<PAGE>
                                      1

                            SETTLEMENT AGREEMENT AND
                           GENERAL AND SPECIAL RELEASE


1.   PARTIES.  The parties to this Settlement  Agreement and General and Special
     Release ("Agreement") are:

     (a)  Herbert J. Lanese (hereinafter "Lanese"), and

     (b)  McDonnell Douglas Corporation ("MDC").

2.   RECITALS.  This Agreement is entered into to effectuate Lanese's separation
     from MDC, and the  parties,  through  this  Agreement,  except as expressly
     provided for herein agree to fully and finally settle all claims, known and
     unknown, that either party may have against the other arising from Lanese's
     relationship with MDC and MDC's  relationship with Lanese,  including,  but
     not limited to, claims relating to Lanese's employment,  his separation and
     the terms and scope of  monetary  payments  made by, or required to be made
     by, MDC to him under this and any other  agreement  by and  between MDC and
     Lanese.

3.   CONTRACTUAL  TERMS.  In  consideration  of the terms and  covenants of this
     Agreement,  MDC agrees to permit, perform, allow or facilitate certain acts
     on  Lanese's  behalf and to pay certain  monies,  all as more fully set out
     below:

     (a)  Lanese's  termination  of  employment  was effective as of October 27,
          1996;

     (b)  Lanese will receive a payment under MDC's Senior Executive Performance
          Sharing  Plan  ("PSP")  equal  to  his  Performance   Adjusted  Target
          Incentive  Compensation  Award  (PAT),  determined  during  the  first
          quarter of 1997,  subject to normal taxation and  withholdings,  which
          payment shall be in complete  satisfaction  of any award under PSP for
          the Plan Year  1996.  Payment  under  this  paragraph  shall  issue in
          accordance with MDC's normal PSP cycle;

     (c)  Promptly  following his  termination on October 27, 1996,  Lanese will
          receive a lump-sum  payment for all accrued and unused  vacation days,
          subject to normal taxation and withholding;

     (d)  The number of  restricted  shares of MDC stock  granted  under the two
          Performance  Accelerated  Restricted Stock ("PARS") Agreements between
          Lanese  and MDC dated  February  16,  1994,  shall  remain  unchanged.
          Subject to the provisions of paragraphs  4(c) and 5(c) herein,  shares
          shall vest or be  forfeited in  accordance  with the terms of the PARS
          Agreements  as if  Lanese  was  still  employed  by  MDC  through  the
          Performance Periods;

     (e)  The  number  of  restricted  shares  of MDC  stock  granted  under the
          Performance  Accelerated  Restricted Stock ("PARS")  Agreement between
          Lanese and MDC dated March 20,  1995,  shall be reduced from 30,000 to
          20,000 shares.  Subject to the provisions of paragraphs  4(c) and 5(c)
          herein,  such  reduced  number of shares shall vest or be forfeited in
          accordance with the terms of the PARS Agreement as if Lanese was still
          employed by MDC through the Performance Periods;
<PAGE>
                                       2


     (f)  The  number  of  restricted  shares  of MDC  stock  granted  under the
          Performance  Accelerated  Restricted Stock ("PARS")  Agreement between
          Lanese and MDC dated  February 1, 1996,  shall be reduced  from 24,000
          (A) to 8,000  shares if payment  of shares  vest and are to be paid in
          their  entirety  pursuant to said PARS Agreement in 1999 and if Lanese
          does not obligate MDC to pay for any outplacement services pursuant to
          paragraph  3(g) below or (B) 4,000 shares  either if any of the shares
          vest and are to be paid in 2002 pursuant to said PARS  Agreement or if
          Lanese obligates MDC to pay for any outplacement  services pursuant to
          paragraph 3(g) below. Subject to the provisions of paragraphs 4(c) and
          5(c) herein,  such reduced number of shares shall vest or be forfeited
          in  accordance  with the terms of the PARS  Agreement as if Lanese was
          still employed by MDC through the Performance Periods;

     (g)  At Lanese's  election,  MDC will pay up to $150,000 at no greater than
          standard  rates to an  outplacement  firm  designated  by  Lanese  for
          outplacement services provided to him, prior to January 1, 1998.

     (h)  Any Long Term Incentive Plan (LTIP) or Performance Sharing Plan annual
          incentive compensation amounts that previously would have been paid to
          Lanese but were deferred  because they would not have been  deductible
          due to the  compensation  cap of Internal  Revenue Code Section 162(m)
          (the "162(m)  Deferral"),  together with additional  amounts otherwise
          payable to him from such deferrals  shall continue to be deferred (the
          "Total Deferral"). The deferred amounts included in the Total Deferral
          will  continue  to earn  interest  at 11%  until  December  31,  1996;
          thereafter,  the  Total  Deferral  will  earn 7%  interest  compounded
          quarterly  during the deferral  period.  Subject to the  provisions of
          paragraphs  4(c) and 5(c) herein,  one-third of the Total Deferral and
          interest  shall be paid to Lanese by MDC on the first  business day of
          January,  1998;  one-half of the remaining Total Deferral and interest
          shall be paid to Lanese by MDC on the first  business  day of January,
          1999; and the balance of the Total Deferral and interest shall be paid
          to Lanese by MDC on the first business day of January, 2000;

          (i)  On each Friday commencing November 1, 1996, and ending on May 30,
               1997,  Lanese will receive a severance  check equal to his weekly
               base  rate of pay as of  October  27,  1996,  subject  to  normal
               taxation and withholding;

          (j)  Until  December 31, 1996, MDC will continue to perform a security
               check on Lanese's  personal  mail and will  continue to reimburse
               Lanese for the security  system at his home, it being  understood
               and agreed that the upgrades to Lanese's  security  system remain
               the property of MDC and will be returned to MDC no later than the
               date when Lanese sells his home; and

          (k)  Lanese shall be entitled to receive  other  employee  benefits in
               accordance with MDC's established  plans,  including the Employee
               Retirement  Income Plan of MDC - Salaried Plan, the  Supplemental
               Employee Retirement Income Plan, the Employee Savings Plan of MDC
               - Salaried Plan and the  Supplemental  Employee Savings Plan, all
               in accordance with the terms of such plans.
<PAGE>
                                       3


4.   ADDITIONAL CONTRACTUAL TERMS & GENERAL AND SPECIAL RELEASE.

     (a)  In  consideration  of the  terms  and  provisions  of this  Agreement,
          Lanese, on behalf of himself and his successors,  assigns,  attorneys,
          representatives,  and  any  and  all  other  related  individuals  and
          entities,  does hereby  release and discharge MDC and its  successors,
          assigns, attorneys,  affiliated components and corporations, and their
          officers,  directors,  agents and  employees  from any and all claims,
          liabilities,  costs  and  expenses  (including,  but not  limited  to,
          attorney's fees),  damages,  actions and causes of action, of whatever
          kind or nature arising out of acts or omissions  occurring  before the
          execution of this  Agreement  (collectively  referred to as "claims"),
          including,  without limitation, any statutory, civil or administrative
          claim, claims arising from rights under federal, state, and local laws
          prohibiting  discrimination on any basis (including age discrimination
          and alleged  violation of the Age  Discrimination  in Employment Act),
          and common  law claims of any kind,  including,  but not  limited  to,
          contract,  tort, and property rights claims including, but not limited
          to, breach of contract,  breach of the implied  covenant of good faith
          and fair dealing,  tortious  interference  with contract or current or
          prospective  economic  advantage,   fraud,  deceit,   libel,  slander,
          misrepresentation,  defamation,  infliction of emotional distress, and
          any  other  common  law claim of any  kind.  Notwithstanding  anything
          herein to the contrary,  except as provided  below in this paragraph 4
          herein  the  Indemnification  Agreement  dated June 21,  1991,  by and
          between MDC and Lanese (the "Indemnification  Agreement") will survive
          this Agreement.

     (b)  The  monies  and other  considerations  outlined  in  paragraphs  3(a)
          through  (k)  herein,   the   sufficiencies  of  which  are  expressly
          acknowledged by Lanese,  are accepted by him in complete  satisfaction
          of all claims, known or unknown, disputed or otherwise.

     (c)  In consideration  of the terms and provisions of this Agreement,  MDC,
          on  behalf  of  itself  and  its   successors,   assigns,   attorneys,
          representatives and any and all other related individuals and entities
          does  hereby  release  and  discharge   Lanese,   and  his  respective
          successors,   assigns   and   attorneys   from  any  and  all  claims,
          liabilities,   costs  and  expenses  (including  but  not  limited  to
          attorneys' fees),  damages,  actions and causes of action, of whatever
          kind or  nature  occurring  before  the  execution  of this  Agreement
          (collectively referred to as "Claims"), including, without limitation,
          common  law  claims  of any  kind,  including,  but  not  limited  to,
          contract,  tort, or property rights claims including,  but not limited
          to, breach of contract,  breach of the implied  covenant of good faith
          and fair dealing,  tortious  interference  with contract or current or
          prospective  economic  advantage,   fraud,  deceit,   libel,  slander,
          misrepresentation,  defamation,  infliction of emotional distress, and
          any other common law claim of any kind. Notwithstanding the foregoing,

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                                       4


          neither this release and discharge nor the  Indemnification  Agreement
          shall protect Lanese from, and Lanese agrees to indemnify and hold MDC
          harmless  from and against any and all  liability  incurred by MDC for
          violations of paragraph 5(c) herein or of federal or state  employment
          discrimination  laws by Lanese or by MDC as a result of the conduct or
          activities  of Lanese  while an  employee  of MDC, or as a result of a
          serious  violation  by him of MDC  policy.  Amounts  payable to Lanese
          under  paragraphs  3(b), (d), (e), (f), (g), (h) and (i) hereunder may
          be reduced and offset by MDC by an amount or amounts deemed reasonably
          appropriate by MDC in its sole discretion to satisfy such  obligations
          of Lanese.

5.   CONTINUING OBLIGATIONS.

     (a)  Acknowledgments by Lanese. Lanese hereby acknowledges the following:

          (i)  MDC  is  engaged  in,  among  other   things,   the  business  of
               researching,  designing, developing,  manufacturing,  selling and
               distributing on a worldwide basis fighter and military  transport
               aircraft, commercial aircraft,  helicopters,  missiles, satellite
               launch  vehicles,  and certain related and other  businesses (the
               "Business").

          (ii) In connection with the Business, MDC has expended a great deal of
               time,  money and effort to develop and  maintain  the secrecy and
               confidentiality   of   substantial   proprietary   trade   secret
               information and other confidential business information which, if
               misused or  disclosed,  could be very harmful to the Business and
               could cause MDC to lose its competitive edge in the marketplace.

          (iii)Lanese  desires  to  become  entitled  to  receive  the  benefits
               contemplated  by this  Agreement  but  which  MDC  would not make
               available to him but for his signing and agreeing to abide by the
               terms of this Section 5.

          (iv) Lanese  recognizes  and  acknowledges  that his position with MDC
               provided  him with  access to certain of MDC's  confidential  and
               proprietary  trade  secret  information  and  other  confidential
               business information.

          (v)  MDC compensates its employees to, among other things, develop and
               preserve goodwill with its customers on MDC's behalf and business
               information for MDC's ownership and use.

          (vi) Lanese recognizes and acknowledges that MDC in all fairness would
               need certain  protection  in order to ensure that Lanese does not
               appropriate and misuse any confidential  information entrusted to
               him  during the course of his  employment  with MDC,  or take any
               other action which could result in a loss of MDC's  goodwill that
               was  generated  on MDC's  behalf and at its  expense,  and,  more
               generally,  to prevent  Lanese from having an unfair  competitive
               advantage over MDC.


<PAGE>
                                       5


     (b)  Confidential Information.

          (i)  Lanese agrees to keep secret and confidential,  and not to use or
               disclose  to any third  parties,  any of MDC's  confidential  and
               proprietary  trade  secret   information  or  other  confidential
               business  information  concerning the Business acquired by Lanese
               during the course of, or in connection  with, his employment with
               MDC.  MDC  considers  and  treats as  confidential  (among  other
               things) its  engineering,  design and  technical  data,  computer
               software and programs, component sourcing and supply information,
               pricing policies,  operational methods, strategic plans, internal
               financial   information,   research  and  development  plans  and
               activities,  and business  acquisition and expansion plans,  and,
               except  as  provided   herein,   Lanese   agrees  to  treat  such
               information   as  secret  and   confidential   so  long  as  such
               information does not become generally known to the public through
               no fault or wrongful act of Lanese.

          (ii) Lanese  acknowledges that any and all notes,  records,  sketches,
               computer diskettes and other documents obtained by or provided to
               him, or otherwise made, produced or compiled during the course of
               his employment with MDC, which contain any such  confidential MDC
               information,  regardless  of the  type of  medium  in which it is
               preserved,  are the sole and exclusive  property of MDC and shall
               be surrendered to MDC upon his termination.

     (c)  Post-Termination  Lanese  Liabilities.  In addition to the  continuing
          liability  of Lanese  provided for in  paragraph  4(c) herein,  Lanese
          agrees  that,  at any time  prior to the  payment of PAT  pursuant  to
          paragraph  3(b),  the vesting or  forfeiture of all  restricted  stock
          under the PARS agreements pursuant to paragraphs 3(d), (e) or (f), the
          payment for outplacement  pursuant to paragraph 3(g) or the payment of
          deferred  compensation  and severance  pursuant to paragraphs 3(h) and
          (i), Lanese shall forfeit all rights to (1) receiving any PAT pursuant
          to paragraph  3(b), (2) vesting or otherwise  receiving any restricted
          stock under the PARS agreements  pursuant to paragraphs  3(d), (e) and
          (f), (3) payment for any outplacement  services  pursuant to paragraph
          3(g),  and (4)  vesting  and  receipt  of  deferred  compensation  and
          severance  pursuant  to  paragraphs  3(h) and (i),  if he,  on his own
          behalf or on behalf of any other person,  firm,  corporation or entity
          in the world:


<PAGE>
                                       6


          (i)  provides any services for any of MDC's  significant  competitors,
               representatives,  suppliers  or customers or provides any general
               business,  technical or  strategic  consulting  or planning  with
               respect to the Business for any such companies. Lanese recognizes
               that such companies  could benefit greatly if they were to obtain
               MDC's confidential information.  Lanese may request permission to
               provide  services  to or  consult  with any  company  that may be
               included  in  the  category  of  MDC's  significant  competitors,
               representatives,  suppliers or customers.  The written  denial or
               grant of such a request by MDC's  President  and Chief  Executive
               Officer  shall be conclusive  and binding on the parties  hereto.
               The grant of such a request  will not be  unreasonably  withheld,
               and if the  request  is  granted,  Lanese  will  not be  held  in
               violation of this  paragraph  5(c) for  providing  services to or
               consulting  with such company in accordance with the terms of the
               request;

          (ii) knowingly solicits,  entices, induces, hires, employs or seeks to
               employ  any  salesperson,   engineer,   technician,   manager  or
               executive-level  employee of MDC,  who was employed by MDC on the
               date  hereof,  to  provide  any  services  with  respect  to  the
               Business; or

         (iii) breaches  or  violates  paragraphs  5(b),  (d) or (e) or any  MDC
               policy regarding confidentiality.

     (d)  Agreement to Refrain  from Using  Disparaging  Comments.  Lanese shall
          indefinitely  refrain,  in writing and orally,  from using examples or
          narrative   which  are  derogatory  of  MDC,  its  present  or  former
          management,  its policies or practices, or any other matter bearing on
          the reputation or good name of MDC.

     (e)  Agreement re Cooperation. Lanese agrees to readily and fully cooperate
          with MDC  should it  become  necessary  to  develop  factual  bases to
          protect or defend MDC's business interests.

     (f)  Acknowledgment  Regarding  Restrictions.  Lanese recognizes and agrees
          that the provisions of this Section 5 are  reasonable and  enforceable
          because,  among other things,  (1) he is receiving  compensation under
          this  Agreement  and (2) there  are many  other  areas in  which,  and
          companies for which, he could work in view of his background, and this
          paragraph  5 therefore  does not impose any undue  hardship on him. He
          further  recognizes and agrees that the provisions of this paragraph 5
          are reasonable and enforceable in view of MDC's  legitimate  interests
          in protecting its confidential  information and customer  goodwill and
          the limitations contained therein on the duration and geographic scope
          of, and activities covered by, such provisions.

6.   SUCCESSORS AND ASSIGNS.  This  Agreement  shall inure to the benefit of and
     shall be binding upon the successors and assigns of the parties hereto, and
     each of them. In the case of MDC, this Agreement is intended to release and
     inure to the benefit of MDC's affiliated components and corporations, their
     divisions and shareholders,  officers, directors, agents,  representatives,
     employees,  and any and all other related individuals and entities, if any,
     individually as well as in the capacity indicated.

<PAGE>
                                       7


7.   INTEGRATION.  This Agreement and the Indemnification Agreement (as modified
     herein)  constitute a single,  integrated  written contract  expressing the
     entire  agreement of the parties to this  Agreement  concerning its subject
     matters;  all other agreements between Lanese and MDC,  including,  but not
     limited to the  Termination  Benefits  Agreement  dated March 15, 1996, are
     hereby  terminated,  and to the extent  required by such other  agreements,
     this  Agreement  shall  constitute  a  terminating  amendment to such other
     agreements.  No covenants,  agreements,  or warranties of any kind, whether
     express  or  implied  in law or fact,  have  been made by any party to this
     Agreement,  except as specifically  set forth in this Agreement.  All prior
     and  contemporaneous  discussions and negotiations have been and are merged
     and integrated into, and are superseded by, this Agreement.

8.   MODIFICATIONS.  No  modification,   amendment  or  waiver  of  any  of  the
     provisions  contained  in this  Agreement,  or any  future  representation,
     promise,  or  condition  in  connection  with the  subject  matter  of this
     Agreement,  shall be binding upon any party  hereto  unless made in writing
     and signed by such party or by a duly  authorized  officer or agent of such
     party.

9.   SEVERABILITY.  In the event that any provision of this Agreement  should be
     held to be void, voidable,  unlawful or for any reason  unenforceable,  the
     remaining portions of this Agreement shall remain in full force and effect.

10.  NON-ASSIGNMENT OF CLAIMS. Lanese and MDC each represent and warrant that he
     and it has not assigned or transferred  any portion of the claims  released
     herein to any other individual,  firm,  corporation,  or other entity,  and
     that no other individual,  firm,  corporation or other entity has any lien,
     claim or interest in any of such claims,  including but not limited to, any
     claim or interest  arising out of, related to or connected with the matters
     referenced  herein.  Lanese and MDC each  covenant  and agree not to bring,
     induce, or assist, in any claim, action or proceeding of any kind or nature
     against the other party, directly or indirectly, regarding, connected with,
     arising out of, or  relating to in any manner the matters  released by this
     Agreement  and to indemnify  the other party from and against all liability
     of any  kind  relating  in any  way to the  activities  described  in  this
     paragraph.

11.  MISCELLANEOUS  TERMS.  Each  of  the  parties  to  this  Agreement  further
     represents, warrants, and agrees as follows:


<PAGE>
                                       8


     (a)  Each of the parties has had the  opportunity  to review this Agreement
          and seek advice on the advisability of making the settlement  provided
          for herein and executing this Agreement,  including the opportunity to
          consult  with  the  legal  counsel  of  the  party's  choice.   Lanese
          acknowledges  that he has  been  given  the  opportunity  to  consider
          settling the claims referenced herein, in accordance with the terms of
          this Agreement, for twenty-one (21) days, and that he may take as much
          of that time as he wants to consider the Agreement  before signing it.
          Lanese  also  acknowledges  that he may revoke this  agreement  within
          seven (7) days of the date he signs it, and that if he does not revoke
          the Agreement  within seven (7) days, the Agreement will be effective,
          binding and enforceable;

     (b)  Each of the  parties  has  read the  Agreement  carefully,  knows  and
          understands the contents thereof,  and has made such  investigation of
          the facts  pertaining to the  settlement and this Agreement and of all
          matters pertaining hereto as it deems necessary or desirable;

     (c)  The  terms  of  this  Agreement  are   contractual   and  result  from
          discussions between the parties;

     (d)  Each party agrees that such party will not take any action which would
          interfere with the performance of this Agreement by any of the parties
          hereto or which  would  adversely  affect  the  status  of the  rights
          provided for, or the claims surrendered, herein; and

     (e)  In  entering  into this  Agreement  and the  settlement  provided  for
          herein,  the  parties,  and  each  of  them,   acknowledge  that  this
          Agreement,  except as expressly provided for herein, is intended to be
          final and binding  between MDC and Lanese,  and,  except as  expressly
          provided for herein, is further intended to be effective as a full and
          final accord and  satisfaction  between them. Each party relies on the
          finality of this Agreement as a material  factor inducing that party's
          execution of this Agreement.

12.  SETTLEMENT. The parties hereto acknowledge and covenant that this Agreement
     represents a settlement of disputed  rights and claims and that by entering
     into this Agreement,  no party hereto admits or acknowledges  the existence
     of any liability or wrongdoing,  all such liability being expressly denied.
     No  provision  of this  Agreement,  or of any  related  document,  shall be
     construed as an admission or concession of liability,  of any wrongdoing or
     of any preexisting liability.


<PAGE>
                                       9


13.  CONFIDENTIALITY.  Lanese and MDC agree that the existence,  fact, terms, or
     provisions  of  or  information  concerning  this  Agreement  shall  remain
     confidential  and shall not be disclosed to the mass media or the press, or
     to any person, firm, corporation, or other entity (collectively referred to
     as "any person") with the sole and exclusive exceptions of: (a) as required
     by any governmental  agency or court, or otherwise required by law, so long
     as the party  being  compelled  to disclose  provides  the other party with
     written notice of such requirement  fifteen (15) days prior to the required
     disclosure;  (b) to Lanese's  attorney or accountant as may be required for
     the  rendition of  professional  services,  so long as any such attorney or
     accountant  is  informed  of this  confidentiality  agreement  prior to the
     disclosure of information protected by it and agrees to abide by its terms;
     (c) to a limited number of MDC employees tasked with  implementation of the
     terms of the Agreement;  (d) to a Court(s) of competent jurisdiction should
     either party be required to enforce any provisions  hereunder or to sue for
     breach; and (e) to Lanese's prospective  employers on a very limited basis.
     In the  unlikely  event that Lanese is  requested  or required to share the
     particulars  of this  Agreement with  prospective  employers,  MDC shall be
     notified prior to any proposed  disclosure  and shall  narrowly  tailor and
     limit the scope of such communications.

14.  GOVERNING  LAW. This  Agreement  shall be construed in accordance  with the
     laws of the State of Missouri.

         IN WITNESS WHEREOF,  the parties hereto have approved and executed this
Agreement on the date(s) specified below.


/s/ Herbert J. Lanese
---------------------------                          October 31, 1996
Herbert J. Lanese



/s/ Harry C. Stonecipher
----------------------------                         October 31, 1996
McDonnell Douglas Corporation
  By:    Harry C. Stonecipher
         President & CEO