MCDONALDS CORP (Form: S-3, Received: 07/15/1998 16:33:34)

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1998

REGISTRATION STATEMENT NO. 333-

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

                                                          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
--------------------------------------------------------------------------------------
Debt Securities........  $1,000,000,000      100%      $1,000,000,000     $295,000

(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.

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.                                                     +

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

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.

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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.

                                                          MARCH 31, 1998
                                                       ---------------------
                                                                      AS
                                                       OUTSTANDING ADJUSTED
                                                       ----------- ---------
                                                       (IN MILLIONS OF U.S.
                                                             DOLLARS)
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
                                                        =========  =========

(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.

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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;

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(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

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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;

(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.

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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;

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(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.

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.

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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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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:

                            PRICE TO    AGENTS' COMMISSIONS AND
                             PUBLIC            DISCOUNTS           PROCEEDS TO THE COMPANY
                         -------------- ------------------------ ----------------------------
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

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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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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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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"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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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

+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.

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

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

                                                THREE
                                               MONTHS
                                                ENDED
                                              MARCH 31, YEAR ENDED DECEMBER 31,
                                              --------- ------------------------
                                              1998 1997 1997 1996 1995 1994 1993
                                              ---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges........... 4.57 4.53 5.16 5.11 5.20 5.26 4.86

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.

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;

(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

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;

(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)

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

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,

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;

(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

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.

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

                                                                            PAGE
                                                                            ----
                             PROSPECTUS SUPPLEMENT

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

$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

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth all expenses in connection with the issuance and distribution of the debt securities being registered. All the amounts are estimated, except the Securities and Exchange Commission Registration fee.

Securities and Exchange Commission Registration fee............. $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
                                                                 ========

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

ITEM 16. LIST OF EXHIBITS.

 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.

* 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

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

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.

             SIGNATURE                                 TITLE
             ---------                                 -----
       /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

II-4

             SIGNATURE                                 TITLE
             ---------                                 -----
------------------------------------
          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

II-5

EXHIBIT INDEX

EXHIBIT NO.
-----------
    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.

reference.

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

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.

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.

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.

(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

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.

(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

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.

(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.

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.

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

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:

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:

SCHEDULE II

 UNDERWRITERS                                         PRINCIPAL AMOUNT
 ------------                                         ----------------
                                                           $
                                                           ------
Total................................................      $
                                                           ======

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.

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)

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

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 :

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

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

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.

(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)

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:

Term                                      Commission Rate
----                                      ---------------
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

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

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").

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.

(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

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

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

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).

(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.

(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:

(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

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

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:

(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.

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

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

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).

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),

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

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

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:

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

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

[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

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

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

                         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

                         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

                        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

                        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

                          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

                        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

                        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

                                  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

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

                            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

                                    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

                              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

                              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

                                        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

                              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

                              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

                              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

                              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

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

                                   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

                              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

                              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

                              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

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

                                   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

                              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

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

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

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

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:

Settlement Procedure      Time
--------------------      ----
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.

     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

                                    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

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

                              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

                                   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

                                   principal amount of each Note sold by the
                                   Company as a result of a solicitation made by
                                   such Agent.

B-37

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

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.

(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

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

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.

(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).

(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

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.

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

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

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:

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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

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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

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

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

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

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

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(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.

R-3

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;

R-4

"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

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

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

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.

R-7

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

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

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

All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

R-11

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM -as tenants in common                   UNIF GIFT MIN ACT- _________                               Custodian
TEN ENT -as tenants by the entireties                                                ________  (Cust) _______  (Minor)
 JT ENT -as joint tenants with right of                                              Under Uniform Gifts to Minors Act
         survivorship and not as tenants                                             _________________________________
         in common                                                                                             (State)

Additional abbreviations may also be used though not in the above list

OPTION TO ELECT REPAYMENT

The undersigned hereby irrevocably requests and instructs the Company to repay $__________ principal amount of the within Note, pursuant to its terms, on the "Optional Repayment Date" first occurring after the date of receipt of the within Note as specified below, together with interest thereon accrued to the date 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

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

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

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

B-2

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.

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.

B-3

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.

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.

(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

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 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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"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;

"Euro" means the single or unified currency to be introduced in the Participating Member States, whether known as the Euro or otherwise;

"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

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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.

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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.

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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.

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, 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.

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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 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 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

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 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 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, 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.

R-16

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 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

R-17

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

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.

R-19

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.

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.

R-20

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 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

ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM -as tenants in common               UNIF GIFT MIN ACT- ________Custodian ____________________________
TEN ENT -as tenants by the entireties                                         ________ (Cust) ________ (Minor)
JT ENT  -as joint tenants with right of                                      Under Uniform Gifts to Minors Act
         survivorship and not as tenants
         in common
                                                                        ______________________________ (State)

Additional abbreviations may also be used though not in the above list

OPTION TO ELECT REPAYMENT

(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.

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

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 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

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

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)

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.

7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR OFFICIALS.

FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR, PARTNER, AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER:

Not applicable - see answer to Item 13.

8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.

FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE TRUSTEE:

Not applicable - see answer to Item 13.

9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE:

Not applicable - see answer to Item 13.

10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING STOCK OF THE OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON:

Not applicable - see answer to Item 13.

11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR, FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE:

Not applicable - see answer to Item 13.

12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.

EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE
TRUSTEE, FURNISH THE FOLLOWING INFORMATION:

Not applicable - see answer to Item 13.

13. DEFAULTS BY THE OBLIGOR.

(A) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.

None.

(B) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.

None.

14. AFFILIATIONS WITH THE UNDERWRITERS.

IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.

Not applicable - see answer to Item 13.

15. FOREIGN TRUSTEE.

IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE TRUSTEE IS AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE QUALIFIED UNDER THE ACT.

Not applicable - trustee is a national banking association organized under the laws of the United States.

16. LIST OF EXHIBITS.

LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT! OF ELIGIBILITY.

     __   1.   Copy of Articles of Association of the trustee as now in effect.*

     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

     __   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.

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

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

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

                                    ASSETS

                                                                              Thousand of Dollars
                                                                              -------------------
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

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

Comptroller of the Currency
Administrator of National Banks

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

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.

[Corporate Seal]

/s/ Eugene A. Ludwig
---------------------------------------

Comptroller of the Currency