maturity
as published in Composite Quotations under the heading "Commercial Paper".
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(b) If the rate is not published either in H.15(519) or in Composite
Quotations by 3:00 p.m. on the Calculation Date, the Commercial Paper Rate
will be the Money Market Yield of the average for the offered rates, as of
11:00 a.m., on that Interest Determination Date, of three leading dealers
of commercial paper in The City of New York selected by the calculation
agent for commercial paper having the specified Index Maturity placed for
an industrial issuer whose bond rating is "AA", or the equivalent, by a
nationally recognized rating agency.
(c) If fewer than three dealers are providing quotes, the rate will be
the same as the rate used in the prior interest period.
Federal Funds Rate Notes
Each Federal Funds Rate note will bear interest at a specified rate that
will be reset periodically based on the Federal Funds Rate and any Spread
and/or Spread Multiplier.
"Federal Funds Rate" means, with respect to any Interest Determination Date,
the rate on specified dates for Federal Funds published in H.15(519) prior to
11:00 a.m. under the heading "Federal Funds (Effective)".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) prior to 11:00 a.m. on the
Calculation Date, then the Federal Funds Rate will be the rate on such
Interest Determination Date published in Composite Quotations under the
heading "Federal Funds/Effective Rate".
(b) If the rate is not published either in H.15(519) or in Composite
Quotations by 3:00 p.m. on the Calculation Date, the Federal Funds Rate
will be the average of the rates, as of 11:00 a.m. on that Interest
Determination Date, for the last transaction in overnight federal funds
arranged by three leading brokers of federal funds transactions in The City
of New York selected by the calculation agent.
(c) If fewer than three brokers are providing quotes, the rate will be
the same as the rate used in the prior interest period.
LIBOR Notes
Each LIBOR note will bear interest at a specified rate that will be reset
periodically based on LIBOR and any Spread and/or Spread Multiplier.
The calculation agent will determine LIBOR on each Interest Determination
Date as follows:
(a) With respect to any Interest Determination Date, LIBOR will be
generally determined as either:
(1) the average of the offered rates for deposits in the Index
Currency having the specified Index Maturity beginning on the second
London Business Day immediately after the Interest Determination Date,
that appear on the Reuters Screen LIBO Page as of 11:00 a.m., London
time, on that Interest Determination Date, if at least two offered
rates appear on the Reuters Screen LIBO Page; or
(2) the rate for deposits in the Index Currency having the specified
Index Maturity beginning on the second London Business Day immediately
after such date, that appears on the Telerate Page 3750 as of 11:00
a.m., London time, on that Interest Determination Date.
If we do not specify either Reuters Screen LIBO Page or Telerate Page
3750 in the pricing supplement, LIBOR will be determined based on
Telerate Page 3750.
Where (1) above applies, if fewer than two offered rates appear on
the Reuters Screen LIBO Page, or, where (2) above applies, if no rate
appears on the Telerate Page 3750, LIBOR for that Interest
Determination Date will be determined based on the rates on that
Interest Determination Date at approximately 11:00 a.m., London time,
at which deposits on that date in the Index Currency for the period of
the specified Index Maturity are offered to prime banks in the London
interbank market by four major banks in that market selected by the
calculation agent and in a principal amount that in the
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calculation agent's judgment is representative for a single transaction
in the Index Currency in such market at such time (a "Representative
Amount"). The offered rates must begin on the second London Business
Day immediately after the Interest Determination Date.
The calculation agent will request the principal London office of each of
these banks to quote its rate. If the calculation agent receives at least
two quotations, LIBOR will be the average of those quotations.
(b) If the calculation agent receives fewer than two quotations, LIBOR
will be the average of the rates quoted at approximately 11:00 a.m., New
York City time, on the Interest Determination Date by three major banks in
the Principal Financial Center selected by the calculation agent. The rates
will be for loans in the Index Currency to leading European banks having
the specified Index Maturity beginning on the second London Business Day
after that date and in a Representative Amount.
(c) If fewer than three banks provide quotes, the rate will be the same
as the rate used in the prior interest period.
Treasury Rate Notes
Each Treasury Rate note will bear interest at a specified rate that will be
reset periodically based on the Treasury Rate and any Spread and/or Spread
Multiplier.
"Treasury Rate" means, with respect to any Interest Determination Date, the
rate for the most recent auction of direct obligations of the United States
("Treasury bills") having the specified Index Maturity as published in
H.15(519) under the heading "U.S. Government Securities/Treasury Bills/Auction
Average (Investment)".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) by 9:00 a.m. on the
Calculation Date, the rate will be 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) for such auction as otherwise announced by
the U.S. Department of the Treasury.
(b) If the results of the auction of Treasury bills having the specified
Index Maturity are not published in H.15(519) by 9:00 a.m., or otherwise
published or reported as provided above by 3:00 p.m., on the Calculation
Date, or if no auction is held in a particular week, then the Treasury Rate
will 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 average of the secondary market bid rates as of approximately 3:30 p.m.
on the Interest Determination Date, of three leading primary U.S.
government securities dealers in The City of New York selected by the
calculation agent for the issue of Treasury bills with a remaining maturity
closest to the specified Index Maturity.
(c) If fewer than three dealers are providing quotes, the rate will be
the same as the rate used in the prior interest period.
Prime Rate Notes
Each Prime Rate note will bear interest at a specified rate that will be
reset periodically based on the Prime Rate and any Spread and/or Spread
Multiplier.
"Prime Rate" means, with respect to any Interest Determination Date, the
rate set forth on that Interest Determination Date in H.15(519) under the
heading "Bank Prime Loan".
The following procedures will apply if the rate cannot be set as described
above:
(a) If the rate is not published in H.15(519) prior to 9:00 a.m. on the
Calculation Date, then the Prime Rate will be the average (rounded upwards,
if necessary, to the next higher one-hundred thousandth of a percentage
point) of the rates publicly announced by each bank on the Reuters Screen
USPRIME1 Page as its prime rate or base lending rate for that Interest
Determination Date.
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(b) If fewer than four, but more than one, rates appear on the Reuters
Screen USPRIME1 Page, the Prime Rate will be the average 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 the Interest Determination
Date by four major money center banks in The City of New York selected by
the calculation agent.
(c) If fewer than two rates appear, the Prime Rate will be determined
based on 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 $500 million and being subject to supervision or
examination by a Federal or State authority, as selected by the calculation
agent.
(d) If no banks are providing quotes, the rate will be the same as the
rate used for the prior interest period.
CMT Rate Notes
Each CMT Rate note will bear interest at a specified rate that will be reset
periodically based on the CMT Rate and any Spread or Spread Multiplier.
"CMT Rate" means, with respect to any Interest Determination Date, the rate
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.", under the column for the specified Index
Maturity for:
(1) if the Designated CMT Telerate Page is 7055, the rate for the
Interest Determination Date; or
(2) if the Designated CMT Telerate Page is 7052, the week or the month,
as applicable, ended immediately preceding the week in which the Interest
Determination Date occurs.
The following procedures will apply if the rate cannot be set as described
above:
(a) if we do not specify any page, the Designated CMT Telerate Page will
be 7052 for the most recent week. If that rate is no longer displayed on
the relevant page, or if it is not displayed by 3:00 p.m. on the
Calculation Date, then the CMT Rate will be the Treasury constant maturity
rate for the specified Index Maturity as published in the relevant
H.15(519).
(b) If the rate is no longer published in H.15(519), or is not published
by 3:00 p.m. on the Calculation Date, then the CMT Rate for that
determination date will be the Treasury constant maturity rate for the
specified Index Maturity (or other U.S. Treasury rate for such Index
Maturity for that Interest Determination Date) as may then be published by
either the Federal Reserve Board or the U.S. Department of the 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).
(c) If that information is not provided by 3:00 p.m. on the Calculation
Date, then the CMT Rate will be calculated as a yield to maturity, based on
the average of the secondary market closing offer side prices as of
approximately 3:30 p.m. on that Interest Determination Date reported,
according to their written records, by three leading primary U.S.
government securities dealers (each, a "Reference Dealer") in The City of
New York selected by the calculation agent. These dealers will be selected
from five Reference Dealers.
The calculation agent will eliminate 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 specified Index Maturity and
a remaining term to maturity of not less than the specified Index Maturity
minus one year.
If two Treasury Notes with an original maturity as described in the
preceding sentence have remaining terms to maturity equally close to the
specified Index Maturity, the quotes for the Treasury Note with the shorter
remaining term to maturity will be used.
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(d) If the calculation agent cannot obtain three Treasury Note
quotations, the CMT Rate will be calculated as a yield to maturity based on
the average of the secondary market offer side prices as of approximately
3:30 p.m. on that Interest Determination Date of three Reference Dealers in
The City of New York selected by the calculation agent using the same
method described above, for Treasury Notes with an original maturity of the
number of years that is the next highest to the specified Index Maturity
with a remaining term to maturity closest to such Index Maturity and in an
amount of at least $100 million.
If three or four (and not five) of the Reference Dealers are providing
quotes, then the CMT Rate will be based on the average of the offer prices
obtained, and neither the highest nor the lowest of such quotes will be
eliminated.
(e) If fewer than three Reference Dealers are providing quotes, the rate
will be the same as the rate used in the prior interest period.
EUROPEAN MONETARY UNION
Unless we state otherwise in a pricing supplement, to the extent legally
permissible, neither the occurrence or non-occurrence of an EMU Event, nor the
entry into force of any law, regulation, directive or order that requires us
to redenominate or consolidate on terms different from those we describe
below, will alter any term of, or discharge or excuse performance under, the
Senior Indenture or the notes, nor would it permit the Trustee, the holders of
the notes, us or any of our agents the right unilaterally to alter or
terminate the Senior Indenture or the notes or give rise to any event of
default or otherwise be the basis for any rescission or renegotiation of the
Senior Indenture or the notes. To the extent legally permissible, the
occurrence or non-occurrence of an EMU Event will be considered to occur
automatically pursuant to the terms of the notes.
An "EMU Event" means any event associated with the European Monetary Union
in the European Community, including:
(a) the introduction or operation of the Euro;
(b) the fixing of exchange rates between the currency of a Participating
Member State and the Euro or between the currencies of Participating
Member States;
(c) the substitution of the Euro for the ECU as the unit of account of the
European Community or the European Central Bank;
(d) the introduction of the Euro as the lawful currency in a Participating
Member State;
(e) the withdrawal from legal tender of any currency that, before the
introduction of the Euro, was the lawful currency in any of the
Participating Member States;
(f) the disappearance or replacement of a relevant rate option or other
price source for the ECU or the currency of any Participating Member
State or the failure of the agreed price or rate sponsor or screen
provider to publish or display the required information; or
(g) any combination of the above.
REDENOMINATION
If payments on the notes of a series are to be made in a foreign or
composite currency and (i) the issuing country of that currency becomes a
Participating Member State; or (ii) the currency is the ECU and the Euro is
substituted for it as the unit of account of the European Community or the
European Central Bank, then we may, solely at our option and without the
consent of holders or the need to amend the Senior Indenture or the notes,
redenominate all of the notes of that series into Euros (whether or not any
other similar series of notes are so redenominated) on any interest payment
date after the EMU Date and after the date on which that country became a
Participating Member State or the substitution of the Euro occurred,
respectively. We will give holders at least 30 days' notice of the
redenomination, including a description of the way we will implement it. If we
elect to redenominate a series of notes, it will be redenominated either:
(a) in a manner and in compliance with all requirements of relevant
monetary, stock exchange or other authorities and existing or expected
market practices consistent with the requirements for debt obligations
issued in the Euromarkets that are held in international clearing
systems; or
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(b) if we do not implement the redenomination as described above, we will
convert the nominal specified currency amount of each note of the
series into Euros by using the fixed conversion rate adopted by the
Council of the European Union for the affected currency, and the series
will be replaced either (i) by notes of the same series equal in value
to the amount redenominated, but denominated in Euros and each with a
denomination of one cent; or (ii) if the international clearing systems
for the notes do not then accept for clearance and settlement
redenominated Euromarket debt obligations, each of that denomination,
by notes of the same series equal in value to the amount redenominated,
but denominated in Euros and each with a denomination of one Euro.
We will pay any balance remaining from a redenomination in cash. The cash
adjustment will be payable in Euros to or on the order of holders of the
affected series in the same way interest is paid.
Despite the above procedures, solely at our option and without the consent
of holders or the need to amend the Senior Indenture or the notes, we may
elect that, beginning on the date of redenomination of a series of notes or
any later interest payment date as we may specify, the denominations of the
notes of that series will be one cent (if applicable), Euro 1, Euro 10, Euro
100, Euro 1,000, Euro 10,000, Euro 100,000 and Euro 1,000,000. The minimum
denominations of the notes after redenomination will not be lower than the
equivalent of any minimum denominations of the notes required by law,
regulation or market practice. We may elect to permit holders to exchange
then-existing Euro-denominated notes of a series for notes of the new
denominations having the same aggregate nominal amount as the notes being
exchanged. We will give holders at least 30 days' irrevocable notice if we
make this election.
Once we have redenominated a series of notes (or when we issue any notes
originally denominated in Euros), "Business Day" for those notes will be (i)
as defined for either fixed or floating rate Euro-denominated Euromarket debt
obligations and in a way that is consistent with then-existing or expected
market practices, as we determine them to be; or (ii) if we do not make the
determination described in clause (i), as defined prior to the redenomination
(or issuance); or (iii) if we would be unable to make payments on the notes on
the required dates if the definition were as described in clause (ii), as
defined by us in any other way.
Solely at our option and without the consent of holders, references in the
notes to any other convention (whether for the calculation of interest,
determination of payment dates or otherwise) may be amended, with effect from
(i) the date of redenomination; (ii) the interest payment date following the
substitution of the Euro for the specified currency; or (iii) any later
interest payment date that we may specify to comply with conventions
applicable to Euro-denominated Euromarket debt obligations under requirements
of relevant monetary, stock exchange or other authorities, and any market
practices consistent with those requirements as we, in our discretion,
determine to apply to other Euromarket debt obligations that have also been
redenominated. The terms of the notes will be deemed to be amended
accordingly.
If we elect to consolidate the notes of a series with other similar series
of notes by reference to the same interest payment date as a redenomination of
the notes of that series into Euros or to a later interest payment date, we
will apply the provisions of "Description of Notes--Consolidation" below with
effect from the date of consolidation.
If a redenominated note is a floating rate note, the rate of interest that
will apply to the note beginning on the interest payment date falling on or
immediately prior to the redenomination date will be (i) the interest rate
that applied prior to redenomination, with Euros substituted for the specified
currency, unless that interest rate is inconsistent with then-existing or
expected market practices for Euro-denominated Euromarket debt obligations
with floating rate interest payments of frequencies identical or substantially
similar to the frequency of interest payments under the note, as we determine;
or (ii) if that interest rate is so inconsistent, the interest rate that would
be consistent with then-existing or expected market practices for Euro-
denominated Euromarket debt obligations, in each case with such interest rate
equal to the interest rate applicable to the note (adjusted as described
above), plus or minus any Spread or Spread Multiplier indicated in the pricing
supplement, as we determine.
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Unless and until the notes of a redenominated series are consolidated with
similar series of other securities as described under "Description of Notes--
Consolidation" below, the interest accrual basis and the provisions of the
notes of that series relating to the source and determination of the interest
accrual basis that will begin on the interest payment date falling on or
immediately prior to the date of redenomination will be:
(a) the interest accrual basis and those provisions that applied prior to
redenomination, unless that interest accrual basis is or those
provisions are inconsistent with then-existing or expected market
practices for Euro-denominated Euromarket debt obligations with fixed
rate or floating rate interest payments of frequencies identical or
substantially similar to the frequency of interest payments under those
notes, based, in the case of floating interest rate payments, on the
reference rate for the notes prior to the date of redenomination, as we
determine; or
(b) if the interest accrual basis that applied previously is or those
provisions are so inconsistent, the interest accrual basis or the
provisions of the notes of that series relating to the source and
determination of that interest accrual basis, as the case may be, which
is consistent with the then-existing or expected market practices for
Euro-denominated Euromarket debt obligations with fixed rate or
floating rate interest payments of frequencies identical or
substantially similar to the frequency of interest payments under those
notes, based, in the case of floating interest rate payments, on the
reference rate applicable to the notes (adjusted as described above),
as we determine.
We may, with the consent of the Trustee but without consent of the holder of
any note, make any change or addition to the terms of the notes of a series if
we and the Trustee believe it is necessary or appropriate to facilitate the
implementation of the practical aspects of the introduction of the Euro or to
correct any clear error or any ambiguity or any defective provisions of the
notes, so long as the change or addition is not materially prejudicial to the
interests of the holders of the affected series. Any change or addition will
be binding on the holders of the notes of that series, the Trustee, the paying
agents, us and any of our other agents. Any change or addition will be
considered to be made by operation of the terms of the relevant notes. We will
promptly notify holders of any change or addition.
CONSOLIDATION
If (i) the payments on the notes of a series are to be made in any specified
currency (including ECU) other than U.S. dollars; and (ii) after the EMU Date,
the issuing country of that currency becomes a Participating Member State or,
if the currency is the ECU and the Euro is substituted for it as the unit of
account of the European Community or the European Central Bank, then, subject
to the provisions below, we may, without the consent of the holders of those
notes or the need to amend the Senior Indenture, consolidate the notes of that
series with one or more other similar series of notes on any interest payment
date after the EMU Date has occurred (or if that day is not a business day in
any location that we determine to be necessary or appropriate for the
consolidation, the next day that is a business day in that location). We will
give holders at least 30 days' notice of the consolidation, including a
description of the way we will implement it. A consolidation may only be
carried out if all of the affected notes have been redenominated in Euros on
or before the interest payment date falling on or immediately prior to the
date of the proposed consolidation (if not already so denominated), and no
default or event of default under any of the notes is continuing.
We may exercise our right referred to above if we determine that the notes
that we propose to consolidate (i) may be cleared and settled on an
interchangeable basis with the same securities identification numbers through
the main clearing systems through which each series of notes was previously
cleared and settled unless on the date of the proposed consolidation it will
be impossible so to clear and settle the consolidated notes in one or more of
those systems, in which case the consolidated notes need not so clear and
settle through any unavailable clearing system unless it would be materially
prejudicial to the holders of the notes of the affected series; and (ii) if
any of the series to be consolidated was listed on any European stock exchange
on which debt obligations are customarily listed immediately prior to the
consolidation, will be listed on at least one of those exchanges.
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Once we have consolidated two or more series of notes, "Business Day" for
those notes will be (i) as defined for fixed or floating rate Euro-denominated
Euromarket debt obligations and in a way consistent with existing or
anticipated market practices as we determine them to be; or (ii) if we do not
make the determination described in clause (i), as defined prior to the
consolidation; or (iii) if we would be unable to make payments on the notes on
the required dates if the term were defined as described in clause (ii), as
defined by us in any other way.
From the date of consolidation of any series of notes or any later interest
payment date, we may, solely at our option and without the consent of holders,
change the nominal amounts in which those notes are denominated as a result of
any previous redenomination, as well as the conventions applicable to those
notes, in each case as described under "Description of Notes--Redenomination".
The interest accrual basis and the provisions of a series relating to the
source and determination of the interest accrual basis that will apply to the
consolidated notes beginning on the interest payment date falling on or
immediately prior to the date of consolidation will remain the same if the
series consolidated had the same interest accrual basis and the same
provisions prior to consolidation. If that is not the case, then despite the
provisions of "Description of Notes--Redenomination" above, the interest
accrual basis or the provisions of the notes of a consolidated series relating
to the source and determination of the interest accrual basis that will apply
beginning on the interest payment date falling on or immediately prior to the
date of consolidation will be:
(a) the interest accrual basis or those provisions that applied to those
notes prior to consolidation, unless that interest accrual basis is or
those provisions are inconsistent with then-existing or expected market
practices for Euro-denominated Euromarket debt obligations with fixed
rate or floating rate interest payments of frequencies identical or
substantially similar to the frequency of interest payments under those
notes, as we determine; or
(b) if the interest accrual basis that applied prior to consolidation is or
those provisions are so inconsistent, the interest accrual basis or the
provisions of the notes of that series relating to the source and
determination of the interest accrual basis that would be consistent
with then-existing or expected market practices for Euro-denominated
Euromarket debt obligations with fixed rate or floating rate interest
payments of frequencies identical or substantially similar to the
frequency of interest payments under those notes, as we determine.
Upon any consolidation, without the consent of holders of the affected
notes, we may change the nominal amounts in which the affected notes are
denominated as a result of any previous redenomination. Upon any consolidation
of the notes of a series represented by a global note or master note with any
other series of notes so represented, we may change the depositary that holds
the notes of either series either physically or on behalf of the clearing
system through which the notes of that series are held or we may issue a
replacement global note or global notes representing them. Notes of any series
represented by certificated notes must be exchanged for notes represented by a
global note or master note prior to any consolidation. If an exchange is not
possible under the terms of any notes, we will not consolidate those notes
with any other series of notes represented by a global note or master note.
We may, with the consent of the Trustee but without the consent of the
holders of any note, make any change or addition to the terms of the notes of
a series if we and the Trustee believe it is necessary or appropriate to
implement the relevant consolidation of notes or to correct any clear error or
any ambiguity or any defective provisions of the notes, so long as the change
or addition is not materially prejudicial to the interests of the holders of
the affected series. Any change or addition will be binding on the holders of
the notes of that series, the Trustee, the paying agents, us and any of our
agents. Any change or addition will be considered to be made by operation of
the terms of the relevant notes. We will promptly notify holders of any change
or addition.
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INDEXED NOTES
We may offer indexed notes under which principal or interest is determined
by reference to an index related to:
(a) the rate of exchange between the specified currency for such note and
the Index Currency;
(b) the difference in the price of a specified commodity on specified
dates;
(c) the difference in the level of a specified stock index, which may be
based on U.S. or foreign stocks, on specified dates; or
(d) any other objective price or economic measures described in the pricing
supplement.
We will describe the manner of determining principal and interest amounts in
the pricing supplement. We will also include historical and other information
regarding the index or indexes and information concerning tax consequences to
holders of indexed notes.
Interest payable on an indexed note will be based on the face amount of the
note. The pricing supplement will describe whether the principal payable upon
redemption or repayment prior to Maturity will be the face amount, the index
principal amount at the time of redemption or repayment or some other amount.
AMORTIZING NOTES
We may offer amortizing notes. Unless otherwise specified in the pricing
supplement, interest on an amortizing note will be computed using a 360-day
year of twelve 30-day months. Payments on amortizing notes will be applied
first to interest due and payable and then to the unpaid principal amount.
Further information about amortizing notes will be specified in the pricing
supplement.
BOOK-ENTRY SYSTEM
Upon issuance, all notes having the same original issue date and otherwise
identical terms will be represented by a single global note. Each global note
representing book-entry notes will be deposited with DTC. This means that we
will not issue certificates to each holder. A single global note will be
issued to DTC. DTC will keep a computerized record of its participants (for
example, your broker) whose clients have purchased the notes. Unless it is
exchanged in whole or in part for a certificated note, a global note may not
be transferred, except that DTC, its nominees and their successors may
transfer a global note as a whole to one another.
Beneficial interests in global notes will be shown on, and transfers of
interests will be made only through, records maintained by DTC and its
participants. The laws of some jurisdictions require that certain purchasers
take physical delivery of securities in definitive form. These laws may impair
the ability to transfer beneficial interests in a global note.
We will wire principal and interest payments to DTC or its nominee. We and
the Trustee will treat DTC or its nominee as the owner of a global note for
all purposes. Accordingly, we, the Trustee and any paying agent will have no
direct responsibility or liability to pay amounts due on a global note to
owners of beneficial interests in a global note.
It is DTC's current practice, upon receipt of any payment of principal or
interest, to credit participants' accounts on the payment date according to
their respective holdings of beneficial interests in the global note as shown
on DTC's records. In addition, it is DTC's current practice to assign any
consenting or voting rights to participants whose accounts are credited with
notes on a record date, by using an omnibus proxy. Payments by participants to
owners of beneficial interests in a global note, and voting by participants,
will be governed by the customary practices between the participants and
owners of beneficial interests, as is the case with notes held for the account
of customers registered in "street name." However, payments will be the
responsibility of the participants and not our responsibility or that of DTC
or the Trustee.
S-16
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Notes represented by a global note will be exchangeable for certificated
notes with the same terms in authorized denominations only if:
(a) DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered under
applicable law and a successor depositary is not appointed by us within
90 days; or
(b) we determine not to require all of the notes of a series to be
represented by a global note and notify the Trustee of our decision.
DTC has advised us as follows: DTC 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.
DTC 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. DTC'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
DTC. Access to DTC'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.
OTHER PROVISIONS; ADDENDA
We may modify any provisions of a note by using the section marked "Other
Provisions" on the face of the note or by providing an addendum to the note.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The pricing supplement for a note will indicate whether we will have the
option to redeem the note before the stated maturity and the price and date or
dates on which redemption may occur. If we are allowed to redeem a note, we
may exercise the option by notifying the Trustee and the paying agent at least
45 days prior to the redemption date. At least 30 but not more than 60 days
before the redemption date, the Trustee will mail notice or cause the paying
agent to mail notice of redemption to the holders. If a note is only redeemed
in part, we will issue a new note or notes for the unredeemed portion.
The pricing supplement relating to a note will also indicate whether you
will have the option to elect repayment by us prior to the stated maturity and
the price and the date or dates on which repayment may occur.
For a note to be repaid, the paying agent must receive at least 30 but not
more than 45 days prior to an optional repayment date, such note with the form
entitled "Option to Elect Repayment" on the reverse of the note completed. You
may also send the paying agent a facsimile 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
describing the particulars of the repayment including a guarantee that the
note and the form entitled "Option to Elect Repayment" will be received by the
paying agent no later than five Business Days after such facsimile or letter.
If you present a note for repayment, such act will be irrevocable. You may
exercise the repayment option for less than the entire principal of the note,
provided the remaining principal outstanding is an authorized denomination. If
you elect partial repayment, your note will be cancelled, and we will issue a
new note or notes for the remaining amount.
DTC or its nominee will be the holder of each global note and will be the
only party that can exercise a right of repayment. If you are a beneficial
owner of a global note and you want to exercise your right of
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repayment, you must instruct your broker or indirect participant through which
you hold your interest to notify DTC. You should consult your broker or such
indirect participant to discuss the appropriate cut-off times and any other
requirements for giving this instruction.
Regardless of anything in this prospectus supplement to the contrary, if a
note is an Original Issue Discount Note (other than an indexed note), the
amount payable in the event of redemption or repayment prior to its stated
maturity will be the amortized face amount on the redemption or repayment
date, as the case may be. The amortized face amount of an Original Issue
Discount Note will be equal to (i) the issue price plus (ii) that portion of
the difference between the issue price and the principal amount of the note
that has accrued at the yield to maturity described in the pricing supplement
(computed in accordance with generally accepted U.S. bond yield computation
principles) by the redemption or repayment date. However, in no case will the
amortized face amount of an Original Issue Discount Note exceed its principal
amount.
We may at any time purchase notes at any price in the open market or
otherwise. We may hold, resell or surrender for cancellation any notes that we
purchase.
UNITED STATES TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax considerations
that may be relevant to a holder of a note that is a U.S. holder. A U.S.
holder is an individual who is a citizen or resident of the United States, a
United States domestic corporation, or any other person that is subject to
United States federal income tax on a net income basis in respect of its
investment in a note. This summary is based on laws, regulations, rulings and
decisions now in effect, which may change. Any change could apply
retroactively and could affect the continued validity of this summary. This
summary deals only with U.S. holders that hold notes as capital assets. It
does not address considerations applicable to investors that may be subject to
special tax rules, such as banks, thrifts, real estate investment trusts,
regulated investment companies, insurance companies, dealers in securities or
currencies, traders in securities or commodities that elect mark to market
treatment, persons that will hold notes as a hedge against currency risk or as
a position in a "straddle" or conversion transaction, tax exempt
organizations, holders who are not U.S. holders, or persons that have a
"functional currency" other than the U.S. dollar.
You should consult your tax adviser about the tax consequences of holding
notes, including the relevance to your particular situation of the
considerations discussed below, as well as of state, local or other tax laws.
PAYMENTS OR ACCRUALS OF INTEREST
Payments of or accruals of "qualified stated interest" (as defined below) on
a note will be taxable to a U.S. holder as ordinary interest income at the
time that the holder accrues or receives such amounts (in accordance with the
holder's method of tax accounting). If a U.S. holder using the cash method of
tax accounting elects to receive payments of interest pursuant to the terms of
a note in a currency or currency unit other than U.S. dollars (a "foreign
currency"), the amount of interest income realized by the 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 is
converted into U.S. dollars. In the case of an accrual basis U.S. 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, an accrual basis U.S.
holder may elect to translate all interest income on foreign currency-
denominated 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 holder receives the interest
payment if that date is within five business days of the end of the accrual
period. A U.S. holder that makes this 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. A U.S. holder that uses the
accrual method of accounting for tax purposes will recognize foreign currency
gain or loss 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 note.
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PURCHASE, SALE AND RETIREMENT OF NOTES
A U.S. holder's tax basis in a note generally will equal the cost of the
note to that holder, increased by any amounts includible in income by the
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 the note. The cost to a U.S. holder of a
note denominated in a foreign currency 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 that date. In the case of a foreign currency note
that is traded on an established securities market, a cash-basis U.S. holder
(or, if it so elects, an accrual-basis U.S. holder) will determine the U.S.
dollar value of the cost of the 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 the holder's tax basis in a note in respect of
foreign currency-denominated original issue discount, market discount and
premium will be determined in the manner described below. The conversion of
U.S. dollars to a foreign currency and the immediate use of that currency to
purchase a note generally will not result in taxable gain or loss for a U.S.
holder.
Upon the sale, exchange or retirement of a note, a U.S. holder generally
will recognize gain or loss equal to the difference between the amount
realized on the transaction (less any accrued qualified stated interest, which
will be taxable as such) and the U.S. holder's tax basis in the note. If a
U.S. holder elects to receive foreign currency in respect of the sale,
exchange or retirement of a foreign currency note, the amount realized
generally will be the dollar value of the foreign currency the holder receives
calculated at the exchange rate in effect on the date the foreign currency
note is disposed of or retired. In the case of a foreign currency note that is
traded on an established securities market, a cash-basis U.S. holder (or, if
it so elects, an accrual-basis U.S. holder) will determine the U.S. dollar
value of the amount realized by translating the amount at the spot rate of
exchange on the settlement date of the sale, exchange or retirement.
The election available to accrual-basis U.S. holders in respect of the
purchase and sale of foreign currency 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 Internal Revenue Service.
Except as discussed below with respect to market discount and foreign
currency gain or loss, gain or loss recognized by a U.S. holder on the sale,
exchange or retirement of a note generally will be long-term capital gain or
loss if the U.S. holder has held the note for more than one year. The Internal
Revenue Code of 1986, provides preferential treatment under certain
circumstances for net long-term capital gains recognized by individual
investors. Net long-term capital gain recognized by an individual U.S. holder
generally will be subject to a maximum tax rate of 28% for notes held for more
than one year and to a maximum rate of 20% for notes held more than 18 months.
Legislation currently pending in Congress generally would, if enacted in its
current form, subject long-term capital gain recognized by an individual
holder to a maximum rate of 20% for notes held for more than one year,
effective for amounts properly taken into account on or after January 1, 1998.
The ability of U.S. holders to offset capital losses against ordinary income
is limited.
Notwithstanding the foregoing, gain or loss recognized by a U.S. holder on
the sale, exchange or retirement of a foreign currency 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 the
holder held the note. This foreign currency gain or loss will not be treated
as an adjustment to interest income that the holder receives on the note.
ORIGINAL ISSUE DISCOUNT
U.S. holders of Original Issue Discount Notes generally will be subject to
the special tax accounting rules for original issue discount obligations
provided by the Internal Revenue Code and certain Treasury regulations. U.S.
holders of these notes should be aware that, as described in greater detail
below, they generally must include original issue discount in ordinary gross
income for U.S. federal income tax purposes as it accrues, in advance of the
receipt of cash attributable to that income.
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<PAGE>
In general, each U.S. holder of an Original Issue Discount Note with a
maturity greater than one year, whether the U.S. 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 holder owns the note.
The daily portions of original issue discount on an Original Issue Discount
Note are determined by allocating to each day in any accrual period a ratable
portion of the original issue discount allocable to that period. Accrual
periods may be any length and may vary in length over the term of an Original
Issue Discount Note, so long as no accrual period is longer than one year and
each scheduled payment of principal or interest occurs on the first or last
day of an accrual period. In the case of an initial holder, the amount of
original issue discount on an Original Issue 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. 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 an Original Issue Discount Note at a single
fixed interest rate or, subject to certain conditions, based on one or more
interest indices. In the case of an Original Issue 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 some 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 an Original Issue Discount Note at the beginning of
any accrual period will generally be the sum of its issue price (including any
accrued interest) and the amount of original issue discount allocable to all
prior accrual periods, reduced by the amount of all payments other than any
qualified stated interest payments on the note in all prior accrual periods.
All payments on an Original Issue Discount Note (other than qualified stated
interest) will generally be viewed first as payments of previously accrued
original issue discount (to the extent of the previously accrued discount),
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 this "constant yield" method
of including original issue discount income, the amounts so includible in
gross income by a U.S. holder in respect of an Original Issue Discount Note
denominated in U.S. dollars are generally lesser in the early years and
greater in the later years than amounts that would be includible on a
straight-line basis.
A U.S. 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 the holder for the note) under the constant yield
method described above. For notes purchased at a premium or bearing market
discount in the hands of the U.S. holder, the holder making this 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 an Original Issue Discount Note that is also a foreign
currency note, a U.S. 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, 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
each partial period). Alternatively, the 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, for an accrual period
that spans two taxable years) or at the spot rate of exchange on the date of
receipt, if that date is within five business days of the last day of the
accrual period, provided that the U.S. holder has made the election described
under "Payments or Accruals of Interest" above. Because exchange rates may
fluctuate, a U.S. holder of an Original Issue Discount Note that is also a
foreign currency note may recognize a
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different amount of original issue discount income in each accrual period than
would the holder of an otherwise similar Original Issue 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
Original Issue Discount Note), a U.S. 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 Original Issue Discount Note, as the case may be)
and the amount accrued (using the exchange rate applicable to such previous
accrual).
A subsequent U.S. holder of an Original Issue Discount Note that purchases
the note at a cost less than its "remaining redemption amount", or an initial
United States holder that purchases an Original Issue Discount Note at a price
other than the note's issue price, 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 holder acquires the Original Issue
Discount Note at a price greater than its adjusted issue price, the 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 an Original Issue Discount Note is the total of all future payments
to be made on the note other than qualified stated interest.
Certain of the Original Issue Discount Notes may be redeemed prior to
Maturity, either at the option of the Company or at the option of the holder,
or may have special repayment or interest rate reset features as indicated in
the pricing supplement. Original Issue Discount Notes containing these
features may be subject to rules that differ from the general rules discussed
above. If you purchase Original Issue Discount Notes with these features, you
should carefully examine the pricing supplement and consult your tax adviser
about them since the tax consequences of original issue discount will depend,
in part, on the particular terms and features of the notes.
SHORT-TERM NOTES
The rules described above will also generally apply to Original Issue
Discount Notes with maturities of one year or less ("short-term notes"), but
with some modifications.
First, the original issue discount rules treat none of the interest on a
short-term note as qualified stated interest, but treat a short-term note as
having original issue discount. Thus, all short-term notes will be Original
Issue Discount Notes. Except as noted below, a cash-basis U.S. 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 will be required to treat any gain realized on a sale,
exchange or retirement of the note as ordinary income to the extent such gain
does not exceed the original issue discount accrued with respect to the note
during the period the holder held it. A U.S. holder may not be allowed to
deduct all of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a short-term note until the Maturity of the
note or its earlier disposition in a taxable transaction. Notwithstanding the
foregoing, a cash-basis U.S. holder of a short-term note may elect to accrue
original issue discount on a current basis (in which case the limitation on
the deductibility of interest described above will not apply). A U.S. holder
using the accrual method of tax accounting and some cash method 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 holder, on a constant yield basis based on
daily compounding.
Second, any U.S. 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 a U.S. holder elects to accrue acquisition discount, the
original issue discount rules will not apply.
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Finally, the market discount rules described below will not apply to short-
term notes.
As described above, certain of the notes may be subject to special
redemption features. These features may affect the determination of whether a
note has a maturity of one year or less and thus is a short-term note. If you
purchase notes with these features, you should carefully examine the pricing
supplement and consult your tax adviser about these features.
PREMIUM AND MARKET DISCOUNT
A U.S. holder that purchases a note at a cost greater than the note's
remaining redemption amount will be considered to have purchased the note at a
premium, and may elect to amortize the premium as an offset to interest
income, using a constant yield method, over the remaining term of the note.
This election, once made, generally applies to all debt instruments held or
subsequently acquired by the holder during or after the first taxable year to
which the election applies. The election may not be revoked without the
consent of the Internal Revenue Service. A U.S. holder that elects to amortize
the premium must reduce its tax basis in the note by the amount of the premium
amortized during its holding period. Original Issue Discount Notes purchased
at a premium will not be subject to the original issue discount rules
described above. In the case of premium on a foreign currency note, the holder
should calculate the 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 U.S. holder for those 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 on the date or
dates the premium is amortized against interest payments on the note and the
exchange rate on the date when the holder acquired the note. For a U.S. holder
that does not elect to amortize premium, the amount of premium will be
included in the holder's tax basis when the note matures or is disposed of.
Therefore, a U.S. holder that does not elect to amortize premium and that
holds the note to Maturity must generally treat the premium as capital loss
when the note matures.
If a U.S. holder purchases a note at a price that is lower than the note's
remaining redemption amount, or in the case of an Original Issue Discount
Note, the note's adjusted issue price, by 0.25% or more of the remaining
redemption amount (or adjusted issue price), multiplied by the number of
remaining whole years to maturity, the note will be considered to bear "market
discount" in the hands of the holder. In this case, gain realized by the
holder on the disposition of the note generally will be treated as ordinary
interest income to the extent of the market discount that accrued on the note
while held by the holder. In addition, the 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 note. In general, market discount will
be treated as accruing ratably over the term of the note, or, at the election
of the holder, under a constant yield method. A U.S. holder must accrue market
discount on a foreign currency note in the specified currency. The amount
includible in income by a U.S. holder in respect of accrued market discount
will be the U.S. dollar value of the accrued amount, generally calculated at
the exchange rate in effect on the date that the note is disposed of.
A U.S. 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 the note as ordinary
income. If a U.S. holder elects to include market discount on a current basis,
the interest deduction deferral rule described above will not apply. The
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 the election applies. The election may not be revoked without
the consent of the Internal Revenue Service. Any accrued market discount on a
foreign currency 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 holder's taxable year).
INDEXED NOTES AND OTHER NOTES PROVIDING FOR CONTINGENT PAYMENT
Special rules govern the tax treatment of debt obligations that provide for
contingent payments ("contingent debt obligations"). These rules generally
require accrual of interest income on a constant yield basis in respect
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of contingent debt obligations at a yield determined at the time of issuance
of the obligation, and may require adjustments to these accruals when any
contingent payments are made. We will provide a detailed description of the
tax considerations relevant to U.S. holders of any contingent debt obligations
in the pricing supplement.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The paying agent will be required to file information returns with the
Internal Revenue Service with respect to payments made to certain U.S.
holders. In addition, certain U.S. holders may be subject to a 31% backup
withholding tax in respect of these payments if they do not provide their
taxpayer identification numbers to the paying agent. Persons holding notes who
are not U.S. holders may be required to comply with certification procedures
to establish that they are not U.S. holders in order to avoid these
information reporting requirements and backup withholding tax.
PLAN OF DISTRIBUTION
We are offering the notes on a continuous basis through agents that have
agreed to use their reasonable best efforts to solicit orders. We have the
right to accept orders or reject proposed purchases in whole or in part. The
agents also have the right, using their reasonable discretion, to reject any
proposed purchase of the notes in whole or in part. We will pay an agent a
commission ranging from .150% to .750% of the principal amount of notes with a
stated maturity of 1 year to 30 years. The exact commission paid will be
determined by the stated maturity of the notes sold. Commissions with respect
to notes with stated maturities of over 30 years will be negotiated at the
time of sale. The following table describes the potential proceeds we will
receive but does not include expenses payable by us which we estimate to be
$887,000:
<TABLE>
<CAPTION>
PRICE TO AGENTS' COMMISSIONS AND
PUBLIC DISCOUNTS PROCEEDS TO THE COMPANY
-------------- ------------------------ ----------------------------
<S> <C> <C> <C>
Per Note................ 100% .150% to .750% 99.850% to 99.250%
Total................... $1,000,000,000 $1,500,000 to $7,500,000 $998,500,000 to $992,500,000
</TABLE>
We may arrange for notes to be sold through any agent or may sell notes
directly to investors. If we sell notes directly to investors, no commission
or discount will be paid. We also may sell notes to any agent as principal for
the agent's account at a price agreed upon at the time of sale. Such notes may
be resold by the agent to investors at a fixed public offering price or at
prevailing market prices, or at a related price, as determined by the agent.
Unless otherwise specified in the pricing supplement, any note sold to an
agent as principal will be purchased at a price equal to 100% of the principal
amount minus a discount equal to the commission that would be paid on an
agency sale of a note of identical maturity.
Agents may sell notes purchased from us as principal to other dealers for
resale to investors and other purchasers and may provide any portion of the
discount received in connection with their purchase from us to such dealers.
After the initial public offering of the notes, the public offering price, the
concession and the discount may be changed.
The notes will not have an established trading market when issued. Also, the
notes will not be listed on any securities exchange. The agents may make a
market in the notes, but 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 notes, or that any notes will be sold.
The agents may be deemed to be "underwriters" within the meaning of the
Securities Act. We have agreed to indemnify the agents against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that they may be required to make in connection with such
indemnification.
The notes have not been and will not be registered under the Securities and
Exchange Law of Japan. We and the agents will not offer or sell any note
directly or indirectly in Japan or to residents of Japan or for the
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<PAGE>
benefit of any Japanese person (which term 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.
GLOSSARY
The following is a glossary of terms used in this prospectus supplement.
"Business Day" means any day, other than 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, ECU or Euro, the Principal Financial Center
of the country issuing such currency; (ii) if the specified currency for such
note is ECU, a day that does not appear as an ECU non-settlement day on the
display designated as "ISDE" on the Reuter Monitor Money Rates Service (or a
day so designated by the ECU Banking Association) or, if ECU non-settlement
days do not appear on that page (and are not so designated) a day on which
payments in ECU may be settled in the international interbank market; (iii) if
the specified currency for such note is Euro, a day fixed as described under
"Description of Notes--Redenomination" above; and (iv) if such note is a LIBOR
note, a London Business Day.
"Calculation Date" means the date by which the calculation agent calculates
an interest rate for a floating rate note, which will be one of the following:
"Prime Rate"-- the earlier of (i) the tenth day after the related Prime
Rate Interest Determination Date or, if such day is not a Business Day, the
next Business Day, or (ii) the Business Day immediately before the
applicable interest payment date or Maturity, as the case may be.
"CD Rate"-- the earlier of (i) the tenth day after the related CD Rate
Interest Determination Date or, if such day is not a Business Day, the next
Business Day, or (ii) the Business Day immediately before the applicable
interest payment date or Maturity, as the case may be.
"CMT Rate"-- the earlier of (i) the tenth day after the related CMT Rate
Interest Determination Date or, if such day is not a Business Day, the next
Business Day, or (ii) the Business Day immediately before the applicable
interest payment date or Maturity, as the case may be.
"Commercial Paper Rate"-- the earlier of (i) the tenth day after the
related Commercial Paper Rate Interest Determination Date or, if such day
is not a Business Day, the next Business Day, or (ii) the Business Day
immediately before the applicable interest payment date or Maturity, as the
case may be.
"LIBOR"-- the LIBOR Interest Determination Date.
"Treasury Rate"-- the earlier of (i) the tenth day after the related
Treasury Rate Interest Determination Date or, if such day is not a Business
Day, the next Business Day, or (ii) the Business Day immediately before the
applicable interest payment date or Maturity, as the case may be.
"Federal Funds Rate"-- the earlier of (i) the tenth day after the related
Federal Funds Effective Rate Interest Determination Date or, if such day is
not a Business Day, the next Business Day, or (ii) the Business Day
immediately before the applicable interest payment date or Maturity, as the
case may be.
"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.
"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 so 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.
"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
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<PAGE>
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.
"EMU Date" means the day on which the third stage of European Monetary Union
has started or events have occurred that have substantially the same effects
and consequences as those of the start of third stage of European Monetary
Union as contemplated by the Maastricht Treaty in effect as of the date of the
Senior Indenture.
"Fixed Conversion Rate" with respect to any specified currency means the
irrevocably fixed conversion rate between the Euro and such specified currency
adopted by the Council of the European Union according to Article 109 1(4)
first sentence of the Treaty of Rome.
"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.
"Index Currency" means the currency (including composite currencies)
specified in the applicable pricing supplement. If no such currency is
specified in the pricing supplement, the Index Currency will be U.S. dollars.
"Index Maturity" for any note is the period of maturity of the instrument,
obligation or index from which the Base Rate is calculated.
"Interest Determination Date" means the date as of which the interest rate
for a floating rate note is to be determined, to be effective as of the
following Interest Reset Date and calculated no later than the related
Calculation Date (except in the case of LIBOR which is calculated on the
related LIBOR Interest Determination Date). The Interest Determination Dates
will be indicated in the applicable pricing supplement and in the note.
"London Business Day" means (i) if the Index Currency is other than Euro or
ECU, any day on which dealings in such Index Currency are transacted in the
London interbank market; (ii) if the Index Currency is Euro then such a day
fixed as described under "Description of Notes--Redenomination" above; or
(iii) if the Index Currency is ECU, then any day that does not appear as an
ECU non-settlement day on the display designated as "ISDE" on the Reuter
Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU non-settlement days do not appear on that page (and
are not so designated) any day on which payments in ECU may be settled in the
international interbank market.
"Maastricht Treaty" means the treaty on European Union which was signed in
Maastricht on February 1, 1992 and came into force on November 1, 1993.
"Maturity" means the date on which the principal of a note or an installment
of principal becomes due and payable as provided in the note or in the Senior
Indenture, whether at stated maturity or by declaration of acceleration, call
for redemption or otherwise.
"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 of days in the period for which accrued interest is being
calculated.
"Original Issue Discount Note" means (i) any note where the difference
between (x) the first price at which a substantial amount of the notes that
are part of the same issue is sold for money (other than to an underwriter,
placement agent or wholesaler) and (y) the stated redemption price at the
maturity of the note is at least 0.25% of that stated redemption price
multipled by the number of full years from the issue date to the stated
maturity; and (ii) any other note designated by the Company as issued with
original issue discount for U.S. federal income tax purposes. The stated
redemption price at Maturity of an Original Issue Discount Note is the total
of all payments to be made under the Original Issue Discount Note, other than
payments of qualified stated interest.
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<PAGE>
"Participating Member State" means a member state of the European Community
established by the Treaty of Rome that adopts the Euro in accordance with the
Treaty of Rome.
"Principal Financial Center" will generally be the capital city of the
country of the specified Index Currency, except that with respect to
Australian dollars, Deutsche marks, Dutch guilders, Italian lire and Swiss
francs, the Principal Financial Center shall be Sydney, Frankfurt, Amsterdam,
Milan and Zurich, respectively.
"Spread" means the number of basis points (one basis point equals one-
hundredth of a percentage point) that may be specified in the applicable
pricing supplement as being applicable to the interest rate of a floating rate
note.
"Spread Multiplier" means the percentage that may be specified in the
applicable pricing supplement as being applicable to the interest rate of a
floating rate note.
"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.
"Treaty of Rome" means the Treaty of Rome of March 25, 1957, as amended by
the Single European Act of 1986 and the Maastricht Treaty, establishing the
European Community, as amended from time to time.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE +
+COMPANY MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED +
+WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS +
+NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY +
+THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JULY 15, 1998
PROSPECTUS
MCDONALD'S CORPORATION
DEBT SECURITIES
McDonald's Corporation (the "Company") may use this prospectus to issue from
time to time one or more series of debt securities which may be either senior
debt securities or subordinated debt securities with a total initial public
offering price or purchase price of up to $1,000,000,000, or the equivalent
thereof in one or more foreign currencies. Debt securities of each series will
be offered on terms to be determined at the time of sale. We may sell debt
securities for U.S. dollars or a foreign or composite currency, and payments on
debt securities may be made in U.S. dollars or a foreign or composite currency.
Debt securities may be issuable as individual securities in registered form
without coupons, or as one or more global securities in registered form. We
will provide the specific terms of an offering of debt securities, including
the designation as senior debt securities or subordinated debt securities, in
an accompanying prospectus supplement.
The debt securities will be unsecured. Unless otherwise specified in a
prospectus supplement, the senior debt securities will rank equally with all of
our other unsecured and unsubordinated indebtedness. The subordinated debt
securities will be subordinated to all of our senior indebtedness.
We may offer debt securities in any of the following ways:
. directly;
. through agents;
. through dealers; or
. through one or more underwriters or a syndicate of underwriters in an
underwritten offering.
We will describe how a particular offering of debt securities will be made in
the prospectus supplement for the offering.
------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------
The date of this prospectus is , 1998.
<PAGE>
MCDONALD'S CORPORATION
GENERAL
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
us or, under the terms of franchise arrangements, by franchisees who are
independent third parties, or by affiliates operating under joint-venture
agreements between us and local businesspeople.
McDonald's restaurants offer a substantially uniform menu consisting of
hamburgers and cheeseburgers, including the Big Mac, Quarter Pounder with
Cheese and Arch Deluxe sandwiches, the Filet-o-Fish, Grilled Chicken Deluxe
and Crispy Chicken Deluxe sandwiches, french fries, Chicken McNuggets, salads,
milk shakes, sundaes and cones, 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. We test new products on an ongoing basis.
We have restaurants located in all 50 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, 1998, there were 23,346
restaurants worldwide, of which 12,413 were located in the United States and
10,933 in 108 other countries. An additional 399 restaurants were under
construction at March 31, 1998, including 326 outside the United States.
At March 31, 1998, 62% of our restaurants were operated by independent
franchisees, 21% were operated by us and our subsidiaries and 17% were
operated by affiliates (entities in which we and/or our subsidiaries have an
equity interest of 50% or less and in which the remaining equity interest
generally is owned by a local resident).
Our principal executive offices are located at One McDonald's Plaza, Oak
Brook, Illinois 60523, telephone: (630) 623-3000.
WHERE TO GET MORE INFORMATION
We have filed a registration statement with the Securities and Exchange
Commission (the "SEC") relating to the debt securities. This prospectus does
not contain all of the information described in the registration statement.
For further information, you should refer to the registration statement.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or
other information we file at the SEC's public reference room in Washington,
D.C. You can request copies of these documents, upon payment of a duplicating
fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. Our SEC filings are
also available to the public at the SEC's web site at http:/www.sec.gov.
The following documents that we have filed with the SEC are incorporated
into this prospectus by reference and considered a part of this prospectus:
(a) Our Annual Report on Form 10-K for the fiscal year ended December 31,
1997;
(b) Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
and
(c) Our Current Reports on Form 8-K dated January 5, February 10, April 17,
April 30, May 6, and June 18, 1998.
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<PAGE>
Later information that the Company files with the SEC will update and
supersede this information. We are also incorporating by reference all
documents that we file with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, after the date of
this prospectus and prior to the termination of the offering of the debt
securities.
We will provide any of the above documents (including any exhibits that are
specifically incorporated by reference in them) to each person, including any
beneficial owner, to whom a prospectus is delivered. You may request these
documents at no cost. Written or telephone requests should be directed to:
McDonald's Shareholder Services, McDonald's Corporation, Kroc Drive, Oak
Brook, Illinois 60523, telephone: (630) 623-7428.
USE OF PROCEEDS
Unless otherwise stated in the applicable prospectus supplement, we intend
to use the net proceeds from the sale of the debt securities for general
corporate purposes, which may include refinancing of debt, capital
expenditures such as the acquisition and development of McDonald's restaurants
and the purchase of our common stock under our ongoing share repurchase
program. Specific allocations of the proceeds for such purposes have not been
made at this time.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
--------- ------------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........... 4.57 4.53 5.16 5.11 5.20 5.26 4.86
</TABLE>
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, fixed charges related to redeemable preferred
stock and a portion of rental charges (after reduction for related sublease
income) considered to be representative of the interest component in the
particular case.
DESCRIPTION OF DEBT SECURITIES
The following is a description of the general terms of the debt securities.
We will provide specific terms of a series of debt securities and the extent
to which these general provisions apply to that series in a supplement to this
prospectus.
The senior debt securities are issued under an Indenture (the "Senior
Indenture"), dated October 19, 1996, between us and First Union National Bank,
as Trustee (the "Trustee"). The subordinated debt securities are issued under
a separate Indenture (the "Subordinated Indenture") dated as of October 18,
1996, between us and the Trustee. The Senior Indenture and the Subordinated
Indenture are sometimes collectively referred to in this prospectus supplement
as the "Indentures." Copies of the Indentures are filed as exhibits to our
registration statement No. 333-14141 and are incorporated into this prospectus
by reference. The following summaries highlight some of the provisions of the
Indentures but they may not contain all of the information that is important
to you. Numerical references in parentheses below are to Articles and Sections
of the Indentures. Except as otherwise indicated, the terms of the Indentures
are identical. As used under this caption, the term "debt securities" includes
the debt securities being offered by this prospectus and all other debt
securities issued by us under the Indentures.
3
<PAGE>
GENERAL
The Indentures do not limit the amount of debt securities that we may issue,
and we may issue debt securities in one or more series. The debt securities
will be unsecured. Unless otherwise specified in the prospectus supplement,
the senior debt securities will be unsubordinated obligations of the Company
and will rank equally with all of our other unsecured and unsubordinated
indebtedness. Certain of our unsecured obligations may, however, under certain
circumstances, become secured by mortgages as a result of negative pledge
covenants applicable to such obligations while the senior debt securities
remain unsecured. Payments on the subordinated debt securities will be
subordinated to the prior payment in full of all of our senior indebtedness,
as described under "Subordination of Subordinated Debt Securities" and in the
applicable prospectus supplement.
The prospectus supplement for each offering will specify whether the debt
securities being offered will be senior debt securities or subordinated debt
securities, and will provide the following terms, where applicable:
(a) the title of the debt securities;
(b) any limit on the aggregate principal amount of the debt securities;
(c) the date or dates on which the principal and any premium of the debt
securities will be payable;
(d) the rate or rates at which the debt securities will bear interest; the
date or dates from which interest will accrue; the interest payment
dates on which interest will be payable; and the record dates for such
interest payment dates;
(e) whether the debt securities are to be issued as original issue discount
securities and the amount of discount with which the debt securities
will be issued;
(f) the place or places where payments will be made;
(g) the terms of any redemption of the debt securities that we may make at
our option;
(h) the terms of our obligation, if any, to redeem, purchase or repay the
debt securities pursuant to any sinking fund or similar provisions or
at the option of a holder;
(i) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the debt securities will be
issuable;
(j) if other than the principal amount, the portion of the principal amount
of the debt securities that will be payable if the maturity of the debt
securities is accelerated;
(k) any changes in any of the events of default or remedies with respect to
the debt securities;
(l) if the debt securities are non-interest bearing, the "stated
intervals";
(m) the currency in which we will make payments on the debt securities; and
(n) any other terms of the debt securities that do not conflict with the
applicable Indenture. (Section 2.02)
We may issue debt securities 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. We may also issue debt securities that have floating
rates of interest but are exchangeable for fixed rate debt securities. Federal
income tax consequences and other relevant considerations will be described in
the applicable prospectus supplement.
Unless otherwise provided in the prospectus supplement for an offering,
payments on the debt securities will be made at the offices of the Trustee in
New York, New York and Charlotte, North Carolina, although we may make
payments of interest by check mailed to the holders. (Sections 2.02, 4.01 and
4.02) Debt securities may be transferred or exchanged at the office or agency
that we maintain for that purpose, subject to the
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<PAGE>
limitations provided in the applicable Indenture, without any charge except
for any tax or governmental charges. (Section 2.06)
Any money that we pay for principal of (and premium, if any) or any interest
on any debt security that remains unclaimed at the end of two years will be
repaid to us on demand, and afterwards the holder of such debt security may
look only to us for payment. (Section 12.05)
GLOBAL SECURITIES
If any debt securities are issuable in temporary or permanent global form,
the applicable prospectus supplement will describe the circumstances, if any,
under which beneficial owners of interests in the global security may obtain
definitive debt securities. Payments on a permanent global debt security will
be made in the manner described in the prospectus supplement. (Section 2.01)
LIMITATION ON LIENS COVENANT IN THE SENIOR INDENTURE
The covenant described below applies with respect to any and all series of
senior debt securities, unless we specify otherwise in the applicable
prospectus supplement. We will describe any additional covenants for a
particular series of senior debt securities in the applicable prospectus
supplement.
For your reference, we have provided a list of definitions of the
capitalized terms used in the covenant at the end of the description.
We will not, nor will we permit any Restricted Subsidiary to, issue or
assume any debt for money borrowed if such debt is secured by a mortgage,
security interest, pledge, lien or other encumbrance (mortgages, security
interests, pledges, liens and other encumbrances are called "mortgage" or
"mortgages") upon any Principal Property or upon any shares of stock or
indebtedness of any Restricted Subsidiary (whether such Principal Property,
shares of stock or indebtedness are now owned or hereafter acquired) without
in any such case effectively providing that the senior debt securities, and at
our option any other indebtedness of the Company or any Restricted Subsidiary
ranking equally with the senior debt securities, are secured equally and
ratably. These restrictions do not apply to debt secured by:
(a) mortgages on property, shares of stock or indebtedness of any
corporation existing at the time the corporation becomes a Restricted
Subsidiary;
(b) mortgages on property existing at the time of its acquisition and
certain purchase money mortgages;
(c) mortgages securing debt of a Restricted Subsidiary owing to the Company
or another Subsidiary;
(d) mortgages on property of a corporation existing at the time it is
merged into or consolidated with the Company or a Restricted Subsidiary
or at the time of a sale, lease or other disposition of the properties
of a corporation as an entirety or substantially as an entirety to the
Company or a Restricted Subsidiary;
(e) mortgages in favor of any country or any political subdivision of any
country, or any instrumentality thereof, to secure certain payments
pursuant to any contract or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase
price or the cost of construction of the property subject to such
mortgages; or
(f) any extension, renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of any mortgage
referred to in the foregoing clauses.
Notwithstanding the above, we and one or more Restricted Subsidiaries may,
without securing the senior debt securities, issue or assume secured debt if,
after giving effect to the transaction, the aggregate of the secured debt then
outstanding (not including secured debt permitted under the above exceptions)
does not exceed 20% of the shareholders' equity of the Company and its
consolidated subsidiaries as of the end of the preceding fiscal year. The
transfer of a Principal Property to a subsidiary or any third party will not
be restricted. (Section 4.06)
5
<PAGE>
The term "Principal Property" means all real property owned by us or any
Restricted Subsidiary which is located within the continental United States of
America and, in the opinion of our Board of Directors, is of material
importance to the total business conducted by the Company and its consolidated
affiliates as an entity. (Section 1.01)
The term "Restricted Subsidiary" means any subsidiary (i) substantially all
the property of which is located within the continental United States of
America, (ii) which owns Principal Property and (iii) in which our investment,
direct or indirect and whether in the form of equity, debt, advances or
otherwise, is in excess of U.S. $1,000,000,000 as shown on our books as of the
end of the fiscal year immediately preceding the date of determination. A
"Restricted Subsidiary" does not include any subsidiary primarily engaged in
financing activities, primarily engaged in the leasing of real property to
persons other than the Company and its subsidiaries, or that we characterize
as a temporary investment. (Section 1.01)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the prospectus supplement, the following
provisions apply to the subordinated debt securities.
The subordinated debt securities will, to the extent described in the
Subordinated Indenture, be subordinate in right of payment to all of our
indebtedness for borrowed money, whether now or in the future, which is not by
its terms subordinate to our other indebtedness. However, senior indebtedness
will not include amounts owed to our trade creditors in the ordinary course of
business. At March 31, 1998, our aggregate amount of senior indebtedness was
approximately $5.1 billion.
Except as provided under the Subordinated Indenture, if any one of the
following events occurs, we will pay all principal, premium, if any, and
interest on the senior indebtedness in full before we make any payment on the
subordinated debt securities:
(a) any insolvency or bankruptcy proceedings of the Company, including any
receivership reorganization or similar proceedings;
(b) any proceedings for voluntary liquidation, dissolution or other
winding up of the Company, whether or not involving insolvency or
bankruptcy proceedings; and
(c) any series of subordinated debt securities is declared due and payable
because of an occurrence of an event of default under the Subordinated
Indenture.
The Subordinated Indenture does not limit the incurrence of additional
senior indebtedness. The senior debt securities constitute senior indebtedness
under the Subordinated Indenture.
The prospectus supplement may have further information regarding the
subordination of the subordinated debt securities of a particular series.
EVENTS OF DEFAULT
The Indentures describe 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 or premium, if any, on debt
securities of such series when due (and continuance of such default
for a period of 10 days in the case of subordinated debt securities);
(c) default in the payment of any sinking fund payment on debt securities
of such series when due (and continuance of such default for a period
of 10 days in the case of subordinated debt securities);
(d) default for 60 days, after appropriate notice, in performance of any
other covenants in the Indentures (other than the limitation on liens
covenant in the Senior Indenture and any other covenant included in
6
<PAGE>
the Indentures solely for the benefit of another series of debt
securities), unless it cannot with due diligence be cured within the 60-
day period due to causes beyond our control;
(e) certain events of bankruptcy, insolvency or reorganization of the
Company; or
(f) default in the performance of a particular covenant applicable to that
series after appropriate notice and opportunity to cure the default.
The Senior Indenture defines a default for 120 days after appropriate notice
in the performance of the limitation on liens covenant as an additional event
of default with respect to the senior debt securities.
An event of default with respect to a particular series of debt securities
issued under either of the Indentures does not necessarily constitute an event
of default with respect to any other series of debt securities issued under the
Indentures. If an event of default under clause (a), (b), (c) or (f) above with
respect to the Indentures is continuing with respect to any series of debt
securities, the Trustee or the holders of not less than 25% in aggregate
principal amount of the affected series of debt securities may declare the
principal amount (or, if the debt securities are original issue discount
securities, the specified portion of the principal amount) of such series to be
due and payable. In case an event of default under clause (d) or (e) above with
respect to the Indentures or with respect to the limitation on liens covenant
of the Senior Indenture is continuing, the Trustee or holders of not less than
25% in aggregate principal amount of all the debt securities may declare the
principal amount (or, if any debt securities are original issue discount
securities, the specified portion of the principal amount) of the debt
securities of all series to be due and payable. Any event of default with
respect to a particular series of debt securities may be waived by the holders
of a majority in aggregate principal amount of those debt securities, except,
in each case, a failure to pay principal of, or premium, if any, or interest on
those debt securities. (Section 6.01; Section 6.07)
We are required to file an annual officers' certificate with the Trustee
concerning our compliance with the Indentures. (Section 4.05) Subject to the
provisions of the Indentures relating to the duties of the Trustee, each
Indenture provides that the Trustee will be under no obligation to exercise any
of its rights or powers at the request, order or direction of the holders of
the debt securities unless the holders have offered the Trustee reasonable
indemnity. (Sections 6.04 and 7.01) Subject to indemnification and other rights
of the Trustee, the holders of a majority (voting as one class) in principal
amount of each affected series of debt securities may direct the time, method,
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any of the Trustee's trusts or powers. (Section 6.07)
MODIFICATION OF THE INDENTURES
We may enter into supplemental indentures with the Trustee without the
consent of the holders of the debt securities to:
(a) evidence the assumption by a successor corporation of our obligations;
(b) add covenants for the protection of the holders of the debt
securities;
(c) add or change any of the provisions of the Indentures to permit or
facilitate the issuance of debt securities of any series in bearer or
coupon form;
(d) cure any ambiguity or correct any inconsistency in the Indentures;
(e) establish the form or terms of debt securities of any series as
permitted by the terms of the Indentures; and
(f) evidence the acceptance of appointment by a successor trustee.
(Section 10.01)
With the consent of the holders of not less than 66 2/3% in aggregate
principal amount of each affected series of debt securities, we may execute
supplemental indentures with the Trustee to add provisions or change or
eliminate any provision of the Indentures or modify the rights of the holders
of those debt securities. However,
7
<PAGE>
no such supplemental indenture will, among other things (a) extend the fixed
maturity of any debt security, or reduce the principal amount (including in
the case of a discounted debt security the amount payable upon acceleration of
the maturity thereof), reduce the rate or extend the time of payment of
interest, or make the principal of, premium, if any, or interest, if any,
payable in any coin or currency other than that provided in the debt security,
without the consent of the holder of each affected debt security or (b) reduce
the percentage of holders required to consent to the supplemental indenture,
without the consent of the holder of each affected debt security. (Section
10.02)
DISCHARGE OF INDENTURES
We, at our option, (a) will be discharged from all obligations under the
Indentures in respect of the debt securities of a series (except in each case
for certain obligations to register the transfer or exchange of those debt
securities, replace stolen, lost or mutilated debt securities, maintain paying
agencies and hold monies for payment in trust) or (b) need not comply with
certain restrictive covenants of the Indentures (including the limitation on
liens covenant in the Senior Indenture) and will not be limited by any
restrictions with respect to merger, consolidation or sales of assets with
respect to those debt securities, in each case if we deposit with the Trustee,
in trust, (x) money or (y) U.S. government obligations or a combination of (x)
and (y) which will provide enough money to pay all the principal (including
any mandatory sinking fund payments) of, and interest, if any, and premium, if
any, on, those debt securities when due. (Section 12.02) In order to select
either option, we must provide the Trustee with an opinion of counsel or a
ruling from, or published by, the Internal Revenue Service, to the effect that
holders will not recognize income, gain or loss for Federal income tax
purposes as a result of our exercising the option and will be subject to
Federal income tax as if we had not exercised the option. (Section 12.02) In
addition, we may also discharge our obligations with respect to a series of
debt securities by depositing with the Trustee, in trust, enough money 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 or called for redemption within one year. No opinion of
counsel or ruling from the Internal Revenue Service is required with respect
to a discharge in these circumstances. Upon any discharge of debt securities
described above, the holders of those debt securities may look solely to such
trust fund, and not to us, for payments. (Sections 12.01 and 12.02)
CONCERNING THE TRUSTEE
We and our subsidiaries and affiliates maintain banking relationships
(including the extension of credit) in the ordinary course of business with
the Trustee. The Trustee is also trustee under other indentures under which we
have issued other senior and subordinated debt securities.
PLAN OF DISTRIBUTION
We may offer debt securities in any of the following ways:
(a) directly;
(b) through agents;
(c) through dealers; or
(d) through one or more underwriters or a syndicate of underwriters in an
underwritten offering.
We will describe how a particular offering of debt securities will be made,
including the names of any underwriters, the purchase price of the securities,
the proceeds of the offering and any underwriters' discounts or commissions,
in the prospectus supplement for the offering.
If we use underwriters or dealers in the sale, the underwriters or dealers
will acquire the debt securities for their own account and may resell them in
one or more transactions, including negotiated transactions, at a fixed
8
<PAGE>
public offering price or at varying prices determined at the time of sale. We
may offer debt securities to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
Unless otherwise described in the applicable prospectus supplement, the
obligations of the underwriters to purchase debt securities will be subject to
certain conditions precedent, and the underwriters must purchase all of such
debt securities if they buy any of them. The underwriters may change any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers from time to time.
We may also sell debt securities directly or through designated agents. Any
agent involved in the offer or sale of debt securities will be named, and any
commissions payable by us to such agent will be described, in the applicable
prospectus supplement. Unless otherwise indicated, an 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
of 1933, as amended (the "Securities Act"). Agents and underwriters may be
entitled under agreements entered into with us to indemnification 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, us
or our subsidiaries or affiliates in the ordinary course of business.
If so indicated in the prospectus supplement, we will authorize agents and
underwriters to solicit offers by certain institutions to purchase our debt
securities at the public offering price set forth in the prospectus supplement
pursuant to delayed delivery contracts providing for payment and delivery on
the date or dates stated in the prospectus supplement. These delayed delivery
contracts will be subject only to those conditions described in the relevant
prospectus supplement, and the prospectus supplement will describe the
commissions payable for the solicitation.
LEGAL MATTERS
Gloria Santona, Vice President, Deputy General Counsel and Secretary of the
Company will pass on the legality of the debt securities being offered by the
Company. Ms. Santona is a full-time employee of the Company and owns shares of
the Company's common stock directly and as a participant in various employee
benefit plans. Ms. Santona also holds options to purchase shares of the
Company's common stock.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1997, as set forth in their report, which is incorporated
in this prospectus by reference. Our consolidated financial statements are
incorporated by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
9
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY ACCOM-
PANYING PRICING SUPPLEMENT) OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH IN-
FORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY 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 OTHER THAN THE SECURITIES OFFERED BY THIS PROSPEC-
TUS SUPPLEMENT (INCLUDING ANY PRICING SUPPLEMENT) OR AN OFFER TO SELL OR A SO-
LICITATION OF AN OFFER TO BUY ANY SUCH SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURIS-
DICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT (INCLUDING ANY AC-
COMPANYING 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
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Risk Factors............................................................... S-2
Capitalization............................................................. S-3
Important Currency Information............................................. S-4
Description of Notes....................................................... S-4
United States Tax Considerations........................................... S-18
Plan of Distribution....................................................... S-23
Glossary................................................................... S-24
PROSPECTUS
McDonald's Corporation..................................................... 2
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 3
Description of Debt Securities............................................. 3
Plan of Distribution....................................................... 8
Legal Matters.............................................................. 9
Experts.................................................................... 9
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$1,000,000,000
MCDONALD'S CORPORATION
LOGO
MEDIUM-TERM NOTES
DUE FROM 1 YEAR
TO 60 YEARS FROM
DATE OF ISSUE
-----------
PROSPECTUS SUPPLEMENT
-----------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
MORGAN STANLEY DEAN WITTER
SALOMON SMITH BARNEY
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration fee............. $295,000
Fees and expenses of accountants................................ 65,000
Fees and expenses of counsel.................................... 100,000
Blue Sky fees and expenses...................................... 7,000
Fees and expenses of Trustee and agents......................... 45,000
Printing and Engraving expenses................................. 100,000
Rating Agency fees.............................................. 260,000
Miscellaneous................................................... 15,000
--------
Total......................................................... $887,000
========
</TABLE>
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.
II-1
<PAGE>
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<CAPTION>
<C> <S>
1(a) Form of Underwriting Agreement.
(b) Form of Distribution Agreement.
4(a) Form of Senior Debt Securities Indenture between McDonald's Corporation
and First Union National Bank, as Trustee (including form of Senior
Debt Security).*
(b) Form of Subordinated Debt Securities Indenture between McDonald's
Corporation and First Union National Bank, as Trustee (including form
of Subordinated Debt Security).*
(c) Form of Supplemental Indenture No. 4 between McDonald's Corporation and
First Union National Bank, as Trustee.
(d) Form of Series F Fixed Rate Registered Note.
(e) Form of Series F Floating Rate Registered Note.
5 Opinion and consent of Gloria Santona, Vice President, Deputy 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 Gloria Santona, Vice President, Deputy 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 Union
National Bank, as Trustee.
</TABLE>
- --------
* Exhibits 4(a) and 4(b) were previously filed as Exhibits 4(a) and 4(b) of
the Company's Registration Statement on Form S-3 (File No. 333-14141) and
are incorporated by reference herein.
** Exhibit 12 above was previously filed as Exhibit 12 of the Company's Annual
Report on Form 10-K, dated December 31, 1997, and is incorporated herein by
reference.
II-2
<PAGE>
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) 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 paragraphs (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Securities and Exchange Commission
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 report 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 Securities Act of 1933 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 Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
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 15TH
DAY OF JULY 1998.
McDONALD'S CORPORATION
/s/ Michael L. Conley
By___________________________________
Michael L. Conley Executive Vice
President and Chief Financial
Officer
Each person whose signature appears below constitutes and appoints Michael
L. Conley, Jeffrey B. Kindler, Carleton D. Pearl and Gloria Santona, and each
of them, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her
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 or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or her 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 15th day of July 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Hall Adams, Jr.
- ------------------------------------
Hall Adams, Jr. Director
/s/ Robert M. Beavers, Jr.
- ------------------------------------
Robert M. Beavers, Jr. Senior Vice President and Director
/s/ James R. Cantalupo
- ------------------------------------
James R. Cantalupo President and Chief Executive Officer--
McDonald's International and Director
/s/ Gordon C. Gray
- ------------------------------------
Gordon C. Gray Director
/s/ Jack M. Greenberg
- ------------------------------------
Jack M. Greenberg Vice Chairman, Chairman and Chief
Executive Officer--McDonald's U.S.A.
and Director
/s/ Enrique Hernandez, Jr.
- ------------------------------------
Enrique Hernandez, Jr. Director
/s/ Donald R. Keough
- ------------------------------------
Donald R. Keough Director
/s/ Donald G. Lubin
- ------------------------------------
Donald G. Lubin Director
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
- ------------------------------------
Walter E. Massey Director
/s/ Andrew J. McKenna
- ------------------------------------
Andrew J. McKenna Director
/s/ Michael R. Quinlan
- ------------------------------------
Michael R. Quinlan Chairman, Chief Executive Officer and
Director
/s/ Terry L. Savage
- ------------------------------------
Terry L. Savage Director
/s/ Roger W. Stone
- ------------------------------------
Roger W. Stone Director
/s/ Robert N. Thurston
- ------------------------------------
Robert N. Thurston Director
/s/ Fred L. Turner
- ------------------------------------
Fred L. Turner Senior Chairman and Director
/s/ B. Blair Vedder, Jr.
- ------------------------------------
B. Blair Vedder, Jr. Director
/s/ Michael L. Conley
- ------------------------------------
Michael L. Conley Executive Vice President and Chief
Financial Officer
/s/ Christopher Pieszko
- ------------------------------------
Christopher Pieszko Senior Vice President and Corporate
Controller
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C> <S>
1(a) Form of Underwriting Agreement.
(b) Form of Distribution Agreement.
4(a) Form of Senior Debt Securities Indenture between McDonald's
Corporation and First Union National Bank, as Trustee (including
form of Senior Debt Security).*
(b) Form of Subordinated Debt Securities Indenture between McDonald's
Corporation and First Union National Bank, as Trustee (including
form of Subordinated Debt Security).*
(c) Form of Supplemental Indenture No. 4 between McDonald's
Corporation and First Union National Bank, as Trustee.
(d) Form of Series F Fixed Rate Registered Note.
(e) Form of Series F Floating Rate Registered Note.
5 Opinion and consent of Gloria Santona, Vice President, Deputy
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 Gloria Santona, Vice President, Deputy 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
Union National Bank, as Trustee.
</TABLE>
- --------
* Exhibits 4(a) and 4(b) were previously filed as Exhibits 4(a) and 4(b) of
the Company's Registration Statement on Form S-3 (File No. 333-14141) and
are incorporated by reference herein.
** Exhibit 12 above was previously filed as Exhibit 12 of the Company's Annual
Report on Form 10-K, dated December 31, 1997, and is incorporated herein by
reference.
<PAGE>
EXHIBIT 1(A)
MCDONALD'S CORPORATION
UNDERWRITING AGREEMENT
To the Representatives named in Schedule I hereto of
the Underwriters named in Schedule II hereto
Dear Sirs:
1. INTRODUCTORY. McDonald's Corporation (the "Company"), a Delaware
corporation, proposes to sell to the underwriters named in Schedule II hereto
(the "Underwriters"), for whom you are acting as representatives (the
"Representatives", which term may refer to a single Representative if so
indicated on Schedule I hereto), the principal amount of its securities
identified in Schedule I hereto (the "Securities"), to be issued under an
Indenture, [dated as of October , 1996] as supplemented by Supplemental
Indenture No. to be dated as of (collectively, the "Indenture"),
between the Company and First Union National Bank, as trustee (the "Trustee").
(If the firm or firms listed in Schedule II hereto include only the firm or
firms listed in Schedule I hereto, then the terms "Underwriters" and
"Representatives," as used herein, shall each be deemed to refer to such firm
or firms.)
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to each of the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act") (File No. 333-
), which has become effective, for the registration under the
Securities Act of the Securities. Such registration statement meets the
requirements set forth in Rule 415(a)(1)(i) under the Securities Act and
complies in all other material respects with said Rule. The Company
proposes to file with the Commission pursuant to Rule 424(b)(2) or (b)(5)
under the Securities Act a supplement to the form of prospectus included in
registration statement File No. 333- relating to the Securities and
the plan of distribution thereof or (b), if the Company elects to rely on
Rule 434 under the Securities Act, a Term Sheet (as such term is
hereinafter defined) relating to the Securities that shall contain such
information as is required or permitted by Rules 434 and 424(b) under the
Securities Act. The registration statement File No. 333- , including
the exhibits thereto, is hereinafter called the "Registration Statement";
the prospectus in the form in which it appears in registration statement
File No. 333- is hereinafter called the "Basic Prospectus"; and such
supplemented form of prospectus, in the form in which it shall be filed
with the Commission pursuant to Rule 424(b)(2) or (b)(5) (including the
Basic Prospectus as so supplemented) or (ii), if the Company elects to rely
on Rule 434 under the Securities Act, in the form of the Term Sheet as
first filed with the Commission pursuant to Rule 424(b)(7) (together with
the Basic Prospectus), is hereinafter called the "Final Prospectus". Any
preliminary form of the Final Prospectus which has heretofore been filed
pursuant to Rule 424(b) is hereinafter called the "Preliminary Final
Prospectus". Any abbreviated term sheet that satisfies the requirements of
Rule 434 under the Securities Act is hereinafter called the "Term Sheet."
Any reference herein to the Registration Statement, the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") on or before the date
of this Agreement, or the issue date of the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, as the case may be;
and any reference herein to the terms "amend", "amendment" or "supplement"
with respect to the Registration Statement, the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any document under
<PAGE>
the Exchange Act after the date of this Agreement, or the issue date of the
Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus,
as the case may be, and deemed to be incorporated therein by reference.
(b) As of the date hereof, when the Final Prospectus is first filed
pursuant to Rule 424(b) under the Securities Act, when, prior to the
Closing Date (as hereinafter defined), any amendment to the Registration
Statement becomes effective (including the filing of any document
incorporated by reference in the Registration Statement), when any
supplement to the Final Prospectus is filed with the Commission and at the
Closing Date (as hereinafter defined), (i) the Registration Statement, as
amended as of any such time, the Final Prospectus, as amended or
supplemented as of any such time, and the Indenture will comply in all
material respects with the applicable requirements of the Securities Act,
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and
the Exchange Act and the respective rules and regulations thereunder and
(ii) neither the Registration Statement, as amended as of any such time,
nor the Final Prospectus, as amended or supplemented as of any such time,
will contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however, that the Company
makes no representations or warranties as to (i) that part of the
Registration Statement which shall constitute the Statement of Eligibility
(Form T-1) under the Trust Indenture Act of the Trustee, (ii) information,
if any, contained in the Registration Statement or Final Prospectus
relating to the Depository Trust Company ("DTC") and its book-entry system,
or (iii) the information contained in or omitted from the Registration
Statement or the Final Prospectus or any amendment thereof or supplement
thereto in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the preparation of
the Registration Statement and the Final Prospectus.
(c) The financial statements of the Company and its consolidated
subsidiaries included in the Registration Statement fairly present the
financial condition of the Company and its consolidated subsidiaries as of
the dates indicated and the results of operations and cash flow for the
periods therein specified; and said financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods involved, except as otherwise
stated therein. As used herein, "consolidated subsidiaries" means each
subsidiary of the Company which is included in the consolidated financial
statements of the Company contained in its annual report to shareholders
for 1997 in accordance with the consolidation policies set forth therein or
which would have been so included if it had been a subsidiary of the
Company as of the date of such consolidated financial statements, and each
other subsidiary of the Company which is included in consolidated financial
statements of the Company prepared from time to time thereafter.
(d) Subsequent to the respective dates as of which information is given
in the Registration Statement and the Final Prospectus and prior to the
Closing Date hereinafter mentioned, except as set forth or contemplated in
the Final Prospectus, (1) neither the Company nor any of its consolidated
subsidiaries has entered into any transaction not in the ordinary course of
business which is material to the Company and its consolidated
subsidiaries, considered as a whole, (2) there has been no material adverse
change in the properties, business, financial condition or results of
operations of the Company and its consolidated subsidiaries, considered as
a whole, and (3) no legal or governmental proceeding, which has or will
have materially affected the Company or any of its consolidated
subsidiaries, considered as a whole, or the transactions contemplated by
this Agreement, has been or will have been instituted or threatened.
(e) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result in a
breach of any of the terms and provisions of, or constitute a default
under, the Restated Certificate of Incorporation or By-Laws of the Company
as presently in effect.
(f) The Securities have been duly and validly authorized and, when
issued, authenticated and delivered against payment therefor in accordance
with the terms of the Indenture and this Agreement, will constitute
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valid and legally binding obligations of the Company entitled to the
benefits of the Indenture, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, moratorium and other laws affecting the
enforceability of creditors' rights and general principles of equity, and
will conform to the description thereof contained in the Final Prospectus.
The Indenture has been duly authorized by the Company and will be a valid
and legal instrument enforceable in accordance with its terms, except as
enforcement thereof may be limited by applicable bankruptcy, insolvency,
moratorium and other laws affecting the enforceability of creditors' rights
and general principles of equity. The Indenture is duly qualified under the
Trust Indenture Act.
3. SALE, PURCHASE AND DELIVERY OF SECURITIES. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company hereby agrees to sell to the
Underwriters, severally and not jointly, and each Underwriter, severally and
not jointly (unless otherwise indicated on Schedule I hereto), agrees to
purchase from the Company, at the purchase price set forth in Schedule I
hereto, the principal amount of the Securities set forth opposite such
Underwriter's name in Schedule II hereto, except that, if Schedule I hereto
provides for the sale of Securities pursuant to delayed delivery arrangements,
the respective principal amounts of Securities to be purchased by the
Underwriters shall be as set forth in Schedule II hereto, less the respective
amounts of Contract Securities determined as provided below. Securities to be
purchased by the Underwriters are herein sometimes called the "Underwriters'
Securities" and Securities to be purchased pursuant to Delayed Delivery
Contracts as hereinafter provided are herein called "Contract Securities".
If so provided in Schedule I hereto, the Underwriters are authorized to
solicit offers to purchase Securities from the Company pursuant to delayed
delivery contracts ("Delayed Delivery Contracts"), substantially in the form
of Schedule III hereto but with such changes therein as the Company may
authorize or approve. The Underwriters will endeavor to make such arrangements
and, as compensation therefor, the Company will pay to the Representatives,
for the account of the Underwriters, on the Closing Date, the percentage set
forth in Schedule I hereto of the principal amount of the Securities for which
Delayed Delivery Contracts are made. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational and charitable
institutions. The Company will make Delayed Delivery Contracts in all cases
where sales of Contract Securities arranged by the Underwriters have been
approved by the Company but, except as the Company may otherwise agree, each
such Delayed Delivery Contract must be for not less than the minimum principal
amount set forth in Schedule I hereto and the aggregate principal amount of
Contract Securities may not exceed the maximum aggregate principal amount set
forth in Schedule I hereto. The Underwriters will not have any responsibility
in respect of the validity or performance of Delayed Delivery Contracts. The
principal amount of Securities to be purchased by each Underwriter as set
forth in Schedule II hereto shall be reduced by an amount which shall bear the
same proportion to the total principal amount of Contract Securities as the
principal amount of Securities set forth opposite the name of such Underwriter
bears to the aggregate principal amount set forth in Schedule II hereto,
except to the extent that you determine that such reduction shall be otherwise
than in such proportion and so advise the Company in writing; provided,
however, that the total principal amount of Securities to be purchased by all
Underwriters shall be the aggregate principal amount set forth in Schedule II
hereto, less the aggregate principal amount of Contract Securities.
Delivery of and payment for the Underwriters' Securities shall be made at
the office, on the date and at the time specified in Schedule I hereto, which
date and time may be postponed by agreement between the Representatives and
the Company or as provided in Section 9 hereof (such date and time of delivery
and payment for the Underwriters' Securities being herein called the "Closing
Date"). Delivery of the Underwriters' Securities shall be made to the
Representatives for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representatives of the
purchase price thereof to or upon the order of the Company in Federal (same
day) funds, or, if so indicated on Schedule I hereto, in New York
Clearinghouse (same day) funds. Certificates for the Underwriters' Securities
shall be registered in such names and in such denominations as the
Representatives may request not less than two full business days in advance of
the Closing Date.
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The Company agrees to have the Underwriters' Securities available for
inspection, checking and packaging by the Representatives in New York, New
York, not later than 1:00 PM on the business day prior to the Closing Date.
If so provided in Schedule I hereto, Underwriters' Securities will be
represented by one or more definitive global Securities in book-entry form
which will be deposited by or on behalf of the Company with DTC or DTC's
designated custodian. In such case, (a) delivery of the Underwriters'
Securities shall be made to the Representatives for the respective accounts of
the several Underwriters by causing DTC to credit the Underwriters' Securities
to the account of the Representatives at DTC, and (b) the Company will cause
the certificates representing the Underwriters' Securities to be made
available to the Representatives for inspection not later than 1:00 p.m., New
York City time, on the business day prior to the Closing Date at the office of
DTC or its designated custodian.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Underwriters that:
(a) Prior to the termination of the offering of the Securities, the
Company will not file any amendment to the Registration Statement or
supplement (including the Final Prospectus) to the Basic Prospectus unless
the Company has furnished you a copy for your review prior to filing, and
the Company will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing sentence, the Company
will cause the Final Prospectus to be filed with the Commission pursuant to
Rule 424 and/or Rule 434 under the Securities Act. The Company will
promptly advise the Representatives (i) when the Final Prospectus shall
have been filed with the Commission pursuant to Rule 424 and/or Rule 434
under the Securities Act, (ii) when any amendment to the Registration
Statement relating to the Securities shall have become effective, (iii) of
any request by the Commission for any amendment of the Registration
Statement or amendment of or supplement to the Final 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 Securities 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.
(b) The Company will prepare and file with the Commission, promptly upon
the request of the Representatives, any amendments or supplements to the
Registration Statement or Final Prospectus which, in the opinion of counsel
for the Underwriters, may be necessary to enable the several Underwriters
to continue the sale of the Securities, and the Company will use its best
efforts to cause any such amendments to become effective and any such
supplements to be filed with the Commission and approved for use by the
Underwriters as promptly as possible. If at any time when a prospectus
relating to the Securities is required to be delivered under the Securities
Act, any event relating to or affecting the Company occurs as a result of
which the Final 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 statement therein not misleading, or if it is
necessary at any time to amend or supplement the Final Prospectus to comply
with the Securities Act or the Exchange Act or the respective rules
thereunder, the Company promptly will prepare and file with the Commission,
subject to the first sentence of paragraph (a) of this Section 4, an
amendment or supplement which will correct such statement or omission or
which will effect such compliance. For the purposes of this paragraph (b),
the Company will furnish such information with respect to itself as the
Representatives may from time to time reasonably request.
(c) As soon as practicable, but not later than 90 days after the end of
the 12-month period beginning at the end of the current fiscal quarter of
the Company, the Company will make generally available to its security
holders and you an earnings statement covering a period of at least twelve
months beginning not earlier than said effective date which shall satisfy
the provisions of Section 11(a) of the Securities Act.
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(d) The Company will furnish to the Representatives and counsel for the
Underwriters, without charge, copies of the Registration Statement
(including exhibits thereto and documents incorporated by reference
therein) and each amendment thereto which shall become effective on or
prior to the Closing Date and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act, as many copies
of any Preliminary Final Prospectus and the Final Prospectus and any
amendments thereof and supplements thereto as the Representatives may
reasonably request. The Company will pay the expenses of printing all
documents relating to the offering.
(e) The Company will furnish such information and execute such
instruments as may be required to qualify the Securities for sale under the
securities or blue sky laws of such jurisdictions within the United States
as you designate, will continue such qualifications in effect so long as
required for distribution and will arrange for the determination of the
legality of the Securities for purchase by institutional investors. The
Company shall not be required to register or qualify as a foreign
corporation nor, except as to matters and transactions relating to the
offer and sale of the Securities, consent to service of process in any
jurisdiction.
(f) So long as the Securities shall be outstanding, the Company will
deliver to you (i) as soon as practicable after the end of each fiscal
year, consolidated balance sheets, statements of income, retained earnings
and cash flows of the Company and its consolidated subsidiaries, as at the
end of and for such year and the last preceding year, all in reasonable
detail and audited by independent public accountants, (ii) as soon as
practicable after the end of each of the first three quarterly periods in
each fiscal year, unaudited consolidated balance sheets, statements of
income, retained earnings and cash flows of the Company and its
consolidated subsidiaries, as at the end of and for such period and for the
comparable period of the preceding year, all in reasonable detail, (iii) as
soon as available, all such proxy statements, financial statements and
reports as the Company shall send or make available to its stockholders
generally, and (iv) copies of all such annual, periodic and current reports
as the Company or any subsidiary shall file with the Commission or any
securities exchange.
(g) The Company will apply for the listing of the Securities on the New
York Stock Exchange, Inc.
(h) The Company will pay all costs and expenses in connection with the
transactions herein contemplated, including, but not limited to, the fees
and disbursements of its counsel; the fees, costs and expenses of
preparing, printing and delivering the Indenture and the Securities; the
fees, costs and expenses of the Trustee; accounting fees and disbursements;
the costs and expenses in connection with the qualification or exemption of
the Securities under state securities or blue sky laws, including filing
fees and reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with any Blue Sky Memorandum; the
costs and expenses in connection with the preparation, printing and filing
of the Registration Statement (including exhibits thereto) and the Basic,
Preliminary Final, and Final Prospectus, the preparation and printing of
this Agreement and the furnishing to the Underwriters of such copies of
each prospectus as the Underwriters may reasonably require; and the fees of
rating agencies. It is understood, however, that, except as provided in
this Section and in Sections 7 and 8 hereof, the Underwriters will pay all
of their own costs and expenses, including the fees of their counsel and
any advertising expenses connected with any offers they may make.
(i) Until the business day following the Closing Date, the Company will
not, without the consent of the Representatives, offer or sell, or announce
the offering of, any debt securities (other than up to $200,000,000
principal amount of the Company's medium term notes to be issued pursuant
to the Company's Registration Statement on Form S-3 (File No. 333-
)) covered by the Registration Statement or any other registration
statement filed under the Securities Act.
5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the
several Underwriters to purchase and pay for the Securities shall be subject
to the accuracy of the representations and warranties on the part of the
Company contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement filed prior to
the Closing Date (including the filing of any document incorporated
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by reference therein) and as of the Closing Date, to the accuracy of the
written statements of Company officers made pursuant to the provisions hereof,
to the performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been instituted or shall be
pending, or, to the knowledge of the Company, shall be contemplated by the
Commission.
(b) No event, nor any material adverse change in the condition of the
Company, financial or otherwise, shall have occurred, nor shall any event
exist which makes untrue or incorrect any material statement or information
contained in the Registration Statement or the Final Prospectus or which is
not reflected in the Registration Statement or the Final Prospectus, but
should be reflected therein in order to make the statements or information
contained therein not misleading.
(c) You shall have received at the Closing Date (or prior thereto as
indicated) the following:
(i) An opinion from Gloria Santona, Vice President, Deputy General
Counsel and Secretary, or a Vice President and Assistant General
Counsel of the Company, dated the Closing Date, to the effect that:
(A) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of
Delaware with corporate power and authority to own its properties
and conduct its business as described in the Final Prospectus.
(B) The Indenture has been duly authorized, executed and delivered
by the Company and the Trustee, is duly qualified under the Trust
Indenture Act, and is a valid and legally binding obligation of the
Company enforceable in accordance with its terms, except as
enforcement thereof may be limited by applicable bankruptcy,
insolvency, moratorium and other laws affecting the enforceability
of creditors' rights and general principles of equity.
(C) The Securities have been duly and validly authorized by all
necessary corporate action and, when duly executed on behalf of the
Company, duly authenticated by the Trustee or the Trustee's
authenticating agent, and duly delivered to the several Underwriters
against payment therefor in accordance with the provisions of this
Agreement, in the case of the Underwriters' Securities, or to the
purchasers thereof pursuant to Delayed Delivery Contracts, in the
case of Contract Securities, will constitute legal, valid and
binding obligations of the Company enforceable in accordance with
their terms and entitled to all the benefits of the Indenture,
except as enforcement thereof may be limited by applicable
bankruptcy, insolvency, moratorium and other laws affecting the
enforceability of creditors' rights and general principles of
equity.
(D) The Indenture and the Securities conform as to legal matters
with the statements concerning them made in the Final Prospectus,
and such statements accurately set forth the provisions thereof
required to be set forth in the Final Prospectus.
(E) This Agreement and any Delayed Delivery Contracts have been
validly authorized, executed and delivered on behalf of the Company.
(F) The Registration Statement and any amendments thereto have
become effective under the Securities Act, and, to the best of the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement, as amended, has been
issued and no proceedings for that purpose have been instituted or
are pending or contemplated under the Securities Act, and the
Registration Statement, the Final Prospectus, and each amendment
thereof or supplement thereto (except for the financial statements
and other financial data included therein, as to which such counsel
need express no opinion) comply as to form in all material respects
with the
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requirements of the Securities Act and the Exchange Act and the
respective rules thereunder; such counsel has no reason to believe
that either the Registration Statement or the Final Prospectus, or
any such amendment or supplement, contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; the descriptions in the Registration Statement and Final
Prospectus of statutes, legal and governmental proceedings and
contracts and other documents are accurate and fairly present the
information required to be shown; and such counsel does not know of
any legal or governmental proceedings required to be described in
the Final Prospectus which are not described as required, nor of any
contracts or documents of a character required to be described in
the Registration Statement or Final Prospectus or to be filed as
exhibits to the Registration Statement which are not described and
filed as required.
(G) The consummation of the transactions herein contemplated and
the fulfillment of the terms hereof or of any Delayed Delivery
Contracts will not result in a breach of any of the terms and
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust or other agreement or instrument to which,
to the knowledge of such counsel, the Company is a party, or the
Restated Certificate of Incorporation or By-Laws of the Company as
presently in effect or, to the knowledge of such counsel, any order,
rule or regulation applicable to the Company of any court or of any
federal or state regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or its
properties.
(H) No authorization, approval, consent or other action of any
governmental authority or agency is required in connection with the
sale of the Securities as contemplated by this Agreement or in any
Delayed Delivery Contracts except such as may be required under the
Securities Act or under state securities or blue sky laws.
(ii) Such opinion or opinions of counsel for the Underwriters, dated
the Closing Date, with respect to the sufficiency of all corporate
proceedings and other legal matters relating to this Agreement, any
Delayed Delivery Contracts, the validity of the Securities, the
Registration Statement, the Final Prospectus and other related matters
as you may reasonably request. The Company shall have furnished to such
counsel such documents as they may reasonably request for the purpose
of enabling them to render their opinions. In connection with such
opinions, such counsel may rely on representations or certificates of
officers of the Company.
(iii) A certificate of the President or a Vice President, and the
Chief Financial Officer of the Company or its Treasurer, dated the
Closing Date, to the effect that:
(A) The representations and warranties of the Company in Section 2
of this Agreement are true and correct as of the Closing Date, and
the Company has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or prior
to the Closing Date.
(B) No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been instituted or are pending or, to the knowledge of the
respective signers of the certificate, are contemplated under the
Securities Act.
(C) The signers of the certificate have carefully examined the
Registration Statement and the Final Prospectus; neither the
Registration Statement, the Final Prospectus nor any amendment or
supplement thereto includes, as of the Closing Date, any untrue
statement of a material fact or omits, as of the Closing Date, to
state any material fact required to be stated therein or necessary
to make the statements therein not misleading; since the latest
respective dates as of which information is given in the
Registration Statement, there has been no material adverse change in
the financial position, business or results of operations of the
Company and its consolidated subsidiaries, considered as a whole,
except as set forth in or contemplated by the Final Prospectus; and
since the effective date of the Registration Statement, as amended,
no event has occurred which is required to be set forth in the Final
Prospectus which has not been so set forth.
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(iv) A letter from Ernst & Young LLP, dated the Closing Date,
addressed to you substantially in the form heretofore approved by you.
(d) Prior to the Closing Date, the Company shall have furnished to you
such further certificates and documents as you may reasonably request.
(e) The Company shall have accepted Delayed Delivery Contracts in any
case where sales of Contract Securities arranged by the Underwriters have
been approved by the Company.
If any condition of the Underwriters' obligations hereunder required to be
satisfied prior to the Closing Date is not so satisfied, this Agreement may be
terminated by you by notice in writing or by facsimile transmission to the
Company.
In rendering the opinions described in Sections 5(d)(i) and (ii) above, Ms.
Gloria Santona, other counsel for the Company, and counsel for the
Underwriters may, as to matters involving the laws of any state other than
Illinois, rely upon the opinion or opinions of local counsel satisfactory to
you, but in such case a signed copy of each such opinion shall be furnished to
you.
All such opinions (including opinions, if any, of local counsel),
certificates, letters and documents will be in compliance with the provisions
hereof only if they are in all material respects satisfactory to you and to
counsel for the Underwriters, as to which both you and such counsel shall act
reasonably. The Company will furnish you with such conformed copies of such
opinions, certificates, letters and documents as you request.
You, on behalf of the Underwriters, may waive in writing the compliance by
the Company of any one or more of the foregoing conditions or extend the time
for their performance.
6. REPRESENTATION OF THE UNDERWRITERS. Each of the Underwriters severally
represents and warrants to the Company that the information furnished to the
Company in writing by such Underwriter or by you expressly for use in the
preparation of the Registration Statement or the Final Prospectus does not,
and any amendments thereof or supplements thereto thus furnished will not,
contain an 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.
7. TERMINATION OF AGREEMENT. This Agreement may be terminated by you on
behalf of the Underwriters by notice in writing delivered to the Company prior
to the Closing Date if prior to such time (i) trading in the Company's common
stock shall have been suspended by the Commission on the New York Stock
Exchange for a period of twenty-four hours or more or trading in securities
generally on the New York Stock Exchange shall have been suspended or
materially limited, in either case to such a degree as would in your judgment
materially adversely affect the market for the Securities; (ii) a general
moratorium on commercial banking activities in the State of New York or the
United States shall have been declared by Federal authorities; or (iii) there
has occurred any material outbreak, or material escalation, of hostilities
involving the United States or other national or international calamity or
crisis, of such magnitude and severity in its effect on the financial markets
of the United States, in your reasonable judgment, as to prevent or materially
impair the marketing, or enforcement of contracts for sale, of the Securities.
If this Agreement shall be terminated by you because of any failure on the
part of the Company to comply with any of the terms or to fulfill any of the
conditions of this Agreement, or if for any reason the Company shall be unable
to perform its obligations under this Agreement, the Company shall pay, in
addition to the costs and expenses referred to in Section 4(h), all reasonable
out-of-pocket expenses incurred by the Underwriters in contemplation of the
performance by them of their obligations hereunder, including but not limited
to the reasonable fees and disbursements of counsel for the Underwriters, the
Underwriters' reasonable printing and traveling expenses, and postage and
telephone charges relating directly to the offering contemplated by the Final
Prospectus, and also including advertising expenses incurred after the
effective date of the Registration Statement, it being understood that such
out-of-pocket expenses shall not include any compensation, salaries or wages
of the officers, partners or employees of any of the Underwriters.
The Company shall not in any event be liable to the several Underwriters for
damages on account of loss of anticipated profits arising out of the
transactions contemplated by this Agreement.
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8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify and hold
harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Securities Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter or such controlling person may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereof, the
Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter and each such controlling person for any legal
or other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of any Underwriter through the Representatives specifically for use in the
preparation thereof; and provided, further, that the foregoing indemnification
with respect to the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) from whom the person asserting any such
loss, claim, damage or liability purchased the Securities, if such Underwriter
failed to send or give copies of the Final Prospectus, as amended or
supplemented, excluding documents incorporated therein by reference, to such
person at or prior to the written confirmation of the sale of such Securities
to such person in any case where such delivery is required by the Securities
Act and the untrue statement or omission of a material fact contained in the
Basic Prospectus or any Preliminary Final Prospectus was corrected in the
Final Prospectus (or the Final Prospectus as amended or supplemented). This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless the
Company, each person, if any, who controls the Company either within the
meaning of the Securities Act or the Exchange Act, each of its directors and
each of its officers who has signed the Registration Statement, against any
losses, claims, damages or liabilities to which the Company, any such
controlling person or any such director or officer may become subject, under
the Securities Act, the Exchange Act, or otherwise, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through you specifically for use
in the preparation of the documents referred to in the foregoing indemnity.
This indemnity agreement will be in addition to any liability which any
Underwriter may otherwise have. The Company acknowledges that the statements
set forth in the last paragraph of the cover page of the Final Prospectus and
under the heading "Underwriting" or "Plan of Distribution" and, if Schedule I
hereto provides for sale of Securities pursuant to delayed delivery
arrangements, in the last sentence under the heading "Delayed Delivery
Arrangements" in the Final Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in the Final Prospectus, and you confirm that such statements are correct.
This indemnity agreement will be in addition to any liability which each such
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
this Section, notify the indemnifying party in writing of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise
than under this Section. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in and, to the
extent that it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include
both the indemnified party
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and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or in addition to those available
to the indemnifying party, the indemnified party or parties shall have the
right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt by such indemnified party of notice
from the indemnifying party of its election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party shall
have employed such counsel in connection with the assumption of legal defenses
in accordance with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel, approved by the Representatives of
the Underwriters in the case of subparagraph (a), representing the indemnified
parties under subparagraph (a) or (b), as the case may be, who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party; provided, further,
that, with respect to legal and other expenses incurred by an indemnified
party for which an indemnifying party shall be liable hereunder, all such
legal fees and expenses shall be reimbursed by the indemnifying party as they
are incurred.
(d) In order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in paragraph (a) of this Section 8
is due in accordance with its terms but is for any reason held by a court to
be unavailable from the Company on grounds of policy or otherwise, the Company
and the Underwriters shall contribute to the aggregate losses, claims, damages
and liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) to which the Company and one
or more of the Underwriters may be subject in such proportion so that the
Underwriters are responsible for that portion represented by the percentage
that the underwriting discount bears to the sum of such discount and the
purchase price of the Securities set forth in Schedule I hereto and the
Company is responsible for the balance; provided, however, that (i) in no case
shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for
any amount in excess of the underwriting discount applicable to the Securities
purchased by such Underwriter hereunder and (ii) 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. For purposes of this Section 8,
each person who controls an Underwriter within the meaning of the Securities
Act shall have the same rights to contribution as such Underwriter, and each
person who controls the Company within the meaning of either the Securities
Act or the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clause (i) of
this paragraph (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made against
another party or parties under this paragraph (d), notify such party or
parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (d).
9. DEFAULT BY AN UNDERWRITER. If the Underwriters' obligations to purchase
Securities pursuant to Section 3 hereof are several and not joint and if any
one or more Underwriters shall fail to purchase and pay for any of the
Securities agreed to be purchased by such Underwriter or Underwriters
hereunder and such failure to purchase shall constitute a default in the
performance of its or their obligations under this Agreement and unless
otherwise provided in Schedule I hereto, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions
which the amount of Securities set forth opposite their names in Schedule II
hereto bear to the aggregate amount of Securities set opposite the names of
all the remaining Underwriters) the Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase; provided, however,
that in the event that the aggregate amount of Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Securities set forth in
10
<PAGE>
Schedule II hereto, the remaining Underwriters shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any
nondefaulting Underwriter or the Company. In the event of a default by any
Underwriter as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the Registration
Statement and the Final Prospectus or in any other documents or arrangements
may be effected. Nothing contained in this Agreement shall relieve any
defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
10. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The respective
indemnities, agreements, representations and warranties of the Company and the
several Underwriters, set forth in or made pursuant to this Agreement, will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter, the Company or any of its officers or directors or
any controlling person, and will survive delivery of and payment for the
Securities. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
11. NOTICES. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Representatives, will be mailed,
delivered or sent by facsimile transmission and confirmed to them, at the
address specified in Schedule I hereto; or, if sent to the Company, will be
mailed, delivered or sent by facsimile transmission and confirmed to the
Company at One McDonald's Plaza, Oak Brook, Illinois 60523, Attention of the
Treasurer, with a copy to the Controller.
12. SUCCESSORS; GOVERNING LAW. This Agreement will inure to the benefit of
and be binding upon the parties hereto and the officers and directors and
controlling persons referred to in Section 8 hereof and their respective
successors, assigns, heirs, executors and administrators, and no other persons
will have any right or obligation hereunder. The terms "successors" and
"assigns" as used herein shall not include a purchaser as such from any
Underwriter. This Agreement shall be governed by and construed and enforced in
accordance with, the internal laws of the State of Illinois.
13. BUSINESS DAY. For purposes of this Agreement, "business day" means any
day on which the New York Stock Exchange is open for trading.
If the foregoing is in accordance with your understanding of our agreement,
sign and return to us the enclosed duplicate hereof, whereupon it will become
a binding agreement between the Company and the several Underwriters in
accordance with its terms.
Very truly yours,
MCDONALD'S CORPORATION
By: _________________________________
The foregoing Underwriting Agreement
is hereby confirmed and accepted by
us in Chicago, Illinois, acting on
behalf of ourselves, the other Rep-
resentatives (if any), and the sev-
eral Underwriters (if any) named in
Schedule II annexed hereto, as of
the date first above written.
[NAME OF REPRESENTATIVE]
By: _________________________________
Date:
11
<PAGE>
SCHEDULE I
UNDERWRITING AGREEMENT DATED
REGISTRATION STATEMENT NO.
REPRESENTATIVES:
TITLE, PURCHASE PRICE AND DESCRIPTION OF SECURITIES:
Title:
Aggregate Principal Amount:
Price to Public:
Purchase Price by Underwriter (include accrued interest or amortization if
applicable):
Maturity:
Interest Rate:
Interest Payment Dates:
Regular Record Dates:
Redemption Provisions:
Sinking Fund Provisions:
Other Provisions:
SALE AND DELIVERY PROVISIONS UNDER SECTION 3:
Obligation to Purchase is:
several and not joint [_]
several and not joint; provided, however that,
notwithstanding the provisions of Section 9 of the
Underwriting Agreement, the Representative(s)
listed above will, subject to the terms and
conditions hereof, purchase or cause to be
purchased any Securities which any defaulting
Underwriter or Underwriters have agreed but failed
or refused to purchase pursuant to Section 3
hereof [_]
joint and several [_]
Payment to Be Made in: New York Clearinghouse (same day) funds [_]
or Federal (same day) funds [_]
Delivery of Securities: Physical delivery to Underwriters through
Representatives [_]
or delivery to Underwriters through facilities of
DTC by delivery to DTC of one or more definitive
global securities in book-entry form [_]
CLOSING DATE, TIME AND LOCATION:
[Delayed Delivery Arrangements:
Payment to Be Made in: New York Clearinghouse (same day) funds [_]
or Federal (same day) funds [_]
Fee:
Minimum principal amount of each contract:
Maximum aggregate prinicipal amount of all contracts:]
ADDRESS FOR NOTICE TO REPRESENTATIVES:
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
UNDERWRITERS PRINCIPAL AMOUNT
------------ ----------------
<S> <C>
$
------
Total................................................ $
======
</TABLE>
<PAGE>
SCHEDULE III
DELAYED DELIVERY CONTRACT
, 19
[Insert name and address of lead Representative]
Dear Sirs:
The undersigned hereby agrees to purchase from McDonald's Corporation (the
"Company"), and the Company agrees to sell to the undersigned, on ,
19 , (the "Delivery Date"), $
principal amount of the Company's
(the "Securities") offered by the Company's Final Prospectus
dated , 19 , receipt of a copy of which is hereby acknowledged, at a
purchase price of % of the principal amount thereof, plus accrued
interest, if any, thereon from , 19 , to the date of payment and
delivery, and on the further terms and conditions set forth in this contract.
Payment for the Securities to be purchased by the undersigned shall be made
on or before 11:00 AM on the Delivery Date to or upon the order of the Company
in New York Clearinghouse (same day) funds or Federal (same day) funds, as
specified in Schedule I to the Underwriting Agreement referred to in the Final
Prospectus mentioned above, at your office or at such other places as shall be
agreed between the Company and the undersigned upon delivery to the
undersigned of the Securities in definitive fully registered form and in such
authorized denominations and registered in such names as the undersigned may
request by written communication addressed to the Company not less than five
full business days prior to the Delivery Date. If no request is received, the
Securities will be registered in the name of the undersigned and issued in a
denomination equal to the aggregate principal amount of Securities to be
purchased by the undersigned on the Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Securities on the Delivery Date, and the obligation of the Company to sell and
deliver Securities on the Delivery Date, shall be subject to the conditions
(and neither party shall incur any liability by reason of the failure thereof)
and (1) the purchase of Securities to be made by the undersigned, which
purchase the undersigned represents is not prohibited on the date hereof,
shall not on the Delivery Date be prohibited under the laws of the
jurisdiction to which the undersigned is subject, and (2) the Company, on or
before the Delivery Date, shall have sold to certain underwriters (the
"Underwriters") such principal amount of the Securities as is to be sold to
them pursuant to the Underwriting Agreement referred to in the Final
Prospectus mentioned above. Promptly after completion of such sale to the
Underwriters, the Company will mail or deliver to the undersigned at its
address set forth below notice to such effect, accompanied by a copy of the
opinion of counsel for the Company delivered to the Underwriters in connection
therewith. The obligation of the undersigned to take delivery of and make
payment for the Securities, and the obligation of the Company to cause the
Securities to be sold and delivered, shall not be affected by the failure of
any purchaser to take delivery of and make payment for the Securities pursuant
to other contracts similar to this contract.
This contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
It is understood that acceptance of this contract and other similar
contracts is in the Company's sole discretion and, without limiting the
foregoing, need not be on a first come, first served basis. If this contract
is acceptable to the Company, it is required that the Company sign the form of
acceptance below and mail or deliver one of the counterparts hereof to the
undersigned at its address set forth below. This will become a binding
contract between the Company and the undersigned, as of the date first above
written, when such counterpart is so mailed or delivered.
<PAGE>
This agreement shall be governed by and construed and enforced in accordance
with, the internal laws of the State of Illinois.
Very truly yours,
-------------------------------------
(Name of Purchaser)
By __________________________________
(Signature and Title of Officer)
-------------------------------------
(Address)
Accepted:
McDONALD'S CORPORATION
By __________________________________
(Authorized Signature)
<PAGE>
EXHIBIT 1(B)
McDonald's Corporation
U.S.$1,000,000,000
Medium-Term Notes, Series F
Due from 1 Year to 60 Years from Date of Issue
U.S. DISTRIBUTION AGREEMENT
July __, 1998
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
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
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
<PAGE>
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 F due from 1 to 60 years from date of
issue having an aggregate initial public offering price or purchase price of up
to U.S.$1,000,000,000 or its equivalent in foreign currencies, including the
Euro, or any composite currency (the "Notes").
The Notes are to be issued under an indenture dated as of October 19,
1996 between the Company and First Union National Bank (the "Trustee") and any
indentures supplemental thereto (collectively, the "Indenture"), will be issued
in fully registered definitive form in denominations of $1,000 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 or rates determined by reference to
a designated index or by application of a formula, in any case 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, including the Euro, or any composite currency. References
herein to amounts stated in United States dollars shall be deemed to refer to
the equivalent amount of foreign currency or 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 each Agent as follows :
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 under the
Securities Act of 1933, as amended (the "Securities Act") (File
No. 333- ) which has become effective, for the registration under
the Securities Act of the offering
2
<PAGE>
of the Notes. Such registration statement 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
Indenture is duly 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 Company proposes
to file with the Commission from time to time, pursuant to Rule
424(b)(2) or (b)(5) under the Securities Act, supplements to the
form of prospectus included in registration statement File No.
333- relating to the Notes and the plan of distribution
thereof or, if the Company elects to rely on Rule 434 under the
Securities Act, a Term Sheet (as such term is hereinafter
defined) relating to the Notes that shall contain such
information as is required or permitted by Rules 434 and 424(b)
under the Securities Act. The registration statement
File No. 333- , including the exhibits thereto, is
hereinafter called the "Registration Statement"; the prospectus
(including the supplement thereto relating to the Notes) in the
form in which it appears in registration statement File No. 333-
is hereinafter called the "Basic Prospectus"; and such
supplemented form of prospectus, in the form in which it shall be
filed with the Commission pursuant to Rule 424(b)(2) or (b)(5)
(including the Basic Prospectus as so supplemented) or (ii) if
the Company elects to rely on Rule 434 under the Securities Act,
in the form of the Term Sheet as first filed with the Commission
pursuant to Rule 424(b)(7) (together with the Basic Prospectus),
is hereinafter called the "Prospectus". Any abbreviated term
sheet that satisfies the requirements of Rule 434 under the
Securities Act is hereinafter called the "Term Sheet". 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 were filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or before the date of
this Agreement, or the issue date of any Basic Prospectus or
Prospectus, as the case may be; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the
Registration Statement, any Basic Prospectus or any Prospectus
shall be deemed to refer to and include the filing of any
document under the Exchange Act after the date of this Agreement,
or the issue date of any Basic Prospectus or any Prospectus, as
the case may be, and deemed to be incorporated therein by
reference.
(b) As of the date hereof, when the Prospectus is first filed
pursuant to Rule 424(b) under the Securities Act, when, prior to
the Commencement Date (as hereinafter defined), any amendment to
the Registration Statement becomes effective (including the
filing of any document incorporated by reference in the
Registration Statement), when any supplement to the Prospectus is
filed with the Commission, on the Commencement Date and on each
Settlement Date (as hereinafter defined), (i) the Registration
Statement, as amended as of any such time, the Prospectus, as
amended or supplemented as of any such
3
<PAGE>
time, and the Indenture will comply in all material respects with
the applicable requirements of the Securities Act, the Trust
Indenture Act and the Exchange Act and the respective rules and
regulations thereunder and (ii) neither the Registration
Statement, as amended as of any such time, nor the Prospectus, as
amended or supplemented as of any such time, will contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein not misleading; provided, however, that
the Company makes no representations or warranties as to (i) that
part of the Registration Statement which shall constitute the
Statement of Eligibility (Form T-1) under the Trust Indenture Act
of the Trustee; (ii) information, if any, contained in the
Registration Statement or Prospectus relating to The Depository
Trust Company and its book-entry system; or (iii) the information
contained in or omitted from the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of any Agent specifically
for use in connection with the preparation of the Registration
Statement and the Prospectus.
(c) The financial statements of the Company and its consolidated
subsidiaries included in the Registration Statement fairly
present the financial condition of the Company and its
consolidated subsidiaries as of the dates indicated and the
results of operations and cash flow for the periods therein
specified; and said financial statements have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved, except as
otherwise stated therein. As used herein, "consolidated
subsidiaries" means each subsidiary of the Company which is
included in the consolidated financial statements of the Company
contained in its Annual Report to shareholders for 1997 in
accordance with the consolidation policies set forth therein or
which would have been so included if it had been a subsidiary of
the Company as of the date of such consolidated financial
statements, and each other subsidiary of the Company which is
included in consolidated financial statements of the Company
prepared from time to time thereafter.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior
to the Commencement Date, except as set forth or contemplated in
the Prospectus, (i) neither the Company nor any of its
consolidated subsidiaries has entered into any transaction not in
the ordinary course of business which is material to the Company
and its consolidated subsidiaries, considered as a whole; (ii)
there has been no material adverse change in the properties,
business, financial condition or results of operations of the
Company and its consolidated subsidiaries, considered as a whole;
and (iii) no legal or governmental
4
<PAGE>
proceeding, which has or will have materially affected the
Company or any of its consolidated subsidiaries, considered as a
whole, or the transactions contemplated by this Agreement, has
been or will have been instituted or threatened.
(e) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not conflict with or result
in a breach of any of the terms and provisions of, or constitute
a default under, the Restated Certificate of Incorporation or By-
Laws of the Company as presently in effect.
(f) The Securities have been duly and validly authorized and, when
issued, authenticated and delivered against payment therefor in
accordance with the terms of the Indenture and this Agreement,
will constitute valid and legally binding obligations of the
Company entitled to the benefits of the Indenture, except as
enforcement thereof may be limited by applicable bankruptcy,
insolvency, moratorium and other laws affecting the
enforceability of creditors' rights and general principles of
equity, and will conform to the description thereof contained in
the Prospectus. The Indenture has been duly authorized by the
Company and will be a valid and legal instrument enforceable in
accordance with its terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, moratorium and
other laws affecting the enforceability of creditors' rights and
general principles of equity. The Indenture is duly qualified
under the Trust Indenture Act.
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, as agent, 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, as agent, of offers to
purchase the Notes. Upon receipt of notice from the Company, each
Agent will forthwith suspend solicitations, as agent, 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)
5
<PAGE>
and (k) hereof; 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) hereof 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 as
agent, 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 one year
to 30 years, such commission will be equal to the following
percentage of the principal amount of such Note:
<TABLE>
<CAPTION>
Term Commission Rate
---- ---------------
<S> <C>
From 1 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
</TABLE>
and with respect to Notes with a term in excess of 30 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 $1,000 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
6
<PAGE>
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
modified by written agreement of the Company and the Agents
soliciting as agents the purchase of such Notes (or purchasing as
principal 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 Gardner,
Carton & Douglas, counsel to the Agents, at 321 North Clark
Street, Quaker Tower, Chicago, Illinois 60610, not later than
5:00 p.m. Chicago 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").
7
<PAGE>
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 supplement (including the Prospectus)
to the Basic Prospectus 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 and/or Rule 434 under
the Securities Act. The Company will promptly advise each Agent
(i) when the Prospectus and any supplement to the Basic
Prospectus shall have been filed pursuant to Rule 424 and/or Rule
434 under the Securities Act; (ii) when any amendment to the
Registration Statement relating to the Notes shall have become
effective; (iii) of any request by the Commission for any
amendment of the Registration Statement or any amendment of or
supplement to the 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 Company files any amendment to the Registration Statement or
any supplement to the Basic Prospectus or the Prospectus, 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.
8
<PAGE>
(b) The Company will prepare and file with the Commission, promptly
upon the request of any Agent, any amendments or supplements to
the Registration Statement or Prospectus which, in the opinion of
counsel for the Agents, may be necessary to enable the several
Agents to continue to solicit offers to purchase the Notes, and
the Company will use its best efforts to cause any such
amendments to become effective and any such supplements to be
filed with the Commission and approved for use by the Agents as
promptly as possible. If, at any time when a prospectus relating
to the Notes is required to be delivered under the Securities
Act, any event relating to or affecting the Company occurs 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 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 or the Exchange Act or the respective rules
thereunder, the Company will promptly 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 Registration Statement or 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 to 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 the rules
thereunder 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
9
<PAGE>
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 or supplement to
the Registration Statement or Prospectus such Agent may resume
its resale of the Notes as principal.
(c) As soon as practicable, but not later than 90 days after the end
of the 12-month period beginning at the end of the current fiscal
quarter of the Company, the Company will make generally available
to its security holders and each Agent an earnings statement
covering a period of at least 12 months beginning not earlier
than said effective date which shall satisfy 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.
(e) The Company will furnish such information and execute such
instruments as may be required to qualify the Notes for offer and
sale under the securities or blue sky laws of such jurisdictions
within the United States as any Agent shall designate, will
continue such qualifications in effect so long as required for
distribution and will arrange for the determination of the
legality of the Notes for purchase by institutional investors.
The Company shall not be required to register or qualify as a
foreign corporation nor, except as to matters and transactions
relating to the offer and sale of the Notes, to consent to
service of process in any jurisdiction. The Company or its
designated agent shall submit
10
<PAGE>
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 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
11
<PAGE>
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 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 President or a Vice President and
the Chief Financial Officer of the Company or its 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(e) hereof 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(d)(i)
hereof 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).
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<PAGE>
(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(f) hereof, 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 Term 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 Ob1igations 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 by
the Company of its obligations hereunder and to the following additional
conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued,
and no proceedings for that purpose shall have been instituted or
shall be pending, or, to the knowledge of the Company, shall be
contemplated by the Commission.
13
<PAGE>
(b) No event, nor any material adverse change in the condition of the
Company, financial or otherwise, shall have occurred, nor shall
any event exist, which makes untrue or incorrect any material
statement or information contained in the Registration Statement
or the Prospectus or which is not reflected in the Registration
Statement or the Prospectus, but should be reflected therein in
order to make the statements or information contained therein not
misleading.
(c) No Agent shall have advised the Company that the Registration
Statement or any prospectus, or any amendment or supplement
thereto, contains an untrue statement of fact which, in the
opinion of counsel for the Agents, is material, or omits to state
a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the
statements therein not misleading.
(d) 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 Gloria Santona, Vice
President, Deputy General Counsel and Secretary, or a Vice
President and Assistant General Counsel of the Company, to
the effect that:
(A) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the
laws of the State of Delaware with corporate power and
authority to own its properties and conduct its
business as set forth in the Prospectus.
(B) The Indenture has been duly authorized, executed and
delivered by the Company and the Trustee, is duly
qualified under the Trust Indenture Act, and is a valid
and legally binding obligation of the Company
enforceable in accordance with its terms, except as
enforcement thereof may be limited by applicable
bankruptcy, insolvency, moratorium and other laws
affecting the enforceability of creditors' rights and
general principles of equity.
(C) The Notes have been duly and validly authorized by all
necessary corporate action and, when duly executed on
behalf of the Company, duly authenticated by the
Trustee or the Trustee's authenticating agent, and duly
delivered to the several purchasers thereof against
payment therefor in accordance with the provisions of
this Agreement, will constitute legal, valid and
binding obligations of the Company enforceable in
accordance with their terms and entitled to all the
benefits of the Indenture, except as
14
<PAGE>
enforcement thereof may be limited by applicable
bankruptcy, insolvency, moratorium and other laws
affecting the enforceability of creditors' rights and
general principles of equity.
(D) The Indenture and the Notes conform as to legal matters
with the statements concerning them made in the
Prospectus, and such statements accurately set forth
the provisions thereof required to be set forth in the
Prospectus.
(E) This Agreement (and, if the opinion is being given
pursuant to Section 3(j) hereof 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.
(F) (1) The Registration Statement and any amendments
thereto have become effective under the Securities Act,
and, to the best of the knowledge of such counsel, no
stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and
no proceedings for that purpose have been instituted or
are pending or contemplated under the Securities Act;
(2) the Registration Statement, the Prospectus, and
each amendment thereof or supplement thereto (except
for financial statements or other financial data
included therein, as to which such counsel need express
no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the
Exchange Act and the respective rules thereunder; (3)
such counsel has no reason to believe that either the
Registration Statement or the Prospectus or any such
amendment or supplement, contains any untrue statement
of a material fact or omits to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading; the descriptions in
the Registration Statement and Prospectus of statutes,
legal and governmental proceedings and contracts and
other documents are accurate and fairly present the
information required to be shown; and (4) such counsel
does not know of any legal or governmental proceedings
required to be described in the Prospectus which are
not so described as required nor of any contracts or
other documents which are required to be described in
the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement which
are not described and filed as required.
(G) The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated
and the fulfillment of the terms hereof will not result
in any breach of any of the terms and
15
<PAGE>
provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement
or instrument to which, to the knowledge of such
counsel, the Company is a party, or the Restated
Certificate of Incorporation or By-Laws of the Company
as presently in effect or, to the knowledge of such
counsel, any order, rule or regulation applicable to
the Company of any court or any federal or state
regulatory body or administrative agency or other
governmental body having jurisdiction over the Company
or its properties.
(H) No authorization, approval, consent or other action of
any governmental authority or agency is required in
connection with the sale of the Notes as contemplated
by this Agreement, except such as may be required under
the Securities Act or under state securities or blue
sky laws.
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)(B) and (i)(C) 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.
(ii) The opinion dated as of such date, of Gardner, Carton
& Douglas, counsel to you, covering the matters in
paragraphs (i)(B), (i)(C), (i)(D), (i)(E) and
(i)(F)(3) above, provided that with respect to
paragraph (i)(F)(3) 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.
(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, a
certificate of the Company, signed by the President or a
Vice President, and the Chief Financial Officer of the
Company or its Treasurer, dated as of the Commencement Date
or such Settlement Date, to the effect that:
16
<PAGE>
(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 are pending or, to
the signer's knowledge, are contemplated under the
Securities Act; and
(iii) the signers of the certificate have carefully examined the
Registration Statement and the Prospectus; neither the
Registration Statement, the Prospectus nor any amendment or
supplement thereto includes, as of the date of such
certificate, any untrue statement of a material fact or
omits, as of such date, to state any material fact required
to be stated therein or necessary to make the statements
therein not misleading; since the latest respective dates
as of which information is given in the Registration
Statement, there has been no material adverse change in the
financial position, business or results of operations of
the Company and its consolidated subsidiaries, considered
as a whole, except as set forth in or contemplated by the
Prospectus; and since the effective date of the
Registration Statement, as amended, no event has occurred
which is required to be set forth in the Prospectus which
has not been so set forth.
(f) 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.
(g) 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 certificates and documents as it may reasonably request.
17
<PAGE>
5. Indemnification and Contribution.
--------------------------------
(a) The Company will indemnify and hold harmless each Agent and each
person, if any, who controls such Agent within the meaning of the
Securities Act or the Exchange Act against any losses, claims,
damages or liabilities, joint or several, to which such Agent or
such controlling person may become subject, under the Securities
Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
Registration Statement or any amendment thereof, the Basic
Prospectus or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse each Agent and each such
controlling person for any legal or other expenses reasonably
incurred by such Agent or such controlling person in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not
be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by an Agent
specifically for use in the preparation thereof; and provided,
further, that the foregoing indemnification with respect to the
Basic Prospectus or the Prospectus shall not inure to the benefit
of any Agent (or any person controlling such Agent) from whom the
person asserting any such loss, claim, damage or liability
purchased the Securities, if such Agent, if acting as principal
in the sale of the Notes to such person or as agent in such sale
having solicited such person, failed to send or give copies of
the Prospectus, as amended or supplemented, excluding documents
incorporated therein by reference, to such person at or prior to
the written confirmation of the sale of such Notes to such person
in any case where such delivery is required by the Securities Act
and the untrue statement or omission of a material fact contained
in the Basic Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented). This indemnity agreement
will be in addition to any liability which the Company may
otherwise have.
(b) Each Agent severally agrees to indemnify and hold harmless the
Company, each person, if any, who controls the Company either
within the meaning of the Securities Act or the Exchange Act,
each of its directors and each of its officers who has signed the
Registration Statement, against any losses, claims, damages or
liabilities to which the Company, any such controlling person or
any such director or officer may become subject, under the
Securities Act, the Exchange Act, or otherwise, to the same
extent as the foregoing indemnity
18
<PAGE>
from the Company to each Agent, but only with reference to
written information relating to such Agent furnished to the
Company specifically for use in the preparation of the documents
referred to in the foregoing indemnity. The Company acknowledges
that the statements set forth under the heading "Plan of
Distribution" (exclusive of the sixth paragraph thereof) in the
Prospectus Supplement dated __________, 1998 relating to the
Notes constitute the only information furnished in writing by or
on behalf of any Agent for inclusion in the Prospectus, and the
Agents confirm that such statements are correct. This indemnity
agreement will be in addition to any liability which each such
Agent may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against
the indemnifying party under this Section, notify the
indemnifying party in writing of the commencement thereof, but
the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party
otherwise than under this Section. In case any such action is
brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent
that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that
if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are
different from or in addition to those available to the
indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon
receipt by such indemnified party of notice from the indemnifying
party of its election so to assume the defense of such action and
approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof
unless (i) the indemnified party shall have employed such counsel
in connection with the assumption of legal defenses in accordance
with the proviso to the next preceding sentence (it being
understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel,
approved by the applicable Agent in the case of subparagraph (a),
representing the indemnified parties under subparagraph (a) or
(b), as the case may be, who are parties to such action); (ii)
the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the
indemnified
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<PAGE>
party within a reasonable time after notice of commencement of
the action; or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of
the indemnifying party; provided further, that, with respect to
legal and other expenses incurred by an indemnified party for
which an indemnifying party shall be liable hereunder, all such
legal fees and expenses shall be reimbursed by the indemnifying
party as they are incurred.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in
paragraph (a) of this Section is due in accordance with its terms
but is for any reason held by a court to be unavailable from the
Company on grounds of policy or otherwise, the Company and each
Agent participating in the offering of Notes that gave rise to
the losses, claims, damages or liabilities (a "Relevant Agent")
for which contribution is sought shall severally contribute to
the aggregate of such losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in
connection with investigating or defending same) in such
proportion so that each Relevant Agent is responsible for that
portion represented by the percentage that the commission rate
paid to such Relevant Agent on the sale of Notes sold through it
bears to the sum of such commission rate and the purchase price
of such Notes sold through such Relevant Agent, and the Company
is responsible for the balance; provided, however, that (i) in no
case shall any such Relevant Agent be responsible for any amount
in excess of the commission rate paid to such Relevant Agent in
connection with the sale of such Notes; and (ii) 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. For purposes of this Section, each person who
controls an Agent within the meaning of either the Securities Act
or the Exchange Act shall have the same rights to contribution as
such Agent, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act, each
officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to
clause (i) of this paragraph (d). Any party entitled to
contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against
another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the
party or parties from whom contribution may be sought from any
other obligation it or they may have hereunder or otherwise than
under this paragraph (d).
20
<PAGE>
6. Restrictions on Offers and Sales of Registered Notes. Each Agent
----------------------------------------------------
represents and agrees that 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 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 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.
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 if (i) trading in the
Company's common stock shall have been suspended by the Commission on the New
York Stock Exchange for a period of 24 hours or more or trading in the
securities generally on the New York Stock Exchange shall have been suspended or
materially limited, in either case to such a degree as would in the reasonable
judgment of the Agent which is party to such Agreement adversely affect the
market for the Notes; (ii) a general moratorium on commercial banking activities
in the State of New York or the United States shall have been declared by
Federal authorities; or (iii) there has occurred any material outbreak, or
material escalation, of hostilities involving the United States or other
national or international calamity or crisis, of such magnitude and severity in
its effect on the financial markets of the United States, in your reasonable
judgment, as to prevent or materially impair the marketing, or enforcement of
contracts for sale, of the Notes. 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),
21
<PAGE>
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 the
last sentence of Section 3(e) and each of Sections 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 and indemnities 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, 10th Floor, New York, New York
10281, Attention: MTN Product Management;
(ii) if to Goldman, Sachs & Co., at 85 Broad Street, New York, New
York 10004, Attention: Medium-Term Note Trading Department;
(iii) if to J.P. Morgan Securities Inc., at 60 Wall Street, 3rd Floor,
New York, New York 10260, Attention: MTN Desk;
(iv) if to Morgan Stanley & Co. Incorporated, at 1585 Broadway, 2nd
Floor, New York, New York 10036, Attention: Medium-Term Note
Trading Desk;
(v) if to Salomon Brothers Inc, at 7 World Trade Center, New York,
New York 10048, Attention: Medium-Term Note Department; and
(vi) if to the Company, at One McDonald's Plaza, Oak Brook, Illinois
60523, 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, assigns, heirs, executors and administrators, and the
officers and directors and controlling
22
<PAGE>
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
--------------
AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
* * *
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: Senior Vice President and
Treasurer
23
<PAGE>
The foregoing Agreement is hereby confirmed and accepted as of the
date first written above.
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:___________________________
Title:
GOLDMAN, SACHS & CO.
By:___________________________
Title:
MORGAN STANLEY & CO.
INCORPORATED
By:___________________________
Title:
J.P. MORGAN SECURITIES INC.
By:___________________________
Title:
SALOMON BROTHERS INC
By:___________________________
Title:
24
<PAGE>
Exhibit A
FORM OF TERMS AGREEMENT
McDonald's Corporation
MEDIUM-TERM NOTES, SERIES F
TERMS AGREEMENT
_______________, 19__
McDonald's Corporation
One McDonald's Plaza
Oak Brook, Illinois 60523
Attention: Treasurer
Re: U.S. Distribution Agreement dated July _____, 1998
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
A-1
<PAGE>
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)
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.
A-2
<PAGE>
[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:]
[The lockup period referred to in Section 3(l) of the U.S.
Distribution Agreement 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
<PAGE>
Exhibit B
Medium-Term Note Administrative Procedures
------------------------------------------
Medium-Term Notes, Series F (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 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 July ___, 1998 (the
"Agreement"). The Notes will be in registered form and will be issued under an
Indenture dated as of October 19, 1996, between the Company and First Union
National Bank 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. The Notes will constitute part of the senior debt of the Company
and will rank equally with all other unsecured and unsubordinated debt of the
Company.
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 The First
National Bank of Chicago ("First Chicago" or the "DTC Agent"), acting as agent
for The Depository Trust Company or any successor depositary selected by the
Company ("DTC", which term, as used herein, includes any successor depositary
selected by the Company), and will be recorded in the book-entry system
maintained by DTC (a "Book-Entry Note"). 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, as adjusted in accordance with changes in
DTC's operating requirements, 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, the Notes or
the Prospectus Supplement relating to the Notes shall be used herein as therein
defined. Notes for which interest is calculated on the basis of a fixed interest
rate, which may be zero, are referred to herein as "Fixed Rate Notes". Notes for
which interest is calculated on the basis of a floating
B-1
<PAGE>
interest rate are referred to herein as "Floating Rate Notes". To the extent the
procedures set forth below conflict with the provisions of the Notes, the
Indenture, DTC's operating requirements or the Agreement, the relevant
provisions of the Notes, the Indenture, DTC's operating requirements and the
Agreement shall control.
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 First Chicago and DTC, dated May
26, 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 (the "CUSIP Service Bureau") for
the
B-2
<PAGE>
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 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, as needed,
and to DTC.
Registration: Global Securities will be issued only in fully
- ------------
registered form without coupons and each Global
Security will be registered in the name of CEDE & Co.,
as nominee for DTC, on the securities register for the
Notes (the "Securities Register") maintained under the
Indenture. 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 (or such participants) 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)
B-3
<PAGE>
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 (a
copy of which shall be attached to the resulting Global
Security described below) specifying (i) the CUSIP
numbers of two or more Outstanding Global Securities
that represent (A) 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
canceled and not immediately reassigned. Upon such
exchange, the DTC Agent will mark the predecessor
Global Security "canceled", make appropriate entries in
the DTC Agent's records and destroy such canceled
Global Security in accordance with the terms of the
Indenture and deliver a certificate of destruction to
the Company. Notwithstanding the foregoing, if the
Global
B-4
<PAGE>
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
- ----------
one year nor more than 60 years after the settlement
date for such Note (the "Stated Maturity"). Unless
otherwise specified in the applicable Pricing
Supplement, a Floating Rate Book-Entry Note will mature
only on an Interest Payment Date for such Note.
Denominations: Book-Entry Notes will be issued in principal amounts of
- -------------
$1,000 or any amount in excess thereof that is an
integral multiple of $1,000. If Book-Entry Notes are
denominated in a Specified Currency other than U.S.
dollars, the denominations of such Notes will be
determined pursuant to the provisions of the applicable
Pricing Supplement. Global Securities will be
denominated in principal amounts not in excess of
$200,000,000 (or the equivalent thereof). If one or more
Book-Entry Notes having an aggregate principal amount in
excess of $200,000,000 (or the equivalent thereof)
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 (or the equivalent
thereof) 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. Unless otherwise indicated in the applicable
- -------- -------
Pricing Supplement, interest, if any, on each Book-Entry
Note will accrue from the Original Issue Date (or such
other date on which interest otherwise begins to accrue
(if different than the Original Issue Date)) of the
Global Security representing such Book-Entry 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 Book-
B-5
<PAGE>
Entry Note and in the applicable Pricing Supplement. The
first payment of interest on any Book-Entry Note
originally issued between a Regular 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 or to but excluding
Stated Maturity. Interest payable at the Stated Maturity
of a Book-Entry Note will be payable to the person to
whom the principal of such Note is payable. Standard &
Poor's 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 daily bond
report published by Standard & Poor's.
Regular Record Dates. Unless otherwise specified in
--------------------
the applicable Pricing Supplement, the Regular Record
Date with respect to any Interest Payment Date for a
Fixed Rate Book-Entry Note shall be the February 1 or
August 1 (whether or not a Business Day) immediately
preceding such Interest Payment Date. Unless otherwise
specified in the applicable Pricing Supplement, 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) 15 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 Stated Maturity;
provided, however, that 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; and provided further 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.
B-6
<PAGE>
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 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, First Chicago, as Calculation
Agent, will make available to Standard & Poor's 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
B-7
<PAGE>
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.
Amortizing Book-Entry Notes. Unless otherwise indicated
---------------------------
in the applicable Pricing Supplement, interest on
Amortizing Notes will be calculated on the basis of a
360-day year of twelve 30-day months.
Payments of Principal
- ---------------------
and Interest: Payment of Interest Only. Promptly after each Regular
- ------------ ------------------------
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 Stated
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. The Company
will pay to the Paying Agent the total amount of
interest due on such Interest Payment Date (other than
at Stated 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".
Payments at Stated 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 Stated
Maturity of such Global Security. The Company will pay
to the Paying Agent the principal amount of such Global
Security, together with
B-8
<PAGE>
interest due at such Stated Maturity. The Paying Agent
will pay such amount to DTC at the times and in the
manner set forth below under "Manner of Payment".
Promptly after payment to DTC of the principal and
interest due at the Stated Maturity of such Global
Security, the Paying Agent will cancel such Global
Security and deliver it to the Company with an
appropriate debit advice.
Manner of Payment. The total amount of any principal
-----------------
and interest due on Global Securities on any Interest
Payment Date or at Stated Maturity shall be paid by the
Company to the Paying Agent in immediately available
funds no later than 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 any such instructions
in writing to the Paying Agent. For Stated 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.
If an issue of Notes is denominated in a currency other
than the U.S. dollar, the Company will make payments of
principal and any interest in the currency in which the
Notes are denominated (the "foreign currency") or in
U.S. dollars. DTC has elected to have all such payments
of principal and
B-9
<PAGE>
interest in U.S. dollars unless notified by
any of its Participants through which an
interest in the Notes is held that it elects,
in accordance with and to the extent permitted
by the applicable Pricing Supplement and the
Note, to receive such payment of principal or
interest in the foreign currency. On or prior
to the third Business Day after the record
date for payment of interest and twelve days
prior to the date for payment of principal,
such Participant shall notify DTC of (i) its
election to receive all, or the specified
portion, of such payment in the foreign
currency; and (ii) its instructions for wire
transfer of such payment to a foreign currency
account.
DTC will notify the applicable Trustee on or
prior to the fifth Business Day after the
record date for payment of interest and ten
days prior to the date for payment of
principal of the portion of such payment to be
received in the foreign currency and the
applicable wire transfer instructions, and the
applicable Trustee shall use such instructions
to pay the Participants directly. If DTC does
not so notify the applicable Trustee, it is
understood that only U.S. dollar payments are
to be made. The applicable Trustee shall
notify DTC on or prior to the second Business
Day prior to payment date of the conversion
rate to be used and the resulting U.S. dollar
amount to be paid per $1,000 face amount. In
the event that the applicable Trustee's
quotation to convert the foreign currency into
U.S. dollars is not available, the applicable
Trustee shall notify DTC's Dividend Department
that the entire payment is to be made in the
foreign currency. In such event, DTC will ask
its Participants for payment instructions and
forward such instructions to the applicable
Trustee and the applicable Trustee shall use
such instructions to pay the Participants
directly.
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
B-10
<PAGE>
the date on which it intends to redeem a Book-
Entry Note, the Company will notify the Trustee
and Paying 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, hand 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.
Procedure for Rate Setting
- --------------------------
and Posting: The Company and the Agent will discuss from time
- -----------
to time the aggregate principal amount of, the
issuance price of and the interest rates to be
borne by, Book-Entry Notes that may be sold as a
result of the solicitation of orders by the Agent.
If the Company decides to set prices of, and rates
borne by, any Book-Entry Notes in respect of which
the Agent is to solicit orders (the setting of
such prices and rates to be referred to herein as
"posting") or if the Company decides to change
prices or rates previously posted by it, it will
promptly advise the Agent of the prices and rates
to be posted.
Acceptance and Rejection
- ------------------------
of Offers: Unless otherwise instructed by the Company, the
- ---------
Agent will advise the Company promptly by
telephone of all orders to purchase Book-Entry
Notes received by the Agent, other than those
rejected by it in whole or in part in the
reasonable exercise of its discretion. Unless
otherwise agreed by the Company and the Agent, the
Company has the right to accept
B-11
<PAGE>
orders to purchase Book-Entry Notes and may reject
any such orders in whole or in part.
Confirmation: For each order to purchase a Book-Entry Note
- ------------
solicited by the Agent and accepted by or on behalf
of the Company, the Agent will issue a confirmation
to the purchaser, with a copy to the Company,
setting forth the details set forth above and
delivery and payment instructions.
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 Book-Entry Note shall constitute
"settlement" with respect to such Book-Entry Note,
and the date of such settlement, the "Settlement
Date". All orders accepted by the Company will be
settled on the third Business Day next succeeding
the date of acceptance pursuant to the timetable for
settlement set forth below unless the Company and
the purchaser agree to settlement on another day,
which shall be no earlier than the next Business Day
following the date of sale.
Settlement Procedures: Settlement Procedures with regard to each Book-Entry
- ---------------------
Note sold by the Company to or through the Agent,
except pursuant to a Terms Agreement, shall be as
follows:
A. The Agent will advise the Company by
telephone (or by facsimile or other
acceptable written means) that such Note is a
Book-Entry Note and of the following
settlement information:
1. Principal or face amount.
2. Series.
3. Stated Maturity.
4. In the case of a Fixed Rate Book-Entry
Note, the interest rate and reset,
redemption, repayment and extension
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) Interest Reset Period,
Interest Reset Dates, Index Maturity,
Spread and/or Spread Multiplier (if any),
Minimum Interest Rate (if any), Maximum
Interest
B-12
<PAGE>
Rate (if any) and reset, redemption,
repayment and extension provisions (if any).
5. Interest Payment Dates and the Interest
Payment Period.
6. Amortization provisions, if any.
7. Settlement Date and Issue Date, if
different.
8. Specified Currency.
9. Denominated Currency, Index Currency, base
exchange rate, and the determination date,
if applicable.
10. Price.
11. Agent's commission, determined as provided
in the Agreement.
12. Whether such Book-Entry Note is an Original
Issue Discount Note and, if so, the total
amount of a OID, the Yield to Maturity and
the initial accrual period.
13. Any other terms necessary to describe the
Book-Entry Note.
B. The Company will advise the relevant DTC Agent by
telephone (confirmed in writing at any time on
the same date), written telecommunication or
electronic transmission of the information set
forth in Settlement Procedure "A" above. Each
such communication by the Company shall
constitute a representation and warranty by the
Company to the DTC Agent for such Note, the
Trustee for such Note and the 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
Note, will conform with the terms of the
Indenture for such Note. The DTC Agent will then
assign a CUSIP number to the Global
B-13
<PAGE>
Security representing such Book-Entry Note and
notify the Agent and the Company by telephone
(confirmed in writing at any time on the same
date), written telecommunication or electronic
transmission of such CUSIP number as soon as
practicable.
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 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 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).
7. The participant account numbers maintained by
DTC on behalf of the Trustee and the Agent.
D. To the extent the Company has not already done so,
the Company will deliver to the Trustee for such
Notes a Global Security in a form that has been
approved by the Company, the Agent and the
Trustee.
E. First Chicago, as Authenticating Agent, will
complete each Book-Entry Note, stamp the
appropriate legend, as instructed by DTC, if not
B-14
<PAGE>
already set forth thereon, and 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
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. Unless the Agent is purchasing such Note as
principal, the 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, upon receipt of funds from the
Agent in accordance with Settlement Procedure "G",
credit to an account of the Company maintained at
the DTC Agent funds available for
B-15
<PAGE>
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.
L. Monthly, 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 Timetable: For sales by the Company of Book-Entry
- -------------------------------
Notes solicited by an Agent and accepted
by the Company (except pursuant to a
Terms Agreement) for settlement on 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 4:00 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
B-16
<PAGE>
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 12:00 Noon 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.
If settlement of a Book-Entry Note is rescheduled
or canceled, the DTC Agent will deliver to DTC
through DTC's Participant Terminal System, a
cancellation message to such effect by no later
than 5:00 p.m. on the Business Day immediately
preceding the scheduled settlement date.
Failure to Settle: If settlement of a Book-Entry Note is rescheduled
- -----------------
and the DTC Agent for such Note has not entered an
SDFS deliver order with respect to a Book-Entry
Note pursuant to Settlement Procedure "G", after
receiving notice from the Company or the Agent,
such DTC Agent shall deliver to DTC, through DTC's
Participant Terminal System, as soon as
practicable, a withdrawal message instructing DTC
to debit such Book-Entry Note to such DTC Agent's
participant account. DTC will process the
withdrawal message, provided that such DTC Agent's
participant account contains a principal amount of
the Global Security representing such Book-Entry
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 Trustee for
the Notes represented by such Global Security will
mark such Global Security "canceled", make
appropriate entries in such Trustee's records and
destroy the canceled Global Security in accordance
with the Indenture and deliver a
B-17
<PAGE>
certificate of destruction to the Company. The
CUSIP number assigned to such Global Security
shall, in accordance with CUSIP Service Bureau
procedures, be canceled 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 for such Book-Entry Notes will
exchange such Global Security for two Global
Securities, one of which shall represent such BooK
-Entry Notes and shall be canceled 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 turn, the Presenting Agent
may enter SDFS deliver orders through DTC's
Participant Terminal System reversing the orders
entered pursuant to Settlement Procedures "H" and
"G", respectively. Thereafter, the DTC Agent for
such Book-Entry Note will deliver the withdrawal
message and take the related actions described in
the preceding paragraph. If such failure shall
have occurred for any reason other than a default
by the Agent in the performance of its obligations
hereunder and under the Agreement, then the
Company will reimburse the Agent for the loss of
the use of the funds during the period when they
were credited to the account of the Company.
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 for such Book-Entry Note or Notes will
provide, in
B-18
<PAGE>
accordance with Settlement Procedures "E" and "G",
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
- ----------------------
Supplements: The Company and the Agents will discuss
- -----------
from time to time the rates to be borne by
Registered Notes that 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 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
44B Colonial Drive
Piscataway, New Jersey 08854
Attn: Prospectus Operations/Nachman
Kimerling
Telephone: (732) 885-2768
Facsimile: (732) 885-2774/5/6
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center,
North Tower, 10th Floor
B-19
<PAGE>
New York, New York 10281-1323
Attn: MTN Product Management
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
if Goldman, Sachs & Co. is the Presenting Agent:
Goldman, Sachs & Co.
85 Broad Street
Medium-Term Note Trading Department
Attn: Karen Robertson
New York, New York 10004
Telephone: (212) 902-8401
Facsimile: (212) 902-0658
if J.P. Morgan Securities Inc. is the Presenting
Agent:
J.P. Morgan Securities Inc.
60 Wall Street
3rd Floor
Attn: MTN Desk
New York, New York 10260
Telephone: (212) 648-0591
Facsimile: (212) 648-5909
if Morgan Stanley & Co. Incorporated is the
Presenting Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway
2nd Floor
New York, New York 10036
Attn: Medium-Term Note Trading Desk
if Salomon Brothers Inc is the Presenting Agent:
Salomon Smith Barney
Brooklyn Army Terminal
140 58th Street
8th Floor
Brooklyn, New York 11220
Attn: Diane Graham
Telephone: (212) 921-8475
Facsimile: (718) 921-8472
B-20
<PAGE>
Suspension of Solicitation;
- ---------------------------
Amendment or Supplement: Subject to the Company's representations,
- -----------------------
warranties and covenants contained in the
Agreement, the Company may instruct the Agents to
suspend solicitation of purchases at any time, for
any period of time or permanently. 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.
Delivery of Prospectus: A copy of the Prospectus and a Pricing Supplement
- ----------------------
relating to a Book-Entry Note must accompany or
B-21
<PAGE>
precede the earlier of (i) the written
confirmation of a sale sent to an investor or
other purchaser or its agent; and (ii) the
delivery of Notes to an investor or other
purchaser or its agent the purchase of such
Note and payment of such Note by its
purchaser. 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 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.
Trustee Not to Risk Funds: Nothing herein shall be deemed to require the
- -------------------------
Trustee to risk or expend its own funds in
connection with any payment to the Company,
DTC, the Agent or the purchaser, it being
understood by all parties that payments made
by the Trustee to the Company, DTC, the Agent
or the purchaser shall be made only to the
extent that funds are provided to the Trustee
for such purpose.
Payment of Selling Commissions
- ------------------------------
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.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
Issuance: Each Certificated Note will be dated and
- --------
issued as of the date of its authentication
by the applicable
B-22
<PAGE>
Trustee. Each Certificated Note will bear an
Original Issue Date, which will be (i) with
respect to an original Certificated Note (or any
portion thereof), its original issuance date
(which will be the settlement date); and (ii) with
respect to any Certificated Note (or portion
thereof) issued subsequently upon transfer or
exchange of a Certificated Note or in lieu of a
destroyed, lost or stolen Certificated Note, the
Original Issue Date of the predecessor
Certificated Note, regardless of the date of
authentication of such subsequently issued
Certificated Note.
Maturities: Each Certificated Note will have a maturity from
- ----------
date of issue of not less than one year and not
more than 60 years. Unless otherwise specified in
the applicable Pricing Supplement, a Floating Rate
Certificated Note will mature only on an Interest
Payment Date for such Note.
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 denominated
in U.S. dollars will be issued only in minimum
denominations of $1,000 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.
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
B-23
<PAGE>
different authorized denominations without service
charge. Certificated Notes will not be
exchangeable for Book-Entry Notes.
Interest: General. Unless otherwise indicated in the
- -------- -------
applicable Pricing Supplement, interest, if any,
on each Certificated Note will accrue from the
Original Issue Date (or such other date on which
interest otherwise begins to accrue (if different
from the Original Issue Date)) of such Note for
the first interest period or the last date to
which interest has been paid, if any, for each
subsequent interest period, on such Note, and will
be calculated and paid in the manner and on the
dates described in such Note and in the
Prospectus, as supplemented by 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.
Regular Record Dates. Unless otherwise specified
--------------------
in the applicable Pricing Supplement, 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.
Unless otherwise specified in the applicable
Pricing Supplement, 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) 15 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 Stated Maturity; provided, however,
that 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
B-24
<PAGE>
payment for the period from and after such
Interest Payment Date; and provided further, 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
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.
B-25
<PAGE>
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
or CMT Rate, interest will be calculated
on the basis of the actual number of
days in the year.
Amortizing Certificated Notes: Unless otherwise indicated in the
applicable Pricing Supplement, interest
on Amortizing Notes will be calculated
on the basis of a 360-day year of twelve
30-day months.
Payments of Principal and Interest: The Trustee will pay the principal
- ----------------------------------
amount of each Certificated Note at
Stated Maturity or upon redemption upon
presentation and surrender of such Note
to the Trustee. Such payment, together
with payment of interest due at Stated
Maturity or upon redemption of such
Note, will be made in funds available
for immediate use by the Trustee and in
turn by the Holder of such Note.
Certificated Notes presented to the
Trustee at Stated Maturity or upon
redemption for payment will be canceled
and destroyed by the Trustee, and a
certificate of destruction will be
delivered to the Company. All interest
payments on a Certificated Note (other
than interest due at Stated Maturity or
upon redemption) will be made by check
drawn on the Trustee (or another person
appointed by the Trustee) and mailed by
the Trustee to the person entitled
thereto as provided in such Note and the
Indenture; provided, however, that the
Holder of $10,000,000 or more of Notes
having the same Interest Payment Dates
will, upon written request prior to the
Regular Record Date in respect of an
Interest Payment Date,
B-26
<PAGE>
be entitled to receive payment by wire
transfer of immediately available funds.
Following each Regular Record Date, the
Trustee will furnish the Company with a list
of interest payments to be made on the
following Interest Payment Date for each
Certificated Note and in total for all
Certificated Notes. Interest at Stated
Maturity or upon redemption will be payable
to the person to whom the payment of
principal is payable. The Trustee will
provide monthly to the Company lists of
principal and interest, to the extent
ascertainable, to be paid on Certificated
Notes maturing or to be redeemed in the next
month.
Withholding Taxes. The amount of any taxes
-----------------
required under applicable law to be withheld
from any interest payment on a Certificated
Note will be determined and withheld by the
Trustee.
The Company will be responsible for
withholding taxes on interest paid on
Certificated Notes as required by applicable
law.
Procedure for Rate Setting
- ---------------------------
and Posting: The Company and the Agent will discuss from
- -----------
time to time the aggregate principal amount
of, the issuance price of, and the interest
rates to be borne by, Notes that may be sold
as a result of the solicitation of orders by
the Agent. If the Company decides to set
prices of, and rates borne by, any Notes in
respect of which the Agent is to solicit
orders (the setting of such prices and rates
to be referred to herein as "posting") or if
the Company decides to change prices or rates
previously posted by it, it will promptly
advise the Agent of the prices and rates to
be posted.
Redemption: The applicable Pricing Supplement will set
- ----------
forth all terms, if any, relating to the
redemption of Notes prior to Stated Maturity.
Acceptance and Rejection
- ------------------------
of Offers: Unless otherwise instructed by the Company,
- ---------
the Agent will advise the Company promptly by
B-27
<PAGE>
telephone of all orders to purchase Certificated
Notes received by the Agent, other than those
rejected by it in whole or in part in the
reasonable exercise of its discretion. Unless
otherwise agreed by the Company and the Agent, the
Company has the sole right to accept orders to
purchase Certificated Notes and may reject any
such orders in whole or in part. Before accepting
any order to purchase a Certificated Note to be
settled in less than three Business Days, the
Company shall verify that the Trustee for such
Certificated Note will have adequate time to
prepare and authenticate such Note.
Settlement: The receipt by the Company of immediately
- ----------
available funds in exchange for an authenticated
Certificated Note delivered to the Agent and the
Agent's delivery of such Certificated Note against
receipt of immediately available funds shall, with
respect to such Certificated Note, constitute
"settlement". All orders accepted by the Company
will be settled on the third Business Day next
succeeding the date of acceptance pursuant to the
timetable for settlement set forth below, unless
the Company and the purchaser agree to settlement
on another day, which shall be no earlier than the
next Business Day following the date of sale.
Details for Settlement: Settlement Procedures with regard to each
- ----------------------
Certificated Note sold by the Company to or
through the Agent, as agent (except pursuant to a
Terms Agreement), shall be as follows:
A. The Agent will advise the Company by
telephone or by facsimile transmission (or
other acceptable written means) that such
Note is a Certificated Note and of the
following settlement information, in time
for the Trustee for such Certificated Note
to prepare and authenticate the required
Note:
1. Name in which such Certificated Note is
to be registered ("Registered Owner").
B-28
<PAGE>
2. Address of the Registered Owner and
address for payment of principal and
interest.
3. Taxpayer identification number of the
Registered Owner (if available).
4. Principal or face amount.
5. Series.
6. Stated Maturity.
7. In the case of a Fixed Rate
Certificated Note, the Interest Rate
and reset provisions (if any) or, in
the case of a Floating Rate
Certificated Note, the Base Rate,
Initial Interest Rate (if known at such
time), Interest Reset Period, Interest
Reset Dates, Index Maturity, Spread
and/or Spread Multiplier (if any),
Minimum Interest Rate (if any), Maximum
Interest Rate (if any) and reset
provisions (if any).
8. Interest Payment Dates and the Interest
Payment Period.
9. Specified Currency.
10. Denominated Currency, Index Currency,
Base Exchange Rate and the
Determination Date, if applicable.
11. Redemption, repayment, amortization or
extension provisions, if any.
12. Settlement date.
13. Price (including currency).
B-29
<PAGE>
14. Agent's commission, if any, determined
as provided in the Agreement.
15. Whether such Certificated Note an
Original Issue Discount Note, and, if
so, the total amount of OID and the
Yield to Maturity and the initial
accrual period.
16. Any other terms necessary to describe
the Certificated Note.
Such Agent will advise the Company of the
foregoing information for each sale made by
it in time for the Trustee's authenticating
agent, 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. The Company will advise the relevant Trustee
by telephone (confirmed in writing at any
time on the sale date), written
telecommunication or electronic transmission
of the information set forth in Settlement
Procedure "A" above and the name of the
Presenting Agent.
C. The Company will deliver to the relevant
Trustee a pre-printed four-ply packet for
such Certificated Note, which packet will
contain the following documents in forms
that have been approved by Company, the
Agents and the Trustee:
1. Certificated Note with customer
confirmation.
2. Stub One - For Trustee.
3. Stub Two - For Agent.
B-30
<PAGE>
4. Stub Three - For Company.
D. The Trustee will complete such Certificated
Note and will authenticate such Certificated
Note and deliver it (with the confirmation)
and Stubs One and Two to the Agent, and the
Agent will acknowledge receipt of the Note
by stamping or otherwise marking Stub One
and returning it to the Trustee. Such
delivery will be made only against such
acknowledgment of receipt and evidence that
instructions have been given by the Agent
for payment to such account as the Company
shall have specified in funds available for
immediate use, of an amount equal to the
price of such Certificated Note less the
Agent's commission. In the event that the
instructions given by the Agent for payment
to the account of the Company are revoked,
the Company will as promptly as possible
wire transfer to the account of the Agent an
amount of immediately available funds equal
to the amount of such payment made.
E. Unless the Agent purchased the Note as
Principal, the Agent will deliver such
Certificated Note (with the confirmation) to
the customer against payment in immediately
payable funds. The Agent will obtain the
acknowledgment of receipt of such
Certificated Note by retaining Stub Two.
F. The Trustee will send Stub Three to the
Company's Treasury Department by first-class
mail. Periodically, the Authenticating
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.
B-31
<PAGE>
Settlement Procedures Timetable: For orders of Certificated Notes solicited
- -------------------------------
by the Agent, as agent, and accepted by the
Company, Settlement Procedures "A" through
"F" set forth above shall be completed on or
before the respective times (New York City
time) set forth below:
<TABLE>
<CAPTION>
Settlement Procedure Time
-------------------- ----
<S> <C>
A 2:00 P.M. on the day
before the Settlement
Date.
B On the day two
Business Days before
the Settlement Date.
C 2:15 P.M. two
Business Days before
the Settlement Date.
D 2:15 P.M. on the
Settlement Date.
E 3:00 P.M. on the
Settlement Date.
F 5:00 P.M. on the
Settlement Date.
</TABLE>
Confirmation: Each Agent shall, for each Certificated
------------
Note offer received by it and accepted by
the Company, issue a confirmation to the
purchaser, with a copy to the Company,
setting forth such of the details set forth
above as is deemed appropriate by such
Agent.
Note Delivery and Cash Payment: Upon instructions from the Company, the
- ------------------------------
Authenticating Agent will deliver the
Certificated Notes to the relevant Agent
(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.
Failure to Settle: If a purchaser fails to accept delivery of
- -----------------
and make payment for any Certificated Note,
the Agent will notify the Company and the
Trustee by telephone and return such Note to
the Trustee. Upon receipt
B-32
<PAGE>
of such notice, the Company will immediately
wire transfer to the account of the Agent an
amount equal to the amount previously
credited thereto in respect of such Note.
Such wire transfer will be made on the
settlement date, if possible, and in any
event not later than the Business Day
following the settlement date. If the
failure shall have occurred for any reason
other than a default by the Agent in the
performance of its obligations hereunder and
under the Agreement with the Company, then
the Company will reimburse the Agent or the
Trustee, as appropriate, on an equitable
basis for its loss of the use of the funds
during the period when they were credited to
the account of the Company. Immediately upon
receipt of the Certificated Note in respect
of which such failure occurred, the Trustee
will mark such Note "canceled", make
appropriate entries in the Trustee's records
and send such Note to the Company.
Maturity: At Stated 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 payment information in
writing. Certificated Notes presented to any
paying agent or the Trustee will be
destroyed by the Trustee.
Procedure for Rate Changes: The Company and the Agents will discuss from
- --------------------------
time to time the rates to be borne by
Certificated Notes 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 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
B-33
<PAGE>
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
44B Colonial Drive
Piscataway, New Jersey
08854
Attn: Prospectus Operations/Nachman Kimerling
Telephone: (732) 885-2768
Facsimile: (732) 885-2774/5/6
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
World Financial Center,
North Tower, 10th Floor
New York, New York 10281-1323
Attn: MTN Product Management
Telephone: (212) 449-7476
Facsimile: (212) 449-2234
if Goldman, Sachs & Co. is the Presenting Agent:
Goldman, Sachs & Co.
85 Broad Street
Medium-Term Note Trading Department
New York, New York 10004
Attn: Karen Robertson
Telephone: (212) 902-8401
Facsimile: (212) 902-0658
if J. P. Morgan Securities Inc. is the Presenting
Agent:
J.P. Morgan Securities Inc.
60 Wall Street
3rd Floor
New York, New York 10260
Attn: MTN Desk
Telephone: (212) 648-0591
B-34
<PAGE>
Facsimile: (212) 648-5909
if Morgan Stanley & Co. Incorporated is the
Presenting Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway
2nd Floor
New York, New York 10036
Attn: Medium-Term Note Trading Desk
if Salomon Brothers Inc is the Presenting Agent:
Salomon Smith Barney
Brooklyn Army Terminal
154 58th Street
8th Floor
Brooklyn, New York 11220
Attn: Diane Graham
Telephone: (212) 921-8475
Facsimile: (718) 921-8472
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
B-35
<PAGE>
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 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.
Trustee Not to Risk Funds: Nothing herein shall be deemed to require the
- -------------------------
Trustee to risk or expend its own funds in
connection with any payment to the Company,
the Agent or the purchaser, it being
understood by all parties that payments made
by the Trustee to the Company, the Agent or
the purchaser shall be made only to the
extent that funds are provided to the Trustee
for such purpose.
Payment of Selling Commissions
- ------------------------------
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
B-36
<PAGE>
principal amount of each Note sold by the
Company as a result of a solicitation made by
such Agent.
B-37
<PAGE>
EXHIBIT 4(C)
------------------------------------------------------------
SUPPLEMENTAL INDENTURE NO. 4
BETWEEN
McDONALD'S CORPORATION
AND
FIRST UNION NATIONAL BANK
Trustee
------------------------------------
Dated as of _____, 1998
------------------------------------
SUPPLEMENTAL TO SENIOR DEBT SECURITIES INDENTURE
DATED AS OF OCTOBER 19, 1996
------------------------------------------------------------
<PAGE>
MCDONALD'S CORPORATION
SUPPLEMENTAL INDENTURE NO. 4
DATED AS OF ______, 1998
SERIES OF
MEDIUM-TERM NOTES, SERIES F
$1,000,000,000
Supplemental Indenture No. 4, dated as of _______, 1998, 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 UNION
NATIONAL BANK, 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 a Senior
Debt Securities Indenture dated as of October 19, 1996 (as amended or
supplemented from time to time, 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; and
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. 4 constitutes an integral
part of the Indenture.
SECTION 1.02. (a) For all purposes of this Supplemental Indenture No. 4,
except as otherwise expressly provided or unless the context otherwise requires,
all capitalized terms used and not defined herein shall have the meanings
assigned to them in the Indenture or in Exhibits A and B hereto.
<PAGE>
(b) All references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of this Supplemental
Indenture No. 4; and
(c) The terms "hereof," "herein," "hereto," "hereunder" and "herewith" refer
to this Supplemental Indenture No. 4.
ARTICLE TWO
THE SERIES OF DEBT SECURITIES.
SECTION 2.01. (a) There shall be a series of Debt Securities issuable in
registered form (the "Notes") limited to an aggregate initial public offering
price or purchase price of $1,000,000,000, or the equivalent thereof in one or
more foreign currencies, including the Euro or any composite currency, as
designated by the Company (the "Specified Currency"). The Notes shall be
designated the "Medium-Term Notes, Series F, Due from 1 Year to 60 Years from
Date of Issue".
(b) Each Note shall 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) in the case of certain
Indexed Notes (as defined below).
SECTION 2.02. Fixed Rate Notes and Floating Rate Notes shall contain
substantially the terms and provisions set forth in either the form of Series F
Fixed Rate Note or the form of Series F Floating Rate Note attached hereto as
Exhibits A and B, respectively, or such other forms of Notes specified in an
Officers' Certificate pursuant to duly adopted resolutions of the Board of
Directors of the Company. All of the terms and provisions of such Notes are
hereby incorporated by reference herein.
SECTION 2.03. In addition to the terms described in Section 2.02, a Note
shall contain the following terms to be specified in an Officers' Certificate:
(a) 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); (b) 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; (c) the price (expressed as
a percentage of the aggregate principal amount thereof) at which such Note
will be issued (the "Issue Price"); (d) the date on which such Note will be
issued (the "Original Issue Date"); (e) the date on which such Note will
mature (the "Stated Maturity"); (f) 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
(each a "Regular Record Date"); (g) 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
3
<PAGE>
Spread Multiplier, if any (all as defined in Sections 2.02 and 2.06 herein),
and any other terms relating to the particular method of calculating the
interest rate for such Note; (h) whether such Note is an Original Issue
Discount Note; (i) if such Note is an Indexed Note, 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 2.07
hereof); (j) 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 hereof) relating to such redemption or repayment,
including, in the case of an Original Issue Discount Note, Indexed Note or
Amortizing Note (as defined below), the information necessary to determine
the amount due upon redemption or repayment; (k) 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 (l) any other terms of such Note
not inconsistent with the provisions of the Indenture.
SECTION 2.04. The First National Bank of Chicago, One First National Plaza,
Chicago, Illinois, is hereby initially appointed as Authenticating Agent,
Registrar, Paying Agent and Calculation Agent with respect to the Notes.
SECTION 2.05. With respect to any Notes issued hereunder, (a) the term
"Original Issue Discount Note" shall mean (i) 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 of such Note; and (ii) any other Note designated by the Company
as issued with original issue discount for U.S. federal income tax purposes; and
(b) 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 2.06. (a) 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 "Index 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.
4
<PAGE>
(b) 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 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 2.07. With respect to any Notes hereunder, the term "Amortizing
Notes" shall mean any Note, payments in respect of which represent interest due
and the reduction of unpaid prinicipal as provided in such Amortizing Note.
SECTION 2.08. Any interest on any 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 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 (a) and clause (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the 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 in writing of the amount of Defaulted
Interest proposed to be paid on each 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 provided. Thereupon the Trustee 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 of the notice of the proposed
payment. The Trustee 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 Notes at his address as it appears in the Debt Security Register,
not less than 10 days prior to 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 Notes are registered on such Special
Record Date and shall no longer be payable pursuant to the following clause
(b).
5
<PAGE>
(b) 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 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 of the proposed payment pursuant to this clause, such payment shall
be deemed practicable by the Trustee.
(c) Subject to the foregoing provisions of this Section, each Note
delivered under this Supplemental Indenture No. 4 upon transfer of or in
exchange for or in lieu of any other Note shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.09. The Place of Payment for the Notes shall be both The City of
New York, New York, and the City of Philadelphia, Pennsylvania.
SECTION 2.10. The terms and provisions contained in the form of the Notes
attached as Exhibits A and B hereto shall constitute, and are hereby expressly
made, a part of the Indenture and, to the extent applicable, the Company and the
Trustee, by their execution and delivery hereof, expressly agree to such terms
and provisons and to be bound thereby.
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. 4 shall be construed in
connection with and as a part of the Indenture.
SECTION 3.03. (a) If any provision of this Supplemental Indenture No. 4
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. 4) by any of the
provisions of Sections 310 to 317, inclusive, of the Trust Indenture Act of
1939, such required provisions shall control.
(b) In case any one or more of the provisions contained in this Supplemental
Indenture No. 4 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. 4 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. 4 contained by or on behalf of the Company or by
or on behalf of the Trustee shall bind and
6
<PAGE>
inure to the benefit of the respective successors and assigns of such parties,
whether so expressed or not. Nothing in this Supplemental Indenture No. 4 or the
Notes, expressed or implied, shall give to any Person, other than the parties
hereto, their successors hereunder and the Holders of the Notes, any benefit or
any legal or equitable right, remedy or claim under this Supplemental Indenture
No. 4.
SECTION 3.05. (a) This Supplemental Indenture No. 4 may be executed in any
number of counterparts, each of which so executed shall be deemed an original,
but all such counterparts shall together constitute but one and the same
instrument.
(b) The descriptive headings of the several Articles of this Supplemental
Indenture No. 4 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.
7
<PAGE>
IN WITNESS WHEREOF, McDONALD'S CORPORATION has caused this Supplemental
Indenture No. 4 to be signed, acknowledged and delivered by its President,
Executive Vice President and Chief Financial Officer or Senior 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 UNION NATIONAL BANK,
as Trustee, has caused this Supplemental Indenture No. 4 to be signed,
acknowledged and delivered by one of its 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
Senior Vice President and Treasurer
Attest:
_______________________________
Secretary
FIRST UNION NATIONAL BANK,
as Trustee
[CORPORATE SEAL]
By: ___________________________________
Vice President
Attest:
________________________________
Authorized Officer
8
<PAGE>
STATE OF ILLINOIS )
) SS:
COUNTY OF DuPAGE )
On the ___ day of __________, in the year one thousand nine hundred
ninety-eight, 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 Senior Vice President and Treasurer of McDONALD'S CORPORATION, one of
the corporations described in and which executed and 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-eight, before me appeared ______________________ to me personally known,
who, being by me duly sworn, did say that he resides at __________________, that
he is a Vice President of FIRST UNION NATIONAL BANK, 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
<PAGE>
SERIES F FIXED RATE NOTE EXHIBIT 4(D)
REGISTERED PRINCIPAL AMOUNT
MCDONALD'S CORPORATION
No. MEDIUM-TERM NOTE, SERIES F
(FIXED RATE) CUSIP
IF THE REGISTERED OWNER OF THIS NOTE (AS INDICATED BELOW) IS THE
DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC, THIS NOTE IS A GLOBAL
SECURITY AND THE FOLLOWING LEGEND IS APPLICABLE: UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUIRED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST
HEREIN. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES
REPRESENTED HEREBY IN DEFINITIVE REGISTERED FORM, THIS REGISTERED GLOBAL
SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC, OR
BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC, OR BY DTC 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.$1,000
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:
A-1
<PAGE>
MCDONALD'S CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to
or registered assigns, the principal sum specified above of
_________________________ (Specified Currency) on the Stated Maturity shown
above and to pay interest thereon 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, semi-annually
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 the principal hereof is paid or
duly provided for. 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 as specified
on the face hereof shall, as provided in such Indenture, 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 as specified on the face hereof, which shall be
the February 1 or August 1 (whether or not a Business Day), as the case may be,
next preceding an Interest Payment Date. 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. 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 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; (ii) if the Specified
Currency for this Note is ECU, a day that does not appear as an ECU non-
settlement day on the display designated as "ISDE" on the Reuter Monitor Money
Rates Service (or a day so designated by the ECU Banking Association) or, if ECU
non-settlement days do not appear on that page (and are not so designated) a day
on which payments in ECU may be settled in the international interbank market;
and (iii) if the Specified Currency for this Note is Euro, a day fixed as
described herein. "Principal Financial Center" means the capital city of the
country issuing the currency or composite currency in which any payment in
respect of this Note is to be made, except that with respect to Australian
dollars, Deutsche marks, Dutch guilders, Italian lire and Swiss francs, the
Principal Financial Center shall be Sydney, Frankfurt, Amsterdam, Milan, Zurich
and Luxembourg, respectively.
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 15 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 15
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
A-2
<PAGE>
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 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 15 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 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 Place of Payment. If this Note is a Global
Security, beneficial owners of interest herein will be paid in accordance with
DTC'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, which further provisions shall for all purposes
have the same effect as if set forth in this place.
Unless the Certificate of Authentication hereon has been executed by
the Trustee referred to on the reverse hereof (or by an Authenticating Agent, as
provided in the Indenture) by manual signature, this Note shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
A-3
<PAGE>
In Witness Whereof, McDonald's Corporation has caused this Note to be
signed in its corporate name by the Chairman of the Board or its President or
one of its Vice Presidents manually or in facsimile and a facsimile of its
corporate seal to be imprinted hereon and attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.
Dated: ________ ___ , 1998
MCDONALD'S CORPORATION
By:_______________________
Senior Vice President and
Treasurer
ATTEST:
By:__________________________
Secretary
A-4
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated herein
provided for in the within mentioned Indenture.
Dated: ________ ___, 1998
FIRST UNION NATIONAL BANK,
as Trustee
THE FIRST NATIONAL BANK OF CHICAGO,
as Authenticating Agent
By:_____________________________
Authorized Signatory
A-5
<PAGE>
MCDONALD'S CORPORATION
MEDIUM-TERM NOTE, SERIES F
(FIXED RATE)
This Note is one of a series of duly authorized issue of debentures,
notes or other evidences of indebtedness of the Company (the "Debt Securities")
of a series hereinafter specified, all issued or to be issued in one or more
series under a Senior Debt Securities Indenture, dated as of October 19, 1996
(herein called the "Indenture"), between the Company and First Union National
Bank, as trustee (herein called 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. The Debt
Securities may be issued in one or more series, which different series may be
issued in various currencies, may be issued in various aggregate principal
amounts, may mature at different times, may bear interest (if any) at different
rates, may be subject to different redemption provisions (if any), may be
subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided. This Debt Security is one of the series designated on
the face hereof, limited in aggregate initial public offering price or purchase
price of up to U.S.$1,000,000,000 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.
"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 Notes
denominated in U.S. dollars will be U.S.$1,000 and any larger amount that is an
integral multiple of U.S.$1,000. The authorized denominations of Notes
denominated in a currency other than U.S. dollars will be as set forth on the
respective faces thereof.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. Only 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
R-1
<PAGE>
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 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, then such payments will be made in the
Specified Currency, unless the Specified Currency is unavailable 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, 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 the principal of and any interest and premium, if any, on the Notes
of a series is payable in any Specified Currency (including ECU (as defined
below)) other than U.S. dollars and (i) the country of which such Specified
Currency has been a currency of legal tender for the payment of public and
private debts (the "Currency Country") becomes a Participating Member State (as
defined below) or (ii) if such Specified Currency is the ECU and the Euro is
substituted for the ECU as the unit of account of the European Community or the
European Central Bank, then the Issuer may, solely at its option and without the
consent of the Holders of such Notes or the need to execute a supplemental
indenture to the Indenture, on any Interest Payment Date after the EMU Date and
after the date on which such country has become a Participating Member State or
such substitution of the Euro for the ECU has occurred, respectively (such
Interest Payment Date, a "Redenomination Date"), redenominate all of the Notes
of such series into Euros (whether or not any Other Securities (as defined
below) are so redenominated) upon the giving of not less than 30 days' notice
thereof in accordance with the terms of such Notes, which notice shall set forth
the manner in which such redenomination shall be effected. If the Issuer elects
to so redenominate a series of Notes, the Notes of such series shall be
redenominated:
(i) in such manner and subject to such procedures as the Issuer shall
determine to be consistent with existing or anticipated market practice for
the redenomination into Euros of debt obligations issued in the Euromarkets
(whether denominated in such Specified Currency or otherwise) which are
held in international clearing systems ("euromarket debt obligations"); or
R-2
<PAGE>
(ii) if no such determination as set out in clause (i) above is made,
the Issuer shall convert the nominal Specified Currency amount of each
Note of such series into Euros by using the Fixed Conversion Rate (as
defined below) and rounding the resultant figure to the nearest cent
(with 0.005 of a Euro being rounded upwards) (the "Redenominated Amount")
and the Notes of the same series denominated in such Specified Currency
shall be replaced either (1) by the Notes of the same series equal in
value to the Redenominated Amount, denominated in Euros, each with a
denomination of one cent; or (2) if the international clearing systems in
which the Notes are then cleared and settled do not then accept for
clearance and settlement redenominated euromarket debt obligations, each
with a denomination of one cent, by Notes of the same series equal in
value to the Redenominated Amount, denominated in Euros, each with a
denomination of one Euro. Any balance remaining from a redenomination in
accordance with clause (2) above shall be paid by way of cash adjustment.
Such cash adjustment shall be payable in Euros on the Redenomination Date
to, or to the order of, the Holders of the Notes of such series in a
manner substantially similar to that provided herein for the payment of
interest on the Notes.
Without prejudice to the foregoing, the Issuer may, solely at its
option and without the consent of the Holders of the Notes or a series of the
need to execute a supplemental indenture to the Indenture, upon the giving of
not less than 30 days' irrevocable notice thereof in accordance with the terms
hereof (which notice shall set forth the manner in which such further
redenomination shall be effected), elect that, with effect from the
Redenomination Date for such series or such later Interest Payment Date as it
may specify (the "Specified Date"), the denominations of the Notes of such
series shall be one cent (if applicable), Euro 1, Euro 10, Euro 100, Euro 1,000,
Euro 10,000, Euro 100,000 and Euro 1,000,000; provided, however, that in no
event shall the minimum denominations of such Notes after the Redenomination
Date with respect thereto be lower than the equivalent of any minimum
denominations of such Notes required by law, regulation or market practice. If
the Issuer so elects, the then-existing Euro-denominated Notes of a series
("Original Euro Notes") shall be exchangeable for Notes of such new denomination
("New Euro Notes") having the same aggregate nominal amount as the Original Euro
Notes so exchanged, in accordance with procedures to be set forth in the
relevant notice of redenomination.
The definitions of Business Day and Market Day that shall apply to the
Notes for payments on or in respect thereof following any redenomination thereof
and for all other purposes under the Notes and under the Indenture shall be (A)
business day and market day definitions for fixed or floating rate (as
applicable) Euro-denominated debt obligations issued in the Euromarkets and held
in international clearing systems which are consistent with existing or
anticipated market practice as determined by the Issuer or (B) if no such
Business Day and Market Day definitions are so determined, the definitions of
Business Day and Market Day which applied to such Notes before redenomination or
(C) if the Issuer would be unable to make payments on the Notes on the date that
payment is expressed to be due if (B) above were to apply, such other business
day and market day definitions as are determined by the Issuer.
If the Notes of a series are to be consolidated with Other Securities
(as defined below) by reference to the same Interest Payment Date as a
redenomination of the Notes of such series into Euros or to an Interest Payment
Date following the Interest Payment Date by reference to which the Notes of such
series are redenominated in Euros, the provisions below concerning consolidation
of Notes shall apply with effect from the Consolidation Date (as defined below)
for such consolidation.
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<PAGE>
Unless and until the Notes of a series redenominated in accordance
with the provisions hereof are to be consolidated with Other Securities in
accordance with the provisions below concerning consolidation of Notes, the
interest accrual basis and the provisions of the Notes of such series relating
to the source and determination of such interest accrual basis that shall apply
to such Notes from, and including, the Interest Payment Date falling on or
immediately prior to the Redenomination Date shall be (i) the interest accrual
basis and such provisions which applied to such Notes prior to such
redenomination, unless such interest accrual basis is and/or such provisions are
inconsistent with the then-existing or anticipated market practice for Euro-
denominated debt obligations issued in the euromarkets with fixed rate or
floating rate interest payments (as the case may be) of frequencies identical or
substantially similar to the frequency of interest payments under such Notes,
based, in the case of floating interest rate payments, on the reference rate
applicable to such Notes prior to the Redenomination Date and held in
international clearing systems as determined by the Issuer or (ii) if the
interest accrual basis which applied to such Notes prior to the Redenomination
Date is and/or such provisions are so inconsistent, the interest accrual basis
and/or the provisions of the Notes of such series relating to the source and
determination of such interest accrual basis, as the case may be, which is
consistent with the then-existing or anticipated market practice for Euro-
denominated debt obligations issued in the euromarkets with fixed rate or
floating rate interest payments (as the case may be) of frequencies identical or
substantially similar to the frequency of interest payments under such Notes,
based, in the case of floating interest rate payments, on the reference rate
applicable to such Notes (adjusted as aforesaid) and held in international
clearing systems as determined by the Issuer.
The Issuer may, with the consent of the Trustee, and without the need
to obtain the consent of the Holder of any Note, make any changes or additions
to the terms of the Notes of a series which (i) the Issuer or the Trustee
believes are necessary or appropriate to facilitate the implementation of the
practical aspects of this section as they relate to such Notes in the context of
the introduction of the Euro or (ii) correct any manifest error or any ambiguity
or correct or supplement any defective provisions described herein and which
changes or additions the Issuer and the Trustee believe are not materially
prejudicial to the interests of the Holders of the Notes of such series. Any
such change or addition shall be binding on the Issuer, the Holders of the Notes
of such series, the Trustee, the Paying Agents and any other agent of the
Issuer. The Issuer shall promptly give notice of any such change or addition.
"EMU" means Economic and Monetary Union as contemplated by the Treaty
of Rome;
"ECU" means the European Currency Unit or its successor as the unit of
account of the European Community and the European Central Bank;
"EMU Date" means the day on which the third stage of EMU has started
or events have occurred which have substantially the same effects and which
result in substantially the same consequences as the effects and consequences of
the start of third stage of EMU as contemplated by the Maastricht Treaty in
effect as of the date of the Indenture;
"Euro" means the single or unified currency to be introduced in the
Participating Member States, whether known as the Euro or otherwise;
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<PAGE>
"Fixed Conversion Rate" with respect to any Specified Currency means
the irrevocably fixed conversion rate between the Euro and such Specified
Currency adopted by the Council of the European Union according to Article 109
1(4) first sentence of the Treaty of Rome;
"Maastricht Treaty" means the treaty on European Union which was
signed in Maastricht on February 1, 1992 and came into force on November 1,
1993;
"Participating Member State" means a member state of the European
Community established by the Treaty of Rome which adopts the Euro in accordance
with the Treaty of Rome; and
"Treaty of Rome" means the Treaty of Rome of March 25, 1957, as
amended by the Single European Act of 1986 and the Maastricht Treaty,
establishing the European Community, as amended from time to time.
If (i) the principal of and any interest and premium (if any) on the
Notes of a series is payable in any Specified Currency (including ECU) other
than U.S. dollars and (ii) after the EMU Date, the Currency Country has become a
Participating Member State or, if the Specified Currency of the Notes of such
series is the ECU, the Euro is substituted for the ECU as the unit of account of
the European Community or the European Central Bank, then, subject to the
provisions below, the Issuer may, without the consent of the Holders of such
Notes or the need to execute a supplemental indenture to the Indenture, on any
Interest Payment Date after the EMU Date (as defined below) has occurred (or if
that day is not a business day in any location(s) which is or are determined by
the Issuer to be necessary or appropriate for the consolidation of the Notes of
such series, the next following day which is a business day in such location(s))
(each a "Consolidation Date"), and on the giving of not less than 30 days'
notice prior to the Interest Payment Date falling on or immediately prior to the
relevant Consolidation Date in accordance with the terms hereof (which notice
shall detail the manner in which consolidation shall be effected), consolidate
the Notes of such series with one or more series of Other Securities, provided,
however, (i) that such consolidation may only be carried out if the Notes of
such series and the Other Securities to be consolidated have been redenominated
in Euros on or before the Interest Payment Date falling on or immediately prior
to the relevant Consolidation Date (if not already so denominated), and (ii)
that no Event of Default under the Notes of such series or other event which,
with the giving of notice or the passage of time or both, would be an Event of
Default under the Notes of such series, or any similar event under the terms of
such Other Securities, has occurred and is continuing.
"Other Securities" means, at any time, any one or more series of other
Notes or other notes or bonds of the Issuer which (i) are issued pursuant to the
Indenture or an indenture supplemental thereto and have the same or
substantially the same terms and conditions (as then in effect and which have
not lapsed), and the benefit of the same rights, as the Notes of a series (other
than in relation to the currency of original denomination and/or the
denomination and/or the terms and conditions of Notes of such series relating to
business days or interest accrual bases and/or the stock exchange(s) (if any) on
which such other Notes or other notes or bonds are listed and/or the clearing
systems through which such other Notes or other notes or bonds are cleared and
settled and/or redenomination into Euros and/or notices) and (ii) have been
designated by the Issuer as falling within clause (i) above and remain so
designated.
R-5
<PAGE>
The Issuer may exercise its right referred to above if it determines
that the Notes of a series and Other Securities which it proposes to consolidate
(collectively, the "Consolidating Securities") will, with effect from the date
of their consolidation, (i) be cleared and settled on an interchangeable basis
with the same securities identification numbers through the main clearing
systems through which the Notes of such series and the relevant Other Securities
were cleared and settled immediately prior to consolidation unless on the date
of such proposed consolidation it will be impossible to so clear and settle the
Consolidating Securities in one or more of such main clearing systems, in which
case the Consolidating Securities need not so clear and settle through such
unavailable clearing system(s) unless it would be materially prejudicial to the
Holders of the Notes of such series who hold their Notes through such clearing
system(s) and (ii) if either the Notes of such series or the relevant Other
Securities were listed on any European stock exchange on which debt obligations
issued in the Euromarkets are customarily listed immediately prior to the
consolidation contemplated hereby, be listed on at least one such exchange.
Notwithstanding the preceding paragraph, the definitions of Business
Day and Market Day that shall apply to a Note for payments on or in respect of
such Note following consolidation thereof shall be (A) business day and market
day definitions for fixed or floating rate (as applicable) Euro-denominated debt
obligations issued in the Euromarkets and held in international clearing systems
which are consistent with existing or anticipated market practice as determined
by the Issuer, or (B) the component business days included in the Business Day
and Market Day which applied to such Note and the business day and market day
definitions which applied to the relevant Other Securities for payments thereon
or in respect thereof prior to consolidation or (C) if the Issuer would be
unable to make payments on such Note on the date that payment is expressed to be
due if (B) above were to apply, such other business day and market day
definitions as are determined by the Issuer.
The interest accrual basis and the provisions of the Notes of a series
relating to the source and determination of such interest accrual basis that
shall apply to the Notes of such series consolidated in accordance with the
provisions hereof from, and including, the Interest Payment Date falling on or
immediately prior to the Consolidation Date shall remain the same if the Other
Securities which have been consolidated with such Notes had the same interest
accrual basis and the same such provisions prior to such consolidation as
applies to such Notes. If such Other Securities do not have such same interest
accrual basis and/or the same such provisions, then notwithstanding the
provisions above concerning redenomination of Notes, the interest accrual basis
and/or the provisions of the Notes of such series relating to the source and
determination of such interest accrual basis, as the case may be, that shall
apply to such Notes from, and including, the Interest Payment Date falling on or
immediately prior to such Consolidation Date shall be (i) the interest accrual
basis and/or such provisions which applied to such Notes prior to their
consolidation, unless such interest accrual basis is and/or such provisions are
inconsistent with the then-existing or anticipated market practice for Euro-
denominated debt obligations issued in the Euromarkets with fixed rate or
floating rate interest payments (as the case may be) of frequencies identical or
substantially similar to the frequency of interest payments thereunder and held
in international clearing systems, as determined by the Issuer, or (ii) if the
interest accrual basis which applied to such Notes prior to their consolidation
is and/or such provisions are so inconsistent, the interest accrual basis and/or
the provisions of the Notes of such series relating to the source and
determination of such interest accrual basis, as the case may be, which is
consistent with the then-existing or anticipated market practice for Euro-
denominated debt obligations issued in the
R-6
<PAGE>
Euromarkets with fixed rate or floating rate interest payments (as the case may
be) of frequencies identical or substantially similar to the frequency of
interest payments hereunder and held in international clearing systems, as
determined by the Issuer.
On a consolidation pursuant to the provisions hereof, the Issuer may
without the need to obtain the consent of Holders of the affected Notes, alter
the nominal amounts in which such Notes are denominated as a result of any
previous redenomination of such Notes.
Upon any consolidation of the Notes of a series represented by a
Global Note with any series of Other Securities so represented, the Issuer may
change the depositary(ies) which hold(s) the Notes of such series and/or the
relevant Other Securities either physically or on behalf of the clearing
system(s) through which the Notes of such series and/or the relevant Other
Securities are held and/or issue a replacement Global Note or Global Notes
representing such Notes. Notes of series represented by Certificated Notes must
be exchanged for Notes represented by a Global Note prior to any consolidation
hereunder. If such exchange is not possible pursuant to the terms of such Notes,
no such consolidation of such Notes with Other Securities represented by a
Global Note may take place.
The Issuer undertakes to the Holders of the Notes of a series
consolidated in accordance with the provisions hereof that, following a
consolidation of the Notes of such series with a series of Other Securities, it
shall, in dealing with the Holders of the Notes of such series, have regard to
the interests of such Holders and the Holders of the relevant Other Securities
alike.
The Issuer may, with the consent of the Trustee, and without the need
to obtain the consent of the Holders of any Note, make any changes or additions
to the terms of the Notes of a series which (i) the Issuer or the Trustee
believes are necessary or appropriate to facilitate the implementation of the
practical aspects of this section as they relate to such Notes in the context of
the relevant consolidation or (ii) correct any manifest error or any ambiguity
or correct or supplement any defective provisions described herein, and which
changes or additions the Issuer and the Trustee believe are not materially
prejudicial to the interests of the Holders of the Notes of such series. Any
such change or addition shall be binding on the Issuer, the Holders of the Notes
of such series, the Trustee, the Paying Agents and any other agent of the
Issuer. Any change or addition shall be considered to be made by operation of
the terms of the relevant Notes. The Issuer shall promptly give notice of any
such change or addition.
Except as provided in the Note or in the Pricing Supplement with
respect to the redenomination of the Notes of a series into Euros or the
consolidation of a series of Notes with other series of Notes upon or subsequent
to such conversion, the occurrence or non-occurrence of an EMU Event (as defined
below) or the entry into force of any law, regulation, directive or order
requiring redenomination or consolidation to be undertaken on terms different
than those described herein, will not have the effect of altering any term of,
or discharging or excusing performance under, the Indenture or Notes nor give
the Issuer, the Trustee or the Holder of such Notes, the right unilaterally to
alter or terminate the Indenture or Notes or give rise to any Event of Default
or otherwise be the basis for any acceleration, early redemption, rescission,
notice, repudiation, adjustment or renegotiation of the terms of the Indenture
or Notes. The occurrence or non-occurrence of an EMU Event will be considered to
occur automatically pursuant to the terms of the Notes. For purposes hereof,
"EMU Event" means any event associated with EMU in the European
R-7
<PAGE>
Community, including, without limitation, each (and any combination) of (i) the
introduction of, changeover to or operation of the Euro; (ii) the fixing of
exchange rates between the currency of a Participating Member State and the Euro
or between the currencies of Participating Members States; (iii) the
substitution of the Euro for the ECU as the unit of account of the European
Community or the European Central Bank; (iv) the introduction of the Euro as
lawful currency in a Participating Member State; (v) the withdrawal from legal
tender of any currency that, before the introduction of the Euro, was lawful
currency in any of the Participating Member States; or (vi) the disappearance or
replacement of a relevant rate option or other price source for the ECU or the
national currency of any participating Member State, or the failure of the
agreed sponsor (or a successor sponsor) to publish or display a relevant rate,
index, price, page or screen.
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 Optional Redemption Date. 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
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 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
canceled 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.
R-8
<PAGE>
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 Optional Redemption Date or the Optional Repayment Date, 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.
If this Note is a Global Security, ownership of beneficial interests
herein will be limited to participants in DTC or persons that hold interests
through such participants, and the transfer of beneficial interests herein
will be effected only through records maintained by DTC (and with respect to
interests of participants in DTC) and by participants in DTC or persons that
may hold interests through such participants (with respect to persons other
than participants in DTC).
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of 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) DTC notifies the Company that it is unwilling or unable to continue as
depositary for this Note or if at any time DTC 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 DTC 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, this Note is transferable on the Debt Security register of
the Company, upon surrender of this Note for registration of transfer at the
office or agent of the Company in The City of New York, New York, or the City
of Philadelphia, Pennsylvania, duly endorsed by or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Debt
Security registrar, duly executed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new 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.
R-9
<PAGE>
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
owner hereof for the purpose of receiving payment as herein provided and for
all other 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 shall occur and be continuing with respect to
the Notes, the unpaid principal amount of the Notes may be declared due and
payable in the manner and with the effect provided in 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 aggregate
principal amount of each series of the Debt Securities at the time outstanding
(as defined in the Indenture) to be affected (each series voting as a class),
evidenced as in the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in
any manner the rights of the Holders of the Debt Securities of all such
series; provided, however, that no such supplemental indenture shall, among
-------- -------
other things, (i) extend the fixed maturity of any Debt Security, or reduce
the rate or extend the time of payment of interest thereon, or reduce the
principal amount or premium if any, thereon, or make the principal thereof, or
premium if any, or interest, if any, thereon payable in any coin or currency
other than that hereinabove provided, without the consent of the Holder of
each Debt Security so affected or reduce the amount of principal of an
Original Issue Discount Security that would be due and payable upon
acceleration of maturity thereof, or (ii) reduce the aforesaid percentage of
Debt Securities the Holders of which are required to consent to any such
supplemental indenture, without the consent of the Holders of each Debt
Security so affected. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding, as defined in the Indenture, on behalf of the Holders of all the
Notes, 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 of this
Note and of any Note issued upon the transfer hereof or in exchange therefor
or in lieu hereof whether or not notation of such consent or waiver is made
upon this Note or upon any Note issued upon the transfer hereof or in exchange
therefor or in lieu hereof.
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 interest on this Note
at the times, places and rate, and in the coin and currency, herein
prescribed.
No recourse shall be made for the payment of the principal of or the
interest on this Note or for any claim based herein or otherwise in any manner
in respect hereof, or in respect of the Indenture, against any incorporator,
stockholder, officer or director, as such past, present or future, of the
Company or of any predecessor or successor corporation, whether by virtue of
any constitutional provision or statute or rule of law, or by the enforcement
of any assessment or penalty or in any other manner, all such liability being
expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.
R-10
<PAGE>
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
R-11
<PAGE>
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:
<TABLE>
<S> <C> <C>
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 of Under Uniform Gifts to Minors Act
survivorship and not as tenants _________________________________
in common (State)
</TABLE>
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 Registrar at The First National Bank of Chicago, c/o First
Chicago Trust Company of New York, 14 Wall Street - 8th Floor, Window 2, New
York, New York 10005, Attention: Corporate Trust Administration.
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 Typewrite Name and Address of Assignee
____________________________________________________________
the within Instrument of MCDONALD'S CORPORATION and hereby does irrevocably
constitute and appoint
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-12
<PAGE>
EXHIBIT 4(E)
SERIES F FLOATING RATE NOTE
REGISTERED PRINCIPAL AMOUNT
NO. MCDONALD'S CORPORATION
MEDIUM-TERM NOTE, SERIES F
(FLOATING RATE) CUSIP
Due from One Year to 60 Years from Date of Issue
IF THE REGISTERED OWNER OF THIS NOTE (AS INDICATED BELOW) IS THE
DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC, THIS NOTE IS A GLOBAL
SECURITY AND THE FOLLOWING LEGEND IS APPLICABLE: UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUIRED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN
INTEREST HEREIN. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES REPRESENTED HEREBY IN DEFINITIVE REGISTERED FORM, THIS REGISTERED
GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE
OF DTC, OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC, OR BY DTC 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 and if
this Note is not a Book-Entry Note)
Method of Payment of Principal:
(Applicable only if other than immediately available funds)
Authorized Denominations:
(Applicable only if other than U.S. $1,000 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:
B-1
<PAGE>
MCDONALD'S CORPORATION, a corporation duly organized and existing under the
laws of the State of Delaware (herein called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to
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 as specified on the face hereof shall, 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 as specified on the face hereof, which shall be the date
(whether or not a Business Day), 15 calendar days immediately preceding such
Interest Payment Date. 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. 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 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; (ii) if the Specified
Currency for this Note is ECU, a day that does not appear as an ECU non-
settlement day on the display designated as "ISDE" on the Reuter Monitor Money
Rates Service (or a day so designated by the ECU Banking Association) or, if
ECU non-settlement days do not appear on that page (and are not so designated)
a day on which payments in ECU may be settled in the international interbank
market; (iii) if the Specified Currency for this Note is Euro, a day fixed as
described herein; and (iv) if this Note is a LIBOR Note, a London Business
Day. "Principal Financial Center" means the capital city of the country
issuing the currency or composite currency in which any payment in respect of
this Note is to be made, except that with respect to Australian dollars,
Deutsche marks, Dutch guilders, Italian lire and Swiss francs, the Principal
Financial Center shall be Sydney, Frankfurt, Amsterdam, Milan, Zurich and
Luxembourg, respectively. "London Business Day" means (i) if the Index
Currency (as defined on the face hereof) is other than Euro or ECU, any day on
which dealings in such Index Currency are transacted in the London interbank
market; (ii) if the Index Currency is Euro, any day fixed as described herein;
and (iii) if the Index Currency is ECU, then any day that does not appear as
an ECU non-settlement day on the display designated as "ISDE" on the Reuter
Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU non-settlement days do not appear on that page (and
are not so designated) any day on which payments in ECU may be settled in the
international interbank market.
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
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respect hereof in the Specified Currency by delivery of a written notice to
the Paying Agent not later than 15 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 15 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 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
15 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 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 Place of
Payment. If this Note is a Global Security, beneficial owners of interest
herein will be paid in accordance with DTC'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 if set forth in this place.
Unless the Certificate of Authentication hereon has been executed by the
Trustee referred to on the reverse hereof (or by an Authenticating Agent, as
provided in the Indenture) by manual signature, this Note shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
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In Witness Whereof, McDonald's Corporation has caused this Note to be signed
in its corporate name by the Chairman of the Board or its President or one of
its Vice Presidents manually or in facsimile and a facsimile of its corporate
seal to be imprinted hereon and attested by the manual or facsimile signature
of its Secretary or one of its Assistant Secretaries.
Dated: _______ ___, 1998
MCDONALD'S CORPORATION
By:___________________________________
Senior Vice President and Treasurer
ATTEST:
By:_________________________
Secretary
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated herein
provided for in the within mentioned Indenture.
Dated: ____________, 1998
FIRST UNION NATIONAL BANK,
as Trustee
THE FIRST NATIONAL BANK OF CHICAGO,
as Authenticating Agent
By:________________________________
Authorized Signatory
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MCDONALD'S CORPORATION
MEDIUM-TERM NOTE, SERIES F
(FLOATING RATE)
This Note is one of a series of duly authorized issue of debentures,
notes or other evidences of indebtedness of the Company (the "Debt
Securities") of a series hereinafter specified, all issued or to be issued in
one or more series under a Senior Debt Securities Indenture, dated as of
October 19, 1996 (herein called the "Indenture"), between the Company and
First Union National Bank, 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. The Debt Securities may be issued in one or more series, which
different series may be issued in various currencies, may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
(if any), may be subject to different sinking, purchase or analogous funds (if
any), may be subject to different covenants and Events of Default and may
otherwise vary as in the Indenture provided. This Debt Security is one of the
series designated on the face hereof, limited in aggregate initial public
offering price or purchase price of up to U.S.$1,000,000,000 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 Notes
denominated in U.S. dollars will be U.S.$1,000 and any larger amount that is
an integral multiple of U.S.$1,000. The authorized denominations of Notes
denominated in a currency other than U.S. dollars will be as set forth on the
respective faces thereof.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. Only 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.
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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 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, then such
payments will be made in the Specified Currency, unless the Specified Currency
is unavailable 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, 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 the principal of and any interest and premium, if any, on the Notes
of a series is payable in any Specified Currency (including ECU (as defined
below)) other than U.S. dollars and (i) the country of which such Specified
Currency has been a currency of legal tender for the payment of public and
private debts (the "Currency Country") becomes a Participating Member State
(as defined below) or (ii) if such Specified Currency is the ECU and the Euro
is substituted for the ECU as the unit of account of the European Community or
the European Central Bank, then the Issuer may, solely at its option and
without the consent of the Holders of such Notes or the need to execute a
supplemental indenture to the Indenture, on any Interest Payment Date after
the EMU Date and after the date on which such country has become a
Participating Member State or such substitution of the Euro for the ECU has
occurred, respectively (such Interest Payment Date, a "Redenomination Date"),
redenominate all of the Notes of such series into Euros (whether or not any
Other Securities (as defined below) are so redenominated) upon the giving of
not less than 30 days' notice thereof in accordance with the terms of such
Notes, which notice shall set forth the manner in which such redenomination
shall be effected. If the Issuer elects to so redenominate a series of Notes,
the Notes of such series shall be redenominated:
(i) in such manner and subject to such procedures as the Issuer shall
determine to be consistent with existing or anticipated market practice
for the
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redenomination into Euros of debt obligations issued in the Euromarkets
(whether denominated in such Specified Currency or otherwise) which are
held in international clearing systems ("euromarket debt obligations");
or
(ii) if no such determination as set out in clause (i) above is made,
the Issuer shall convert the nominal Specified Currency amount of each
Note of such series into Euros by using the Fixed Conversion Rate (as
defined below) and rounding the resultant figure to the nearest cent
(with 0.005 of a Euro being rounded upwards) (the "Redenominated Amount")
and the Notes of the same series denominated in such Specified Currency
shall be replaced either (1) by the Notes of the same series equal in
value to the Redenominated Amount, denominated in Euros, each with a
denomination of one cent; or (2) if the international clearing systems in
which the Notes are then cleared and settled do not then accept for
clearance and settlement redenominated euromarket debt obligations, each
with a denomination of one cent, by Notes of the same series equal in
value to the Redenominated Amount, denominated in Euros, each with a
denomination of one Euro. Any balance remaining from a redenomination in
accordance with clause (2) above shall be paid by way of cash adjustment.
Such cash adjustment shall be payable in Euros on the Redenomination Date
to, or to the order of, the Holders of the Notes of such series in a
manner substantially similar to that provided herein for the payment of
interest on the Notes.
Without prejudice to the foregoing, the Issuer may, solely at its
option and without the consent of the Holders of the Notes or a series of the
need to execute a supplemental indenture to the Indenture, upon the giving of
not less than 30 days' irrevocable notice thereof in accordance with the terms
hereof (which notice shall set forth the manner in which such further
redenomination shall be effected), elect that, with effect from the
Redenomination Date for such series or such later Interest Payment Date as it
may specify (the "Specified Date"), the denominations of the Notes of such
series shall be one cent (if applicable), Euro 1, Euro 10, Euro 100, Euro
1,000, Euro 10,000, Euro 100,000 and Euro 1,000,000; provided, however, that
in no event shall the minimum denominations of such Notes after the
Redenomination Date with respect thereto be lower than the equivalent of any
minimum denominations of such Notes required by law, regulation or market
practice. If the Issuer so elects, the then-existing Euro-denominated Notes of
a series ("Original Euro Notes") shall be exchangeable for Notes of such new
denomination ("New Euro Notes") having the same aggregate nominal amount as
the Original Euro Notes so exchanged, in accordance with procedures to be set
forth in the relevant notice of redenomination.
The definitions of Business Day and Market Day that shall apply to the
Notes for payments on or in respect thereof following any redenomination
thereof and for all other purposes under the Notes and under the Indenture
shall be (A) business day and market day definitions for fixed or floating
rate (as applicable) Euro-denominated debt obligations issued in the
Euromarkets and held in international clearing systems which are consistent
with existing or anticipated market practice as determined by the Issuer or
(B) if no such Business Day and Market Day definitions are so determined, the
definitions of Business Day and Market Day which applied to such Notes before
redenomination or (C) if the Issuer would be unable to make payments on the
Notes on the date that payment is expressed to be due if
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(B) above were to apply, such other business day and market day definitions as
are determined by the Issuer.
If the Notes of a series are to be consolidated with Other Securities
(as defined below) by reference to the same Interest Payment Date as a
redenomination of the Notes of such series into Euros or to an Interest
Payment Date following the Interest Payment Date by reference to which the
Notes of such series are redenominated in Euros, the provisions below
concerning consolidation of Notes shall apply with effect from the
Consolidation Date (as defined below) for such consolidation.
If a Note redenominated in accordance with this section is a Floating
Rate Security, the rate of interest that shall apply to such Note from, and
including, the Interest Payment Date falling on or immediately prior to the
Redenomination Date shall be (i) the interest rate which applied to such Note
prior to the redenomination, with "Euros" substituted for the Specified
Currency specified for such Note, unless such interest rate is inconsistent
with the then-existing or anticipated market practice for Euro-denominated
debt obligations issued in the Euromarkets with floating rate interest
payments of frequencies identical or substantially similar to the frequency of
interest payments hereunder and held in international clearing systems, as
determined by the Issuer, or (ii) if such interest rate is so inconsistent,
the interest rate which is consistent with the then-existing or anticipated
market practice for Euro-denominated debt obligations issued in the
Euromarkets and held in international clearing systems, in each case with such
interest rate equal to the interest rate applicable hereto (adjusted as
aforesaid) plus or minus any spread indicated in the Pricing Supplement for
such Notes, as determined by the Issuer.
Unless and until the Notes of a series redenominated in accordance
with the provisions hereof are to be consolidated with Other Securities in
accordance with the provisions below concerning consolidation of Notes, the
interest accrual basis and the provisions of the Notes of such series relating
to the source and determination of such interest accrual basis that shall
apply to such Notes from, and including, the Interest Payment Date falling on
or immediately prior to the Redenomination Date shall be (i) the interest
accrual basis and such provisions which applied to such Notes prior to such
redenomination, unless such interest accrual basis is and/or such provisions
are inconsistent with the then-existing or anticipated market practice for
Euro-denominated debt obligations issued in the euromarkets with fixed rate or
floating rate interest payments (as the case may be) of frequencies identical
or substantially similar to the frequency of interest payments under such
Notes, based, in the case of floating interest rate payments, on the reference
rate applicable to such Notes prior to the Redenomination Date and held in
international clearing systems as determined by the Issuer or (ii) if the
interest accrual basis which applied to such Notes prior to the Redenomination
Date is and/or such provisions are so inconsistent, the interest accrual basis
and/or the provisions of the Notes of such series relating to the source and
determination of such interest accrual basis, as the case may be, which is
consistent with the then-existing or anticipated market practice for Euro-
denominated debt obligations issued in the euromarkets with fixed rate or
floating rate interest payments (as the case may be) of frequencies identical
or substantially similar to the frequency of interest payments under such
Notes, based, in the case of floating interest rate payments, on the reference
rate applicable to such Notes (adjusted as aforesaid) and held in
international clearing systems as determined by the Issuer.
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The Issuer may, with the consent of the Trustee, and without the need
to obtain the consent of the Holder of any Note, make any changes or additions
to the terms of the Notes of a series which (i) the Issuer or the Trustee
believes are necessary or appropriate to facilitate the implementation of the
practical aspects of this section as they relate to such Notes in the context
of the introduction of the Euro or (ii) correct any manifest error or any
ambiguity or correct or supplement any defective provisions described herein
and which changes or additions the Issuer and the Trustee believe are not
materially prejudicial to the interests of the Holders of the Notes of such
series. Any such change or addition shall be binding on the Issuer, the
Holders of the Notes of such series, the Trustee, the Paying Agents and any
other agent of the Issuer. The Issuer shall promptly give notice of any such
change or addition.
"EMU" means Economic and Monetary Union as contemplated by the Treaty
of Rome;
"ECU" means the European Currency Unit or its successor as the unit of
account of the European Community and the European Central Bank;
"EMU Date" means the day on which the third stage of EMU has started
or events have occurred which have substantially the same effects and which
result in substantially the same consequences as the effects and consequences
of the start of third stage of EMU as contemplated by the Maastricht Treaty in
effect as of the date of the Indenture;
"Euro" means the single or unified currency to be introduced in the
Participating Member States, whether known as the Euro or otherwise;
"Fixed Conversion Rate" with respect to any Specified Currency means
the irrevocably fixed conversion rate between the Euro and such Specified
Currency adopted by the Council of the European Union according to Article 109
1(4) first sentence of the Treaty of Rome;
"Maastricht Treaty" means the treaty on European Union which was
signed in Maastricht on February 1, 1992 and came into force on November 1,
1993;
"Participating Member State" means a member state of the European
Community established by the Treaty of Rome which adopts the Euro in
accordance with the Treaty of Rome; and
"Treaty of Rome" means the Treaty of Rome of March 25, 1957, as
amended by the Single European Act of 1986 and the Maastricht Treaty,
establishing the European Community, as amended from time to time.
If (i) the principal of and any interest and premium (if any) on the
Notes of a series is payable in any Specified Currency (including ECU) other
than U.S. dollars and (ii) after the EMU Date, the Currency Country has become
a Participating Member State or, if the Specified Currency of the Notes of
such series is the ECU, the Euro is substituted for the ECU as the unit of
account of the European Community or the European Central Bank, then, subject
to the provisions below, the Issuer may, without the consent of the Holders of
such
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Notes or the need to execute a supplemental indenture to the Indenture, on any
Interest Payment Date after the EMU Date (as defined below) has occurred (or
if that day is not a business day in any location(s) which is or are
determined by the Issuer to be necessary or appropriate for the consolidation
of the Notes of such series, the next following day which is a business day in
such location(s)) (each a "Consolidation Date"), and on the giving of not less
than 30 days' notice prior to the Interest Payment Date falling on or
immediately prior to the relevant Consolidation Date in accordance with the
terms hereof (which notice shall detail the manner in which consolidation
shall be effected), consolidate the Notes of such series with one or more
series of Other Securities, provided, however, (i) that such consolidation may
only be carried out if the Notes of such series and the Other Securities to be
consolidated have been redenominated in Euros on or before the Interest
Payment Date falling on or immediately prior to the relevant Consolidation
Date (if not already so denominated), and (ii) that no Event of Default under
the Notes of such series or other event which, with the giving of notice or
the passage of time or both, would be an Event of Default under the Notes of
such series, or any similar event under the terms of such Other Securities,
has occurred and is continuing.
"Other Securities" means, at any time, any one or more series of other
Notes or other notes or bonds of the Issuer which (i) are issued pursuant to
the Indenture or an indenture supplemental thereto and have the same or
substantially the same terms and conditions (as then in effect and which have
not lapsed), and the benefit of the same rights, as the Notes of a series
(other than in relation to the currency of original denomination and/or the
denomination and/or the terms and conditions of Notes of such series relating
to business days or interest accrual bases and/or the stock exchange(s) (if
any) on which such other Notes or other notes or bonds are listed and/or the
clearing systems through which such other Notes or other notes or bonds are
cleared and settled and/or redenomination into Euros and/or notices) and (ii)
have been designated by the Issuer as falling within clause (i) above and
remain so designated.
The Issuer may exercise its right referred to above if it determines
that the Notes of a series and Other Securities which it proposes to
consolidate (collectively, the "Consolidating Securities") will, with effect
from the date of their consolidation, (i) be cleared and settled on an
interchangeable basis with the same securities identification numbers through
the main clearing systems through which the Notes of such series and the
relevant Other Securities were cleared and settled immediately prior to
consolidation unless on the date of such proposed consolidation it will be
impossible to so clear and settle the Consolidating Securities in one or more
of such main clearing systems, in which case the Consolidating Securities need
not so clear and settle through such unavailable clearing system(s) unless it
would be materially prejudicial to the Holders of the Notes of such series who
hold their Notes through such clearing system(s) and (ii) if either the Notes
of such series or the relevant Other Securities were listed on any European
stock exchange on which debt obligations issued in the Euromarkets are
customarily listed immediately prior to the consolidation contemplated hereby,
be listed on at least one such exchange.
Notwithstanding the preceding paragraph, the definitions of Business
Day and Market Day that shall apply to a Note for payments on or in respect of
such Note following consolidation thereof shall be (A) business day and market
day definitions for fixed or floating
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rate (as applicable) Euro-denominated debt obligations issued in the
Euromarkets and held in international clearing systems which are consistent
with existing or anticipated market practice as determined by the Issuer, or
(B) the component business days included in the Business Day and Market Day
which applied to such Note and the business day and market day definitions
which applied to the relevant Other Securities for payments thereon or in
respect thereof prior to consolidation or (C) if the Issuer would be unable to
make payments on such Note on the date that payment is expressed to be due if
(B) above were to apply, such other business day and market day definitions as
are determined by the Issuer.
The interest accrual basis and the provisions of the Notes of a series
relating to the source and determination of such interest accrual basis that
shall apply to the Notes of such series consolidated in accordance with the
provisions hereof from, and including, the Interest Payment Date falling on or
immediately prior to the Consolidation Date shall remain the same if the Other
Securities which have been consolidated with such Notes had the same interest
accrual basis and the same such provisions prior to such consolidation as
applies to such Notes. If such Other Securities do not have such same interest
accrual basis and/or the same such provisions, then notwithstanding the
provisions above concerning redenomination of Notes, the interest accrual
basis and/or the provisions of the Notes of such series relating to the source
and determination of such interest accrual basis, as the case may be, that
shall apply to such Notes from, and including, the Interest Payment Date
falling on or immediately prior to such Consolidation Date shall be (i) the
interest accrual basis and/or such provisions which applied to such Notes
prior to their consolidation, unless such interest accrual basis is and/or
such provisions are inconsistent with the then-existing or anticipated market
practice for Euro-denominated debt obligations issued in the Euromarkets with
fixed rate or floating rate interest payments (as the case may be) of
frequencies identical or substantially similar to the frequency of interest
payments thereunder and held in international clearing systems, as determined
by the Issuer, or (ii) if the interest accrual basis which applied to such
Notes prior to their consolidation is and/or such provisions are so
inconsistent, the interest accrual basis and/or the provisions of the Notes of
such series relating to the source and determination of such interest accrual
basis, as the case may be, which is consistent with the then-existing or
anticipated market practice for Euro-denominated debt obligations issued in
the Euromarkets with fixed rate or floating rate interest payments (as the
case may be) of frequencies identical or substantially similar to the
frequency of interest payments hereunder and held in international clearing
systems, as determined by the Issuer.
On a consolidation pursuant to the provisions hereof, the Issuer may
without the need to obtain the consent of Holders of the affected Notes, alter
the nominal amounts in which such Notes are denominated as a result of any
previous redenomination of such Notes.
Upon any consolidation of the Notes of a series represented by a
Global Note with any series of Other Securities so represented, the Issuer may
change the depositary(ies) which hold(s) the Notes of such series and/or the
relevant Other Securities either physically or on behalf of the clearing
system(s) through which the Notes of such series and/or the relevant Other
Securities are held and/or issue a replacement Global Note or Global Notes
representing such Notes. Notes of series represented by Certificated Notes
must be exchanged for Notes represented by a Global Note prior to any
consolidation hereunder. If such exchange is not
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possible pursuant to the terms of such Notes, no such consolidation of such
Notes with Other Securities represented by a Global Note may take place.
The Issuer undertakes to the Holders of the Notes of a series
consolidated in accordance with the provisions hereof that, following a
consolidation of the Notes of such series with a series of Other Securities,
it shall, in dealing with the Holders of the Notes of such series, have regard
to the interests of such Holders and the Holders of the relevant Other
Securities alike.
The Issuer may, with the consent of the Trustee, and without the need
to obtain the consent of the Holders of any Note, make any changes or
additions to the terms of the Notes of a series which (i) the Issuer or the
Trustee believes are necessary or appropriate to facilitate the implementation
of the practical aspects of this section as they relate to such Notes in the
context of the relevant consolidation or (ii) correct any manifest error or
any ambiguity or correct or supplement any defective provisions described
herein, and which changes or additions the Issuer and the Trustee believe are
not materially prejudicial to the interests of the Holders of the Notes of
such series. Any such change or addition shall be binding on the Issuer, the
Holders of the Notes of such series, the Trustee, the Paying Agents and any
other agent of the Issuer. Any change or addition shall be considered to be
made by operation of the terms of the relevant Notes. The Issuer shall
promptly give notice of any such change or addition.
Except as provided in the Note or in the Pricing Supplement with
respect to the redenomination of the Notes of a series into Euros or the
consolidation of a series of Notes with other series of Notes upon or
subsequent to such conversion, the occurrence or non-occurrence of an EMU
Event (as defined below) or the entry into force of any law, regulation,
directive or order requiring redenomination or consolidation to be undertaken
on terms different than those described herein, will not have the effect of
altering any term of, or discharging or excusing performance under, the
Indenture or Notes nor give the Issuer, the Trustee or the Holder of such
Notes, the right unilaterally to alter or terminate the Indenture or Notes or
give rise to any Event of Default or otherwise be the basis for any
acceleration, early redemption, rescission, notice, repudiation, adjustment or
renegotiation of the terms of the Indenture or Notes. The occurrence or non-
occurrence of an EMU Event will be considered to occur automatically pursuant
to the terms of the Notes. For purposes hereof, "EMU Event" means any event
associated with EMU in the European Community, including, without limitation,
each (and any combination) of (i) the introduction of, changeover to or
operation of the Euro; (ii) the fixing of exchange rates between the currency
of a Participating Member State and the Euro or between the currencies of
Participating Members States; (iii) the substitution of the Euro for the ECU
as the unit of account of the European Community or the European Central Bank;
(iv) the introduction of the Euro as lawful currency in a Participating Member
State; (v) the withdrawal from legal tender of any currency that, before the
introduction of the Euro, was lawful currency in any of the Participating
Member States; or (vi) the disappearance or replacement of a relevant rate
option or other price source for the ECU or the national currency of any
participating Member State, or the failure of the agreed sponsor (or a
successor sponsor) to publish or display a relevant rate, index, price, page
or screen.
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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 Optional Redemption Date. 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 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 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
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the principal amount of this Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, this Note shall be
canceled 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 Optional Redemption Date or the Optional Repayment Date, 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
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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 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
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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 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.
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
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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 9:00 a.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
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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 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
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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-Non-Financial". 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 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
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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 the yield calculated in accordance
with the following formula:
Money Market Yield = D x 360 X 100
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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 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.
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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 11:00 a.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 rates, as of 11:00 a.m., New York
City time, on the Federal Funds Rate Determination Date for the last
transaction 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 fewer than three brokers
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selected as aforesaid by the Calculation Agent are 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 rate for U.S. dollar deposits, "LIBOR" for each Interest Reset Period
shall be determined by the Calculation Agent as follows:
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(i) On the second London Business Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR 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 U.S. dollars having the
Index Maturity designated in the applicable 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 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 Agent, to
provide the Calculation Agent with its offered quotation for deposits
of not less than $1,000,000 in U.S. dollars for the period of the
Index Maturity designated on the face hereof, commencing on the second
London Business Day immediately following such LIBOR Determination
Date, to prime banks in the London interbank market at approximately
11:00 a.m., London time, on such LIBOR 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 Determination
Date will be the arithmetic mean of such quotations. If fewer than
two quotations are provided, LIBOR determined on such LIBOR
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m. in The City of New York, on such LIBOR
Determination Date by three major banks in The City of New York
selected by the Calculation Agent for loans in the Index Currency to
leading European banks, having the Index Maturity designated on the
face hereof 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 fewer than three banks so selected by the
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Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Determination Date will be LIBOR in effect
on such LIBOR Determination Date.
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"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 Euro, the Principal Financial Center
shall be The City of New York, Milan and Brussels, 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,
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that if fewer than three 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.
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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 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 USPRIME1 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
USPRIME1 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 USPRIME1 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 no
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banks are providing quotes, 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 USPRIME1 Page" means the
display
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designated as page "USPRIME1" on the Reuters Monitor Money Rates Service (or
such other page as may replace the USPRIME1 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 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 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
R-18
<PAGE>
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for 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.
If this Note is a Global Security, ownership of beneficial interests
herein will be limited to participants in DTC or persons that hold interests
through such participants, and the transfer of beneficial interests herein
will be effected only through records maintained by DTC (and with respect to
interests of participants in DTC) and by participants in DTC or persons that
may hold interests through such participants (with respect to persons other
than participants in DTC).
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations, as requested by the
Person surrendering the same.
R-19
<PAGE>
If this Note is a Global Security, this Note is exchangeable only if
(x) DTC notifies the Company that it is unwilling or unable to continue as
depositary for this Note or if at any time DTC 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 DTC 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, this Note is transferable on the Debt Security register of
the Company, upon surrender of this Note for registration of transfer at the
office or agent of the Company in The City of New York, New York or the City
of Philadelphia, Pennsylvania, duly endorsed by or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Debt
Security registrar, duly executed by the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of this series, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same.
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.
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 Owner hereof
for purposes of receiving payment as herein provided and for all other
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 shall occur and be continuing with respect to
the Notes, the unpaid principal of all Notes may be declared due and payable
in this manner and with the effect provided in 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 aggregate
principal amount of each series of the Debt Securities at the time outstanding
(as defined in the Indenture) to be affected (each series voting as a class),
evidenced as in the Indenture provided, to execute supplemental
R-20
<PAGE>
indentures adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or
modifying in any manner the rights of the Holders of the Debt Securities of
all such series; provided, however, that no such supplemental indenture shall,
-------- -------
among other things, (i) extend the fixed maturity of any Debt Security, or
reduce the rate or extend the time of payment of interest thereon, or reduce
the principal amount or premium if any, thereon, or make the principal
thereof, or premium if any, or interest, if any, thereon payable in any coin
or currency other than that hereinabove provided, without the consent of the
Holder of each Debt Security so affected or reduce the amount of principal of
an Original Issue Discount Security that would be due and payable upon
acceleration of maturity thereof, or (ii) reduce the aforesaid percentage of
Debt Securities the Holders of which are required to consent to any such
supplemental indenture, without the consent of Holders of each Debt Security
so affected. The Indenture also contains provisions permitting the Holders of
a majority in aggregate principal amount of the Note at the time Outstanding,
as defined in the Indenture, on behalf of the Holders of all the Notes, 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 of this Note and of any Notes
issued upon the transfer hereof or in exchange therefor or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note or
upon any Note issued upon the transfer hereof or in exchange therefor or in
lieu hereof.
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 interest on this Note
at the times, places and rate, and in the coin and currency, herein
prescribed.
No recourse shall be made for the payment of the principal of or the
interest on this Note or for any claim based herein or otherwise in any manner
in respect hereof, or in respect of the Indenture, against any incorporator,
stockholder, officer or director, as such past, present or future, of the
Company or of any predecessor or successor corporation, whether by virtue of
any constitutional provision or statute or rule or law, or by the enforcement
of any assessment or penalty or in any other manner, all such liability being
expressly waived and released by the acceptance hereof and as part of the
consideration for the issue hereof.
R-21
<PAGE>
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:
<TABLE>
<S> <C>
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 of Under Uniform Gifts to Minors Act
survivorship and not as tenants
in common
______________________________ (State)
</TABLE>
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 Registrar at The First National Bank of Chicago, c/o First
Chicago Trust Company of New York, 14 Wall Street - 8th Floor, Window 2, New
York, New York 10005, Attention: Corporate Trust Administration.
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 Typewrite Name and Address of Assignee
________________________________________________________________
the within Instrument of McDONALD'S CORPORATION and all rights thereunder,
hereby does irrevocably constitute and appoint
________________________________________________________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-22
<PAGE>
EXHIBIT 5
July 15, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: McDonald's Corporation
Registration Statement on Form S-3
----------------------------------
Dear Ladies and Gentlemen:
In my capacity as Vice President, Deputy 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
registration under the Securities Act of 1933, as amended (the "Securities Act")
of $1,000,000,000 in proposed maximum aggregate offering price of Debt
Securities to be issued under a Senior Debt Securities Indenture or a
Subordinated Debt Securities Indenture (the "Indentures"), as supplemented,
between the Company and First Union National Bank, as trustee (the "Trustee"),
all as more fully described in the registration statement on Form S-3 to which
this opinion is an exhibit (the "Registration Statement").
I am an attorney licensed to practice law in the State of Illinois and my
opinion is expressly limited to the laws of the State of Illinois, the General
Corporation Law of the State of Delaware and the federal laws of the United
States of America.
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.
<PAGE>
Page 2
2. The Indentures have been duly authorized by all necessary corporate
action of the Company and have been duly executed and delivered by the Company.
3. When (a) the Registration Statement has become effective under the
Securities Act, and provided no stop order shall have been issued by the
Securities and Exchange Commission relating thereto, and (b) the Debt Securities
are qualified for sale (or exempt) under the securities laws of the states in
which they are offered for sale, then upon the execution of any indenture or
indentures supplemental to the Indentures, and the issuance and sale of the Debt
Securities in conformance with the provisions of the applicable Indenture, as
supplemented, and in the manner and on the terms set forth in the Registration
Statement, the Debt Securities will be, when sold, duly authorized, legally
issued, fully paid, non-assessable and binding obligations of the Company,
entitled to all of the benefits of the applicable Indenture, as supplemented,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforceability of creditor's rights generally
and by the effect of general principles of equity, regardless of whether
enforceability is considered in a proceeding at law or in equity.
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.
Very truly yours,
/s/ Gloria Santona
Gloria Santona
<PAGE>
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 $1,000,000,000 of debt securities and to the
incorporation by reference therein of our report dated January 22, 1998, with
respect to the consolidated financial statements of McDonald's Corporation
included in its Annual Report on Form 10-K for the year ended December 31, 1997,
as amended on Form 10-K/A, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Chicago, Illinois
July 15, 1998
<PAGE>
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 UNION NATIONAL BANK
(Exact Name of Trustee as Specified in its Charter)
22-1147033
(I.R.S. Employer Identification No.)
301 SOUTH COLLEGE STREET, CHARLOTTE, NORTH CAROLINA
(Address of Principal Executive offices)
28288-0630
(Zip Code)
FIRST UNION NATIONAL BANK
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)
60523
(Zip Code)
DEBT SECURITIES
APPLICATION RELATES TO ALL SECURITIES REGISTERED PURSUANT
TO THE DELAYED OFFERING REGISTRATION STATEMENT
(TITLE OF INDENTURE SECURITIES)
<PAGE>
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
Richmond, Virginia 23219
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.
<PAGE>
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.
<PAGE>
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.*
X 2. Copy of the Certificate of the Comptroller of the Currency dated
--
March 4, 1998, evidencing the authority of the trustee to
transact business.
X 3. Copy of the Certification of Fiduciary Powers of the trustee by
--
the Office of the Comptroller of the Currency dated March 4,
1998.**
__ 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, 1998, 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
<PAGE>
__ 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 and Exchange Commission on March 16, 1998
as an Exhibit to Form T-1 in connection with Registration Statement Number
333-47985, 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.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, First Union National Bank, 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 1st day of July, 1998.
FIRST UNION NATIONAL BANK
By: /s/ John H. Clapham
---------------------------
John H. Clapham
Vice President
<PAGE>
EXHIBIT 6
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,
Debt Securities, First Union National Bank, 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 UNION NATIONAL BANK
By: /s/ John H. Clapham
-----------------------------
John H. Clapham
Vice President
Philadelphia, Pennsylvania
July 1, 1998
<PAGE>
EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the First Union National
Bank, Charlotte, North Carolina, at the close of business on March 31, 1998
published in response to call made by Comptroller of the Currency, under title
12, United States Code, Section 161. Charter Number 22693 Comptroller of the
Currency.
STATEMENT OF RESOURCES AND LIABILITIES
<TABLE>
<CAPTION>
ASSETS
Thousand of Dollars
-------------------
<S> <C>
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin..................................7,346,667
Interest-bearing balances..............................................................12,481
Securities...........................................................................//////////
Hold-to-maturity securities.........................................................1,937,159
Available-for-sale securities......................................................31,508,601
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 and securities purchases to resell...............................4,501,133
Loans and lease financing receivables:
Loan and leases, net of unearned income..............................................98,043,231
LESS: Allowance for loan and lease losses.............................................1,213,121
LESS: Allocated transfer risk reserve.........................................................0
Loans and leases, net of unearned income, allowance, and reserve.....................96,830,110
Assets held in trading accounts.......................................................3,818,431
Premises and fixed assets (including capitalized leases)..............................2,660,908
Other real estate owned.................................................................112,869
Investment in unconsolidated subsidiaries and associated //////////
companies.............................................................................269,234
Customer's liability to this bank on acceptances outstanding............................575,447
Intangible assets.....................................................................2,896,263
Other assets..........................................................................7,274,331
Total assets........................................................................159,743,634
LIABILITIES
Deposits:
In domestic offices...............................................................101,438,219
Noninterest-bearing.............................................................19,061,893
Interest-bearing................................................................82,376,326
In foreign offices, Edge and Agreement subsidiaries, and IBFs.......................5,487,257
Noninterest-bearing.................................................................29,619
Interest-bearing.................................................................5,457,638
Federal funds purchased and securities sold under agreements to repurchase...........24,525,123
Demand notes issued to the U.S. Treasury................................................426,758
Trading liabilities...................................................................4,547,797
Other borrowed money:................................................................//////////
With original maturity of one year or less..........................................3,391,194
With original maturity of more than one year thru 3 yrs...............................635,109
With a maturity of more than three years..............................................416,618
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Not applicable.......................................................///////////
Bank's liability on acceptances executed and outstanding.................575,222
Subordinated notes and debentures......................................2,797,773
Other liabilities......................................................3,662,892
Total liabilities....................................................147,903,952
Not applicable.......................................................///////////
EQUITY CAPITAL
Perpetual preferred stock and related surplus............................160,540
Common Stock..............................................................82,795
Surplus................................................................8,532,323
Undivided profits and capital reserves.................................2,823,904
Net unrealized holding gains (losses) on available-for-sale..........///////////
securities.............................................................240,120
Cumulative foreign currency translation adjustments............................0
Total equity capital..................................................11,839,682
Total liabilities and equity capital.................................159,743,634
</TABLE>
<PAGE>
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Comptroller of the Currency
Administrator of National Banks
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Washington, D.C. 20219
CERTIFICATE
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession, custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "First Union National Bank," Charlotte, North Carolina, (Charter No. 22693)
is a National Banking Association formed under the laws of the United States
and is authorized thereunder to transact the business of banking on the date of
this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal
of office to be affixed to these
presents at the Treasury Department in
the City of Washington and District of
Columbia, this 4th day of March, 1998.
[Corporate Seal]
/s/ Eugene A. Ludwig
--------------------------------------
Comptroller of the Currency
<PAGE>
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Comptroller of the Currency
Administrator of National Banks
- --------------------------------------------------------------------------------
Washington, D.C. 20219
Certificate of Fiduciary Powers
I, Eugene A. Ludwig, Comptroller of the Currency, do hereby certify that:
1. The Comptroller of the Currency, pursuant to Revised Statutes 324, et seq.,
as amended, 12 U.S.C. 1, et seq., as amended, has possession , custody and
control of all records pertaining to the chartering of all National Banking
Associations.
2. "First Union National Bank," Charlotte, North Carolina, (Charter No.22693),
was granted, under the hand and seal of the Comptroller, the right to act in all
fiduciary capacities authorized under the provisions of the Act of Congress
approved September 28, 1962, 76 Stat. 668, 12 U.S.C. 92a, and that the authority
so granted remains in full force and effect on the date of this Certificate.
IN TESTIMONY WHEREOF, I have hereunto
subscribed my name and caused my seal
of office to be affixed to these
presents at the Treasury Department in
the City of Washington and District of
Columbia, this 4th day, of March, 1998.
[Corporate Seal]
/s/ Eugene A. Ludwig
---------------------------------------
Comptroller of the Currency
