<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)  Robert H. Hood,  Jr. and  Dorothy  P. Hood  (collectively  hereinafter
          "Hood"), and

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

2.       RECITALS.   This  Agreement  is  entered  into  to  effectuate   Hood's
         retirement 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 Hood's  relationship with MDC and MDC's  relationship with
         Hood,  including,  but  not  limited  to,  claims  relating  to  Hood's
         employment, his retirement 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 Hood.

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

     (a)  From the date of the execution of this  Agreement  until and including
          December 31, 1996, Hood will continue in full-time employment at MDC;

     (b)  At the close of business on December 31,  1996,  Hood will retire from
          MDC;

     (c)  Hood 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;

     (d)  Promptly  following  his  retirement  on December 31, 1996,  Hood will
          receive a lump-sum  payment for all accrued and unused  vacation days,
          subject to normal taxation and withholding;

     (e)  The number of  restricted  shares of MDC stock  granted  under the two
          Performance  Accelerated  Restricted Stock ("PARS") Agreements between
          Hood and MDC dated February 18, 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  Hood  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
          Hood and MDC dated  March 20,  1995,  shall be reduced  from 24,000 to
          16,000 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 Hood was still
          employed by MDC through the Performance Periods;

     (g)  The  number  of  restricted  shares  of MDC  stock  granted  under the
          Performance  Accelerated  Restricted Stock ("PARS")  Agreement between
          Hood and MDC dated  February 1, 1996,  shall be reduced from 10,000 to
          1,667 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 Hood was still
          employed by MDC through the Performance Periods;


     (h)  Any Long Term Incentive Plan (LTIP) or Performance Sharing Plan annual
          incentive compensation amounts that previously would have been paid to
          Hood 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,  the Total Deferral and interest shall be paid to Hood by
          MDC in the form of a ten (10) year annuity, payable in equal quarterly
          installments of seventy-eight  thousand two hundred eighty-two dollars
          and forty cents ($78,282.40) beginning on April 1, 1997;

     (i)  Hood  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;

     (j)  Subject to the  provisions  of paragraphs  4(c) and 5(c) herein,  Hood
          shall be  entitled  to receive  the  relocation  and  retransportation
          benefits  set forth in  paragraph  5 of the 2 May 1989 Memo  Agreement
          between MDC and Hood relating to his 1989 relocation from St. Louis to
          Long Beach, CA (the  "Relocation  Benefits  Agreement")  together with
          appropriate  gross-up for income tax purposes (if Hood  relocates to a
          location other than St. Louis, Missouri, MDC shall only be responsible
          for what  such  expenses  would  have been as if he  relocated  to St.
          Louis);


<PAGE>
                                       3


     (k)  For purposes of determining amounts due to Hood by MDC under the terms
          and conditions of the Restated Shared  Appreciation  Note between Hood
          and MDC dated  January 18,  1991 in the face  amount of $665,000  (the
          "Note"),  Hood and MDC agree to the  calculations and values set forth
          in Schedule A hereto  regarding the amount (the "Balance")  payable by
          Hood to MDC.  Payment  of the  Balance  shall  be  satisfied  from the
          proceeds  received  by MDC from the sale and  closing of the  property
          known and numbered as 3814 East Woodbine Road, Orange County, CA 92667
          (the "Hood Residence"),  which is subject to the April 29, 1989 Second
          Deed of Trust in favor of MDC  securing  the Note.  MDC will  gross up
          Hood's compensation for the tax consequence thereof in accordance with
          the calculations in Schedule A; and

     (l)  From and after January 1, 1997,  MDC shall assume  responsibility  for
          dues and  assessments  and shall be entitled to all proceeds  from the
          sale of Hood's membership in the Virginia Country Club.

4.   ADDITIONAL CONTRACTUAL TERMS & GENERAL AND SPECIAL RELEASE.

     (a)  In consideration of the terms and provisions of this Agreement,  Hood,
          on behalf of  himself  and  herself  and  their  successors,  assigns,
          attorneys,  representatives, and any and all other related individuals
          and entities,  do 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 Hood (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 Hood, are accepted by him in complete  satisfaction of
          all claims, known or unknown, disputed or otherwise.


<PAGE>
                                       5


     (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   Hood,  and  their   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,
          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 violations of
          the Age  Discrimination  in Employment  Act), and 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, neither this release
          and discharge  nor the  Indemnification  Agreement  shall protect Hood
          from,  and Hood 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 Hood or by MDC as a result of the  conduct  or  activities  of
          Hood while an employee  of MDC, or as a result of a serious  violation
          by him of MDC policy.  Amounts payable to Hood under  paragraphs 3(e),
          (f), (g), (h) and (j) 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 Hood.

5.   CONTINUING OBLIGATIONS.

     (a)  Acknowledgments by Hood. Hood 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.


<PAGE>
                                       6


         (iii) Hood   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) Hood  recognizes  and  acknowledges  that his  position  with MDC
               provides  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) Hood recognizes and  acknowledges  that MDC in all fairness would
               need  certain  protection  in order to ensure  that Hood 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  Hood from  having an unfair  competitive
               advantage over MDC.

     (b)  Confidential Information.

          (i)  Hood  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 Hood
               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,  Hood 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 Hood.

          (ii) Hood  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 retirement.


<PAGE>
                                       7


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

               (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.  Hood  recognizes that such companies could
                    benefit  greatly if they were to obtain  MDC's  confidential
                    information. Hood 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,  Hood  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.  Hood 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.  Hood agrees to readily and fully cooperate
          with MDC  should it  become  necessary  to  develop  factual  bases to
          protect or defend MDC's business interests.


<PAGE>
                                       8


     (f)  Acknowledgment Regarding Restrictions. Hood 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.

7.   INTEGRATION.  This Agreement,  the  Indemnification  Agreement (as modified
     herein),  paragraph  5  of  the  Relocation  Benefits  Agreement  and  Note
     constitute a single,  integrated  written  contract  expressing  the entire
     agreement of the parties to this Agreement  concerning its subject matters;
     all other agreements between Hood and MDC 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.


<PAGE>
                                       9


10.  NON-ASSIGNMENT  OF CLAIMS.  Hood 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.  Hood 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:

     (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.   Hood
          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.
          Hood 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
          is, except as expressly  provided for herein  intended to be final and
          binding between MDC and Hood,  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.


<PAGE>
                                       10


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.

13.  CONFIDENTIALITY.  Hood 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 Hood'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 Hood's prospective employers on a very limited basis. In
     the  unlikely  event  that  Hood 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/ Robert H. Hood, Jr.
-------------------------------------             December 10, 1996
Robert H. Hood, Jr.


/s/ Dorothy P. Hood
-------------------------------------             December 10, 1996
Dorothy P. Hood


s/s Harry C. Stonecipher
-------------------------------------              December 9, 1996
McDonnell Douglas Corporation
  By:    Harry C. Stonecipher
         President & CEO


<PAGE>



                                   SCHEDULE A
                                       TO
                            SETTLEMENT AGREEMENT AND
                           GENERAL AND SPECIAL RELEASE




     Original cost basis of home (1/10/92)                         $1,330,000
     Current Fair Market Value (12/96)                             $1,037,500


     Hood Proportionate Share:

     Amount payable to pay Senior Deed of Trust                      $365,000
     Amount payable to Hood
         o      Down Payment                                         $300,000
         o      Capital Improvements                                   $8,942
                                                                     ---------
                  Total                                              $673,942

     MDC Proportionate Share                                         $363,558
                                                                     --------
                  Total                                            $1,037,500

    Tax Gross-Up for depreciation of home value                      $292,890