EXHIBIT 10(ii)

 

THE BOEING COMPANY

 

RESTRICTED STOCK AWARD AGREEMENT

PURSUANT TO THE BOEING COMPANY 2003 INCENTIVE STOCK PLAN

 

THIS AGREEMENT (this “Agreement”) is made effective as of July 1, 2005 (the
“Grant Date”), between The Boeing Company, a Delaware corporation (the
“Company”), and W. James McNerney, Jr. (the “Participant”).

 

R E C I T A L :

 

WHEREAS, the Company desires to grant to the Participant certain shares of its
restricted stock, $5.00 par value per share (“Restricted Stock”), under the
Company’s 2003 Incentive Stock Plan (the “Plan”), which has been approved by its
shareholders.

 

NOW THEREFORE, in consideration of the mutual covenants set forth herein, the
parties agree as follows:

 

1. Grant of the Restricted Stock Award. Subject to the terms and conditions set
forth in this Agreement and the Plan, the Company hereby grants to the
Participant an Award consisting of 162,000 shares (each, a “Share”) of
Restricted Stock, subject to adjustment as set forth in Section 15 of the Plan.
Any capitalized terms not defined herein shall have the same meaning as set
forth in the Plan. Each Share shall vest and become unrestricted in accordance
with Section 2 hereof and otherwise as set forth in the Plan.

 

2. Vesting.

 

(a) The Award shall vest and become unrestricted at the rate of one-sixth of the
Award per each vesting date, for the period commencing on the Grant Date and
ending on January 1, 2011, provided that the Participant is continuously
employed with the Company through each such vesting date for such Shares to
vest, as shown immediately below (except as otherwise provided herein) (each a
“Vesting Date”):

 

Vesting Date

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   Shares Vesting

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January 1, 2006

   27,000

January 1, 2007

   27,000

January 1, 2008

   27,000

January 1, 2009

   27,000

January 1, 2010

   27,000

January 1, 2011

   27,000

 

(b) If the Company shall undergo a Change in Control (as defined in Section
10(a) of the Participant’s Employment Agreement with the Company dated June 29,
2005 (the “Employment Agreement”)), any then-unvested Shares shall then vest and
become unrestricted if and to the extent that then-unvested Awards of Restricted
Stock or Restricted Stock Units granted to other senior executives of the
Company become vested thereupon.

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(c) If the Participant’s employment with the Company is terminated (i) by the
Company without Cause (as defined in Section 7(c) of the Employment Agreement)
or due to the Participant’s Disability (as defined in Section 7(a) of the
Employment Agreement)), (ii) by the Participant for Good Reason (as defined in
Section 7(e) of the Employment Agreement) or (iii) due to the Participant’s
death, then any Shares of Restricted Stock unvested on the date of termination
shall immediately fully vest and become unrestricted.

 

(d) If the Participant’s employment with the Company terminates for any reason
other than as provided in Section 2(c) hereof, the portion of the Award which is
not vested as of the date of termination shall be forfeited by the Participant
and such portion shall be cancelled by the Company. The Participant irrevocably
grants to the Company the power of attorney to transfer any unvested Shares
forfeited to the Company and agrees to execute any document required by the
Company in connection with such forfeiture and transfer.

 

(e) Upon the vesting of Shares of Restricted Stock pursuant to this Section 2,
all restrictions on such vested Shares shall lapse and such Shares shall become
unrestricted and freely transferable.

 

3. Rights as a Shareholder. The Company will issue the Shares by registering the
Shares in book entry form with the Company’s transfer agent in the Participant’s
name and the applicable restrictions will be noted in the records of the
Company’s transfer agent and in the book entry system. No certificate(s)
representing all or a part of the Shares will be issued until the Shares become
vested Shares. The Participant may exercise all voting rights with respect to
the Shares of Restricted Stock and shall be entitled to receive fully vested
dividend equivalents in cash with respect to the Shares of Restricted Stock as
and when declared and paid.

 

4. No Right to Continued Employment. Without limiting the applicability of the
Employment Agreement, this Agreement shall not be construed as giving the
Participant the right to be retained in the employ of the Company.

 

5. Transferability. The Shares subject to the Award and not then vested may not
be transferred by the Participant other than by will or the laws of descent and
distribution. Except to the extent permitted by the foregoing, the Shares
subject to the Award and not then vested may not be sold, transferred, assigned,
pledged, hypothecated, encumbered or otherwise disposed of (whether by operation
of law or otherwise) or be subject to execution, attachment or similar process.
Any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of such Shares shall be null and void.

 

6. Withholding. By accepting the Award, the Participant agrees to make
appropriate arrangements with the Company for the satisfaction of any applicable
federal, state or local income tax withholding requirements, including the
payment to the Company of all such taxes and requirements in connection with the
distribution or delivery of the Shares, or other settlement in respect of the
Shares, and the Company shall be authorized to take such action as may be
necessary (including, without limitation, at the election of the Participant,
withholding Shares otherwise deliverable to the Participant hereunder and/or
withholding amounts from any compensation or other amount owing from the Company
to the Participant) to satisfy all obligations for the payment of such taxes;
provided, however, that in no event shall the value of Shares so withheld by the
Company exceed the minimum withholding rates required by applicable statutes.

 

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7. Section 83(b) Election. The Participant understands that under Section 83(a)
of the Internal Revenue Code of 1986, as amended (the “Code”), the excess of the
fair market value of unvested Shares on the date the forfeiture restrictions
lapse over the amount paid for such Shares on the Grant Date will be taxed, on
the date such forfeiture restrictions lapse, as ordinary income subject to
payroll and withholding tax and tax reporting, as applicable. For this purpose,
the term “forfeiture restrictions” means the right of the Company to receive
back any unvested Shares upon termination of the Participant’s employment with
the Company. The Participant understands that the Participant may elect under
Section 83(b) of the Code to be taxed at ordinary income rates on the fair
market value of the unvested Shares at the time they are acquired, rather than
when and as the unvested Shares cease to be subject to the forfeiture
restrictions. Such election (an “83(b) Election”) must be filed with the
Internal Revenue Service within 30 days from the Grant Date of the Award. The
Participant understands that (a) the Participant will not be entitled to a
deduction for any ordinary income previously recognized as a result of the 83(b)
Election if the unvested Shares are subsequently forfeited to the Company and
(b) the 83(b) Election may cause the Participant to recognize more compensation
income than Participant would have otherwise recognized if the value of the
unvested Shares subsequently declines.

 

THE FORM FOR MAKING AN 83(b) ELECTION IS ATTACHED TO THIS AGREEMENT AS EXHIBIT
B. THE PARTICIPANT UNDERSTANDS THAT FAILURE TO FILE SUCH AN ELECTION WITHIN THE
30-DAY PERIOD MAY RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE
RESTRICTIONS LAPSE.

 

The Participant further understands that an additional copy of such election
form should be filed with the Participant’s federal income tax return for the
calendar year in which the date of this Agreement falls. The Participant
acknowledges that the foregoing is only a summary of the federal income tax laws
that apply to the Award of the Shares under this Agreement and does not purport
to be complete.

 

THE PARTICIPANT FURTHER ACKNOWLEDGES THAT THE COMPANY HAS DIRECTED THE
PARTICIPANT TO SEEK INDEPENDENT ADVICE REGARDING THE APPLICABLE PROVISIONS OF
THE CODE, THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN
WHICH THE PARTICIPANT MAY RESIDE, AND THE TAX CONSEQUENCES OF THE PARTICIPANT’S
DEATH.

 

The Participant agrees to execute and deliver to the Company with this Agreement
a copy of the Acknowledgment and Statement of Decision Regarding Section 83(b)
Election attached hereto as Exhibit A. The Participant further agrees that the
Participant will execute and deliver to the Company with this Agreement a copy
of the 83(b) Election attached hereto as Exhibit B if Participant chooses to
make such an election.

 

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8. Notices. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (a) on the date of delivery if delivered by hand,
(b) on the date of transmission, if delivered by confirmed facsimile, (c) on the
first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (d) on the fourth business day following the date
delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed to the Company in care of its
General Counsel and to the Participant at the address (or to the facsimile
number) shown on the records of the Company.

 

9. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Agreement shall in no way be construed to be a waiver
of such provision or of any other provision hereof.

 

10. Authority of Committee. Subject to the Employment Agreement and Section 13
hereof, the Committee shall have full authority to interpret and construe the
terms of this Agreement. The determination of the Committee as to any such
matter of interpretation or construction shall be final, conclusive and binding.

 

11. Choice of Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Illinois without regard
to its conflicts of law principles.

 

12. Counterparts. This Agreement may be executed in two counterparts each of
which shall be deemed an original and both of which together shall constitute
one and the same instrument. Any facsimile of this Agreement shall be considered
an original document.

 

13. Complete Agreement; Inconsistencies. The Award is made pursuant to the Plan,
the terms of which are incorporated herein by reference. The Plan, this
Agreement and those documents expressly referred to herein (including, without
limitation, the Employment Agreement) embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way. In the
event of any conflict between the terms of the Plan and this Agreement, the
terms of the Plan shall prevail. In the event of any conflict between the terms
of the Employment Agreement and either this Agreement or the Plan, the terms of
the Employment Agreement shall prevail.

 

14. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by the Participant, the Company and their
respective permitted successors and assigns (including personal representatives,
heirs and legatees), and is intended to bind all successors and assigns of the
respective parties, except that the Participant may not assign any of the
Participant’s rights or obligations under this Agreement except to the extent
and in the manner expressly permitted hereby.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
and the Participant has hereunto set his hand, effective as of the Grant Date.

 

THE BOEING COMPANY

By:

 

 

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Name:

 

 

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Its:

 

 

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Participant: W. James McNerney, Jr.

 

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EXHIBIT A

 

ACKNOWLEDGMENT AND STATEMENT OF DECISION REGARDING

SECTION 83(b) ELECTION

 

The undersigned, a recipient of 162,000 shares of Common Stock of The Boeing
Company, a Delaware corporation (the “Company”), pursuant to a restricted stock
award granted under the terms of the Company’s 2003 Incentive Stock Plan (the
“Plan”), hereby states as follows:

 

1. The undersigned acknowledges receipt of a copy of the Restricted Stock Award
Agreement and Plan relating to the offering of such shares. The undersigned has
carefully reviewed the Plan and the Restricted Stock Award Agreement pursuant to
which the award was granted.

 

2. The undersigned either (check and complete as applicable)

 

  (a)           has consulted, and has been fully advised by, the undersigned’s
own tax advisor,                                         , whose business
address is                                         , regarding the federal,
state and local tax consequences of receiving shares under the Plan, and
particularly regarding the advisability of making an election pursuant to
Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), and
pursuant to the corresponding provisions, if any, of applicable state law, or

 

  (b)          has knowingly chosen not to consult such a tax advisor.

 

3. The undersigned hereby states that the undersigned has decided (check as
applicable)

 

  (a)           to make an election pursuant to Section 83(b) of the Code, and
is submitting to the Company, together with the undersigned’s executed
Restricted Stock Award Agreement, an executed form entitled “Election Under
Section 83(b) of the Internal Revenue Code of 1986,” or

 

  (b)           not to make an election pursuant to Section 83(b) of the Code.

 

4. Neither the Company nor any subsidiary or representative of the Company has
made any warranty or representation to the undersigned with respect to the tax
consequences of the undersigned’s acquisition of shares under the Plan or of the
making or failure to make an election pursuant to Section 83(b) of the Code or
the corresponding provisions, if any, of applicable state law.

 

[Signature page follows]

 

A-1

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Dated:                        

 

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     Recipient     

 

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Print Name

 

A-2

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EXHIBIT B

 

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

 

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with taxpayer’s receipt of the property described below:

 

1. The name, address, taxpayer identification number and taxable year of the
undersigned are as follows:

 

NAME OF TAXPAYER:                                                          

ADDRESS:                                         
                                       

                                                            
                                        

IDENTIFICATION NO. OF TAXPAYER:                             

TAXABLE YEAR:                             

 

2. The property with respect to which the election is made is described as
follows: 162,000 shares of Common Stock of The Boeing Company, a Delaware
corporation (the “Company”).

 

3. The date on which the property was transferred is July 1, 2005.

 

4. The property is subject to the following restrictions:

 

The property is subject to a forfeiture right pursuant to which the Company can
reacquire the Shares if taxpayer’s services with the Company are terminated for
certain reasons. The Company’s right to receive back the shares lapses in six
equal annual installments beginning on January 1, 2006 and ending on January 1,
2011.

 

5. The aggregate fair market value at the time of transfer, determined without
regard to any restriction other than a restriction which by its terms will never
lapse, of such property is $                     (                            
dollars).

 

6. The amount (if any) paid for such property is $0.00.

 

The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned’s receipt of the
above-described property. The undersigned is the person performing the services
in connection with the transfer of said property.

 

B-1

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The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner of Internal Revenue.

 

Dated:                       

 

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    Taxpayer

 

B-2

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DISTRIBUTION OF COPIES

 

1. File original with the Internal Revenue Service Center where the taxpayer’s
income tax return will be filed. Filing must be made by no later than 30 days
after the date the property was transferred.

 

2. Attach one copy to the taxpayer’s income tax return for the taxable year in
which the property was transferred.

 

3. Mail one copy to the Company at the following address:

 

The Boeing Company

ATTN: Mark R. Pacioni

Assistant Corporate Secretary and Counsel

100 N. Riverside MC 5003-1001

Chicago, IL 60606-1596