-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BpKkgiRado/04wfyL1liPbdxxBZff4UVbmVajXQy+/TUWeBCy0uBwJJ/KCppQeRc MMC662Nxg9tg0DVz2QReHg== 0000891020-97-001030.txt : 19970801 0000891020-97-001030.hdr.sgml : 19970801 ACCESSION NUMBER: 0000891020-97-001030 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970731 EFFECTIVENESS DATE: 19970731 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BOEING CO CENTRAL INDEX KEY: 0000012927 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT [3721] IRS NUMBER: 910425694 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-32567 FILM NUMBER: 97649441 BUSINESS ADDRESS: STREET 1: P O BOX 3707 MS 1F 31 CITY: SEATTLE STATE: WA ZIP: 98124 BUSINESS PHONE: 2066552121 MAIL ADDRESS: STREET 1: 7755 EAST MARGINAL WAY SOUTH CITY: SEATTLE STATE: WA ZIP: 98124-2207 FORMER COMPANY: FORMER CONFORMED NAME: BOEING AIRPLANE CO DATE OF NAME CHANGE: 19730725 S-8 1 FORM S-8 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 1997 Registration No. 333-_____ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------- THE BOEING COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 91-0425694 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) 7755 EAST MARGINAL WAY SOUTH SEATTLE, WASHINGTON 99108 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES (ZIP CODE)) McDONNELL DOUGLAS CORPORATION 1994 PERFORMANCE AND EQUITY INCENTIVE PLAN AND McDONNELL DOUGLAS CORPORATION INCENTIVE AWARD PLAN (FULL TITLE OF THE PLANS) -------------------------- HEATHER HOWARD CORPORATE SECRETARY AND CORPORATE COUNSEL THE BOEING COMPANY 7755 EAST MARGINAL WAY SOUTH SEATTLE, WASHINGTON 98108 (206) 655-7531 (NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ---------------------- COPY TO: J. SUE MORGAN PERKINS COIE 1201 THIRD AVENUE, 40TH FLOOR SEATTLE, WASHINGTON 98101-3099 (206) 583-8447 ---------------------- CALCULATION OF REGISTRATION FEE
================================================================================================================== PROPOSED MAXIMUM TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE PER PROPOSED MAXIMUM AMOUNT OF TO BE REGISTERED REGISTERED(2) SHARE(3) AGGREGATE OFFERING PRICE REGISTRATION FEE - ------------------------------------------------------------------------------------------------------------------ Common Stock, par value $5.00 per share 1994 Performance and 1,170,000 $14.214743 $16,631,249.31 $5,039.77 Equity Incentive Plan(1) 52,000 $18.798876 $ 977,541.55 $ 296.22 Incentive Award Plan(1) 45,978 $ 7.195513 $ 330,838.17 $ 100.25 TOTAL: 1,267,978 $17,939,629.03 $5,436.25 ===================================================================================================================
(1) Pursuant to an Agreement and Plan of Merger dated as of December 14, 1996 (the "MDC Merger Agreement"), among the Registrant, West Acquisition Corp. and McDonnell Douglas Corporation ("MDC"), the Registrant assumed all of the outstanding options to purchase common stock of MDC under the MDC 1994 Performance and Equity Incentive Plan and the MDC Incentive Award Plan (the "MDC Assumed Options"), with appropriate adjustments to the number of shares and exercise price of each MDC Assumed Option to reflect the ratio at which the MDC common stock was converted into common stock of the Registrant under the MDC Merger Agreement. (2) Includes an indeterminate number of additional shares that may be issued to adjust the number of shares issued pursuant to such employee benefit plans as the result of any future stock split, stock dividend or similar adjustment of the Registrant's outstanding common stock. (3) Such shares are issuable upon exercise of outstanding options with fixed exercise prices. Pursuant to Rule 457(h) under the Securities Act of 1933, as amended, the aggregate offering price and the registration fee have been computed upon the basis of the price at which the options may be exercised. 2 PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents are hereby incorporated by reference in this Registration Statement: (a) The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996, filed with the Securities and Exchange Commission (the "Commission"), on March 10, 1997, which contains audited consolidated financial statements for the most recent fiscal year for which such statements have been filed; (b) All other reports filed by the Registrant pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since the end of the fiscal year covered by the Annual Report on Form 10-K referred to in (a) above; and (c) The Registrant's Registration Statement on Form 10 (Registration No. 1-422) with respect to the Registrant's common stock and filed with the Commission on April 20, 1935, under Section 12(g) of the Exchange Act, including any amendments or reports filed for the purpose of updating such description. All documents filed by the Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters the securities covered hereby then remaining unsold shall also be deemed to be incorporated by reference into this Registration Statement and to be a part hereof commencing on the respective dates on which such documents are filed. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL The opinion of counsel as to the legality of the securities that may be issued under the Plans is given by Heather Howard, Corporate Secretary and Corporate Counsel for the Registrant. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation in a derivative action), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's charter, by-laws, disinterested director vote, stockholder vote, agreement or otherwise. Article VII, Section 4 of the Registrant's By-Laws provides for indemnification of the Registrant's directors and officers to the full extent permitted under Delaware law. Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for payments of unlawful dividends or unlawful stock repurchases or redemptions, or (iv) for any transaction from which the director derived an improper personal benefit. II-1 3 Article Twelfth of the Registrant's Restated Certificate of Incorporation provides that, to the full extent that Delaware law permits the limitation or elimination of the liability of directors, a director of the Registrant will not be liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director. Officers and directors of the Registrant are covered by insurance that, with certain exceptions and within certain limitations, indemnifies them against losses and liabilities arising from any alleged "wrongful act," including any alleged error or misstatement, misleading statement, wrongful act or omission, neglect or breach of duty, in their capacities as such. ITEM 8. EXHIBITS
Exhibit Number Description - --------------------- -------------------------------------------------------------------------- 5.1 Opinion of counsel regarding legality of the Common Stock being registered 15.1 Letter re unaudited interim financial information 23.1 Consent of Deloitte & Touche LLP (see page II-6) 23.2 Consent of counsel (included in Exhibit 5.1) 24.1 Power of Attorney (see Signature Page) 99.1 McDonnell Douglas Corporation 1994 Performance and Equity Incentive Plan 99.2 McDonnell Douglas Corporation Incentive Award Plan
ITEM 9. UNDERTAKINGS A. The undersigned Registrant hereby undertakes: (1) To file during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (a) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the "Securities Act"); (b) 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) that, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (c) 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 paragraphs (1)(a) and (1)(b) 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 Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, 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. II-2 4 (3) To remove from registration by means of a post-effective amendment any of the securities being registered that remain unsold at the termination of the offering. B. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) 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. C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act 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 and will be governed by the final adjudication of such issue. II-3 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on July 29, 1997. THE BOEING COMPANY By: /s/ PHILIP M. CONDIT ----------------------------------------- Philip M. Condit Chairman of the Board and Chief Executive Officer POWER OF ATTORNEY Each person whose signature appears below constitutes and appoints Philip M. Condit, Theodore J. Collins and B.E. Givan, or any of them, his or her attorneys-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Registration Statement, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities indicated on July 29, 1997.
SIGNATURE TITLE --------- ----- /s/ PHILIP M. CONDIT Chairman of the Board and Chief Executive Officer - ------------------------------------------------------ (Principal Executive Officer) Philip M. Condit /s/ B.E. GIVAN Senior Vice President and Chief Financial Officer - ------------------------------------------------------ (Principal Financial Officer) B.E. Givan /s/ GARY W. BEIL Vice President and Controller - ------------------------------------------------------ (Principal Accounting Officer) Gary W. Beil /s/ JOHN E. BRYSON Director - ------------------------------------------------------ John E. Bryson /s/ JOHN B. FERY Director - ------------------------------------------------------ John B. Fery Director - ------------------------------------------------------ Paul E. Gray Director - ------------------------------------------------------ Harold J. Haynes Director - ------------------------------------------------------ Donald E. Petersen /s/ CHARLES M. PIGOTT Director - ------------------------------------------------------ Charles M. Pigott /s/ ROZANNE L. RIDGWAY Director - ------------------------------------------------------ Rozanne L. Ridgway
II-4 6 - ------------------------------------------------------ Frank A. Shrontz Director /s/ GEORGE H. WEYERHAEUSER - ------------------------------------------------------ George H. Weyerhaeuser Director
II-5 7 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of The Boeing Company on Form S-8 of our reports dated January 23, 1997, appearing in and incorporated by reference in the Annual Report on Form 10-K of The Boeing Company and subsidiaries for the year ended December 31, 1996. /s/ DELOITTE & TOUCHE - ------------------------------- DELOITTE & TOUCHE LLP Seattle, Washington July 30, 1997 II-6 8 INDEX TO EXHIBITS
Exhibit Number Description -------------- ----------- 5.1 Opinion of counsel regarding legality of the Common Stock being registered 15.1 Letter re unaudited interim financial information 23.1 Consent of Deloitte & Touche LLP (see page II-6) 23.2 Consent of counsel (included in Exhibit 5.1) 24.1 Power of Attorney (see Signature Page) 99.1 McDonnell Douglas Corporation 1994 Performance and Equity Incentive Plan 99.2 McDonnell Douglas Corporation Incentive Award Plan
EX-5.1 2 OPINION OF COUNSEL 1 EXHIBIT 5.1 [LETTERHEAD OF THE BOEING COMPANY] July 30, 1997 The Boeing Company 7755 East Marginal Way South Seattle, Washington 98108 RE: REGISTRATION STATEMENT ON FORM S-8 Gentlemen and Ladies: As Corporate Counsel of The Boeing Company (the "Company"), I have acted as counsel in connection with the Registration Statement on Form S-8 which is being filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to 1,267,978 shares of common stock, $5.00 par value, of the Company (the "Shares"). The Shares may be issued pursuant to the McDonnell Douglas Corporation 1994 Performance and Equity Incentive Plan and the McDonnell Douglas Corporation Incentive Award Plan (collectively, the "Plans"). I have examined the Registration Statement and a copy of the Restated Certificate of Incorporation of the Company and any amendments thereto to date, a copy of the By-Laws of the Company as amended to date, and such resolutions of the Board of Directors of the Company and other documentation as I have deemed necessary for the purpose of this opinion. Based upon and subject to the foregoing, I am of the opinion that the Shares that may be issued by the Company pursuant to the Plans, upon the due execution by the Company and registration by its registrar of the Shares and the issuance thereof by the Company in accordance with the terms of the Plans, and the receipt of consideration therefor in accordance with the terms of the Plans, will be validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to me under the heading "Interests of Named Experts and Counsel" in the Registration Statement. Cordially, /s/ HEATHER HOWARD ----------------------------------------- Heather Howard Corporate Secretary and Corporate Counsel EX-15.1 3 LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION 1 EXHIBIT 15.1 [LETTERHEAD OF DELOITTE & TOUCHE LLP] July 30, 1997 The Boeing Company Seattle, Washington We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of The Boeing Company and subsidiaries for the periods ended March 31, 1997 and 1996, as indicated in our report dated May 13, 1997; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which was included in your Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, is being incorporated by reference in this Registration Statement. We are also aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. /s/ Deloitte & Touche LLP EX-99.1 4 1994 PERFORMANCE AND EQUITY INCENTIVE PLAN 1 EXHIBIT 99.1 MCDONNELL DOUGLAS CORPORATION 1994 PERFORMANCE AND EQUITY INCENTIVE PLAN ARTICLE I NAME AND PURPOSE 1.1 Name. The name of this Plan is the "McDonnell Douglas Corporation 1994 Performance and Equity Incentive Plan." 1.2 Purpose. The purpose of the Plan is to enhance the profitability and value of the Company for the benefit of its shareholders by providing equity ownership opportunities and performance based incentives to better align the interests of officers and key employees with those of shareholders. The Plan is also designed to enhance the profitability and value of the Company for the benefit of its shareholders by providing stock and cash awards to attract, retain and motivate officers and other key employees who make important contributions to the success of the Company. ARTICLE II DEFINITIONS OF TERMS AND RULES OF CONSTRUCTION 2.1 General Definitions. The following words and phrases, when used in the Plan, unless otherwise specifically defined or unless the context clearly otherwise requires, shall have the following respective meanings: (a) Affiliate. A Parent, or Subsidiary of the Company or any other entity designated by the Committee in which the Company owns at least a 50% interest (including, but not limited to, partnerships and joint ventures). (b) Agreement. The document which evidences the grant of any Benefit under the Plan and which sets forth the Benefit and the terms, conditions and provisions of, and restrictions relating to, such Benefit. (c) Benefit. Any benefit granted to a Participant under the Plan. (d) Board. The Board of Directors of the Company. (e) Cash Award. A Benefit payable in the form of cash. (f) Change of Control. (i) The acquisition at any time by a "person" or "group" (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) (excluding, for this purpose, the Company or any Subsidiary or any employee benefit plan of the Company or any Subsidiary) of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of securities representing 20% or more of the combined voting power in the election of directors of the then-outstanding securities of the Company or any successor of the Company; (ii) the termination of service as directors, for any reason other than death, disability or retirement from the Board during any period of two consecutive years or less, of individuals who at the beginning of such period constituted a majority of the Board of Directors, unless the election of or nomination for election of each new director during such period was approved by a vote of at least two-thirds of the directors still in office who were directors at the beginning of the period; (iii) approval by the shareholders of the Company of any merger or consolidation or statutory share exchange as a result of which the Common Stock shall be changed, converted or exchanged (other than a merger or share exchange 2 with a wholly-owned Subsidiary of the Company) or liquidation of the Company or any sale or disposition of 50% or more of the assets or earning power of the Company; or (iv) approval by the shareholders of the Company of any merger or consolidation or statutory share exchange to which the Company is a party as a result of which the persons who were shareholders of the Company immediately prior to the effective date of the merger or consolidation or statutory share exchange shall have beneficial ownership of less than 50% of the combined voting power in the election of directors of the surviving corporation following the effective date of such merger or consolidation or statutory share exchange; provided, however, that no Change in Control shall be deemed to have occurred if, prior to such time as a Change in Control would otherwise be deemed to have occurred, the Company's Board of Directors deems otherwise. A "Change in Control" shall not include any reduction in ownership of an Affiliate so long as the entity continues to meet the definitions of those terms as contained in this Section. (g) Code. The Internal Revenue Code of 1986, as amended. Any reference to the Code includes the regulations promulgated pursuant to the Code. (h) Company. The Boeing Company. (i) Committee. The Company's Compensation Committee or its successor. (j) Common Stock. The Company's $5.00 par value common stock. (k) Effective Date. The date that the Plan is approved by the shareholders of MDC which must occur within one year after approval by the Board of Directors of MDC. Any grants of Benefits prior to the approval by the shareholders of the Company shall be void if such approval is not obtained. (l) Employee. Any person employed by the Employer. (m) Employer. The Company and all Affiliates. (n) Exchange Act. The Securities Exchange Act of 1934, as amended. (o) Fair Market Value. The closing price of a Share on the New York Stock Exchange on a given date, or, in the absence of sales on a given date, the closing price on the New York Stock Exchange on the last day on which a sale occurred prior to such date. (p) Fiscal Year. The taxable year of the Company which is the calendar year. (q) ISO. An Incentive Stock Option as defined in Section 422 of the Code. (r) MDC. McDonnell Douglas Corporation. (s) NQSO. A Non-Qualified Stock Option that does not meet the statutory requirements of an ISO. (t) Option. An option to purchase Shares granted under the Plan. (u) Other Stock Based Award. An award under ARTICLE XVIII that is valued in whole or in part by reference to, or is otherwise based on, Common Stock. 2 3 (v) Parent. Any corporation (other than the Company or a Subsidiary) in an unbroken chain of corporations ending with the Company, if, at the time of the grant of an Option or other Benefit, each of the corporations (other than the Company or a Subsidiary) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. (w) Participant. An Employee who is granted a Benefit under the Plan. Benefits may be granted only to Employees. (x) Performance Share. A Share awarded to a Participant under ARTICLE XVI of the Plan. (y) Plan. The McDonnell Douglas Corporation 1994 Performance and Equity Incentive Plan and all amendments and supplements to it. (z) Restricted Stock. Shares issued under ARTICLE XV of the Plan. (aa) Rule 16b-3. Rule 16b-3 promulgated by the SEC, as amended, or any successor rule in effect from time to time. (bb) SEC. The Securities and Exchange Commission. (cc) Share. A share of Common Stock. (dd) SAR. A Stock Appreciation Right, which is the right to receive an amount equal to the appreciation, if any, in the Fair Market Value of a Share from the date of the grant of the right to the date of its payment. (ee) Subsidiary. Any corporation, other than the Company, in an unbroken chain of corporations beginning with the Company if, at the time of grant of an Option or other Benefit, each of the corporations, other than the last corporation in the unbroken chain, owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 2.2 Other Definitions. In addition to the above definitions, certain words and phrases used in the Plan and any Agreement may be defined in other portions of the Plan or in such Agreement. 2.3 Conflicts in Plan. In the case of any conflict in the terms of the Plan, or between the Plan and an Agreement, relating to a Benefit, the provisions in the ARTICLE of the Plan which specifically grants such Benefit shall control those in a different ARTICLE or in such Agreement. ARTICLE III COMMON STOCK 3.1 Number of Shares. The number of Shares which may be issued or sold or for which Options, SARs or Performance Shares may be granted under the Plan shall be 1,222,000. During the term of this Plan, no more than 250,000 of such Shares may be granted to any one individual. Such Shares may be authorized but unissued Shares, required Shares, Shares acquired on the open market specifically for distribution under this Plan, or any combination thereof. 3 4 3.2 Reusage. Other than pursuant to Section 3.3, no further awards may be granted pursuant to the Plan after July 28, 1997. 3.3 Adjustments. If there is any change in the Common Stock of the Company by reason of any stock split, stock dividend, spin-off, split-up, spin-out, recapitalization, merger, consolidation, reorganization, combination or exchange of shares, or any other similar transaction, the number of shares available for grant under the Plan or subject to or granted pursuant to a Benefit and the price thereof, as applicable, shall be appropriately adjusted by the Committee. ARTICLE IV ELIGIBILITY 4.1 Determined By Committee. The Participants and the Benefits they receive under the Plan shall be determined by the Committee in its sole discretion. In making its determinations, the Committee shall consider past, present and expected future contributions of Participants and potential Participants to the Employer. Members of the Committee and any other persons whose participation in the Plan would cause disqualification of this or any other benefit plan intended to be qualified under Rule 16b-3 are ineligible to participate in the Plan. ARTICLE V ADMINISTRATION 5.1 Committee. The Plan shall be administered by the Company's Management Compensation and Succession Committee or its successor. The Committee shall consist of three or more members of the Board who are "disinterested persons" as defined in Rule 16b-3 and are "outside directors" as defined in Code Section 162(m) and the regulations thereunder. 5.2 Authority. Subject to the terms of the Plan, the Committee shall have sole discretionary authority to: (a) determine the individuals to whom Benefits are granted, the type and amounts of Benefits to be granted and the date of issuance and duration of all such grants; (b) determine the terms, conditions and provisions of, and restrictions relating to, each Benefit granted; (c) interpret and construe the Plan and all Agreements; (d) prescribe, amend and rescind rules and regulations relating to the Plan; (e) determine the content and form of all Agreements; (f) determine all questions relating to Benefits under the Plan; (g) maintain accounts, records and ledgers relating to Benefits; (h) maintain records concerning its decisions and proceedings; (i) employ agents, attorneys, accountants or other persons for such purposes as the Committee considers necessary or desirable; and 4 5 (j) do and perform all acts which it may deem necessary or appropriate for the administration of the Plan and carry out the purposes of the Plan. 5.3 Performance Based Benefits. The Committee's discretion to grant Benefits includes the right to issue up to 25,000 Shares per Fiscal Year which are not performance based. Since one of the primary purposes of the Plan is to provide performance based incentives, not less than 40% of the Shares in excess of this amount which may be issued or sold or for which Options, SARs or Performance Shares may be granted under the Plan in any Fiscal Year shall be payable solely on account of the attainment of performance goals established at the sole discretion of the Committee at the time such Benefit is granted. Such performance goals will be based upon one or more of the following performance based criteria, either on a Company-specific basis or in comparison with peer group performance: return on net assets, return on assets, return on equity, return on capital, return on revenues cash flow, book value, Share price performance (including Options and SARs tied solely to appreciation in the fair market value of the Shares), earnings per Share, price earnings ratio, or tool quality management score calculated generally in accordance with criteria and scoring procedures specified by the Malcolm Baldrige Foundation. 5.4 Delegation. Except as required by Rule 16b-3 with respect to grants of Options, SARs, Performance Shares, Other Stock Based Awards, or other Benefits to individuals who are subject to Section 16 of the Exchange Act or as otherwise required for compliance with Rule 16b-3 or other applicable law, the Committee may delegate all or any part of its authority under the Plan to any Employee, Employees or committee of Employees. 5.5 Decisions of Committee and its Delegates. All decisions made by the Committee, or (unless the Committee has specified an appeal process to the contrary) any other person or persons to whom the Committee has delegated authority, pursuant to the provisions hereof shall be final and binding on all persons. ARTICLE VI AMENDMENT OF PLAN 6.1 Power of Committee. The Committee shall have the sole right and power to amend the Plan at any time and from time to time; provided, however, that the Committee may not amend the Plan, without approval of the shareholders of the Company, in a manner which would: (a) cause Options which are intended to qualify as ISOs to fail to qualify; (b) cause the Plan to fail to meet the requirements of Rule 16b-3; or (c) violate applicable law. ARTICLE VII TERM AND TERMINATION OF PLAN 7.1 Term. The Plan shall commence as of the Effective Date. No Benefit shall be granted pursuant to the Plan on or after the tenth anniversary date of the Effective Date, but Benefits granted prior to such tenth anniversary may extend beyond that date to the date(s) specified in the Agreement(s) covering such Benefits. 7.2 Termination. Subject to ARTICLE VIII, the Plan may be terminated at any time by the Committee. 5 6 ARTICLE VIII MODIFICATION OR TERMINATION OF BENEFITS 8.1 General. Subject to the provisions of Section 8.2, the amendment or termination of the Plan shall not adversely affect a Participant's rights to or under any Benefit granted prior to such amendment or termination. 8.2 Committee's Right. Except as may be provided in an Agreement, any Benefit granted may be converted, modified, forfeited or canceled, prospectively or retroactively, in whole or in part, by the Committee in its sole discretion, but, subject to Section 8.3, no such action may impair the rights of any Participant without his or her consent. Except as may be provided in an Agreement, the Committee may, in its sole discretion, in whole or in part, waive any restrictions or conditions applicable to, or accelerate the vesting of, any Benefit. 8.3 Termination of Benefits under Certain Conditions. The Committee in its sole discretion may cancel any unexpired, unpaid, or deferred Benefits at any time if the Participant is not in compliance with all applicable provisions of this Plan or with any Agreement or if the Participant, whether or not he or she is currently employed by an Employer, acts in a manner contrary to the best interests of the Company or any Affiliate. 8.4 Awards to Foreign Nationals and Employees Outside the United States. To the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practice and to further the purpose of this Plan, the Committee may, without amending this Plan, (i) establish special Rules applicable to Benefits granted to Participants who are foreign nationals, are employed outside the United States, or both, including rules that differ from those set forth in this Plan, and (ii) grant Benefits to such Participants in accordance with those rules. ARTICLE IX CHANGE OF CONTROL 9.1 Right of Committee. The occurrence of a Change of Control shall not limit the Committee's authority to take any action, in its sole discretion, permitted by Section 8.2. The Committee, in its sole discretion, may specify in any Agreement the effect a Change of Control will have on such Agreement. ARTICLE X AGREEMENTS AND CERTAIN BENEFITS 10.1 Grant Evidenced by Agreement. The grant of any Benefit under the Plan may be evidenced by an Agreement which shall describe the specific Benefit granted and the terms and conditions of the Benefit. The granting of any Benefit shall be subject to, and conditioned upon, the recipient's execution of any Agreement required by the Committee. Except as otherwise provided in an Agreement, all capitalized terms used in the Agreement shall have the same meaning as in the Plan, and the Agreement shall be subject to all of the terms of the Plan. 10.2 Provisions of Agreement. Each Agreement shall contain such provisions as the Committee shall determine in its sole discretion to be necessary, desirable and appropriate for the Benefit granted which may include, but not necessarily be limited to, the following: description of the type of Benefit; the Benefit's duration; its transferability; if an Option, the exercise price, the exercise period and the person or persons who may exercise the Option; the effect upon such Benefit of the Participant's death, disability, change of duties or termination of employment; the Benefit's conditions; subject to the provisions of Section 11.2, 6 7 when, if, and how any Benefit may be forfeited, converted into another Benefit, modified, exchanged for another Benefit, or replaced; and the restrictions on any Shares purchased or granted under the Plan. 10.3 Certain Benefits. Any Benefit granted to an individual who is subject to Section 16 of the Exchange Act shall not be transferable other than by will or the laws of descent and distribution and shall be exercisable during the Participant's lifetime only by the Participant, his or her guardian or legal representative. The designation of a beneficiary by such individual shall not constitute a transfer. ARTICLE XI TANDEM AWARDS AND REISSUANCE OF OPTIONS 11.1 Tandem Awards. Benefits may be granted by the Committee in its sole discretion individually or in tandem, provided, however, that no Benefit except SARs may be granted in tandem with an ISO. 11.2 Cancellation and Reissuance of Options. The Committee will not permit the repricing of Options by any method, including by cancellation and reissuance. ARTICLE XII PAYMENT, DIVIDENDS, DEFERRAL AND WITHHOLDING 12.1 Payment. Upon the exercise of an Option or in the case of any other Benefit that requires a payment by a Participant to the Company, the amount due the Company is to be paid: (a) in cash; (b) by the surrender of all or part of a Benefit (including the Benefit being exercised); (c) by the tender to the Company of Shares owned by the Participant and registered in his or her name, having a Fair Market Value equal to the amount due to the Company; (d) in other property, rights and credits, deemed acceptable by the Committee including the Participant's promissory note; or (e) by any combination of the payment methods specified in (a) through (d) above. Notwithstanding the foregoing, any method of payment other than in cash may be used only with the consent of the Committee or if and to the extent so provided in an Agreement. The proceeds of the sale of Shares purchased pursuant to an Option and any payment to the Company for other Benefits shall be added to the general funds of the Company or to the required Shares held by the Company, as the case may be, and used for the corporate purposes of the Company as the Board shall determine. 12.2 Dividend Equivalents. Grants of Benefits in Shares or Share equivalents may include dividend or dividend equivalent payments or dividend credit rights. 12.3 Optional Deferral. The right to receive any Benefit under the Plan may, at the request of the Participant, be deferred for such period and upon such terms as the Committee shall determine, which may include crediting of interest on deferrals of cash and crediting of dividends on deferrals denominated in Shares. 7 8 12.4 Code Section 162(m). The Committee, in its sole discretion, may require that one or more Agreements contain provisions which provide that, in the event Section 162(m) of the Code, or any successor provision relating to excessive employee remuneration, would operate to disallow a deduction by the Company for all or part of any Benefit under the Plan, a Participant's receipt of the portion of such Benefit that would not be deductible by the Company shall be deferred until the next succeeding year or years in which the Participant's remuneration does not exceed the limit set forth in such provision of the Code. 12.5 Withholding. The Company may, at the time any distribution is made under the Plan, whether in cash or in Shares, or at the time any Option is exercised, withhold from such distribution or Shares issuable upon the exercise of an Option, any amount necessary to satisfy federal, state and local withholding requirements with respect to such distribution or exercise of such Option. Such withholding may be satisfied, at the Company's option, either by cash or the Company's withholding of Shares. Agreements may contain withholding provisions applicable only to Participants who are subject to Section 16 of the Exchange Act. ARTICLE XIII OPTIONS 13.1 Type of Options. It is intended that that both ISOs and NQSOs may be granted by the Committee under the Plan. 13.2 Option Price. The purchase price for Shares under any ISO shall be no less than the Fair Market Value of the Shares at the time the Option is granted. 13.3 Other Requirements for ISOs. The terms of each Option which is intended to qualify as an ISO shall meet all requirements of Section 422 of the Code or any successor statute in effect from time to time. 13.4 NQSOs. The terms of each NQSO shall provide that such Option will not be treated as an ISO. The purchase price for Shares under any NQSO shall be no less than the Fair Market Value of the Shares at the time the Option is granted. 13.5 Determination by Committee. Except as otherwise provided in Section 13.2 through Section 13.4, the terms of all Options shall be determined by the Committee. ARTICLE XIV SARS 14.1 Grant and Payment. The Committee may grant SARS. Upon electing to receive payment of an SAR, a Participant shall receive payment in cash, in Shares, or in any combination of cash and Shares, as the Committee shall determine. 14.2 Grant of Tandem Award. If SARs are granted in tandem with an Option, the exercise of the Option shall cause a proportional reduction in SARs standing to a Participant's credit which were granted in tandem with the Option; and the payment of SARs shall cause a proportional reduction of the Shares under such Option. If SARs are granted in tandem with an ISO, the SARs shall have such terms and conditions as shall be required for the ISO to qualify as an ISO. 14.3 Payment of Award. SARs shall be paid by the Company to a Participant, to the extent payment is elected by the Participant (and is otherwise duo and payable), as soon as practicable after the date on which such election is made. 8 9 ARTICLE XV RESTRICTED STOCK 15.1 Description. The Committee may grant Benefits in Shares as Restricted Stock with such terms and conditions as may be determined in the sole discretion of the Committee. Shares of Restricted Stock shall be issued and delivered at the time of the grant or as otherwise determined by the Committee, but shall be subject to forfeiture until provided otherwise in the applicable Agreement or the Plan. Each certificate representing Shares of Restricted Stock shall bear a legend referring to the Plan and the risk of forfeiture of the Shares and stating that such Shares are nontransferable until all restrictions have been satisfied and the legend has been removed. At the discretion of the Committee, the grantee may or may not be entered to full voting and dividend rights with respect to all shares of Restricted Stock from the date of grant. The Committee may (but is not obligated to) require that any dividends on such shares shall be automatically deferred and reinvested in additional Restricted Stock subject to the same restrictions as the underlying Benefit. 15.2 Cost of Restricted Stock. Grants of Shares of Restricted Stock shall be made at such cost as the Committee shall determine and may be issued for no monetary consideration, subject to applicable state law. 15.3 Nontransferability. Shares of Restricted Stock shall not be transferable until after the removal of the legend with respect to such Shares. ARTICLE XVI PERFORMANCE SHARES 16.1 Description. Performance Shares represent the right of a Participant to receive Shares or cash equal to the Fair Market Value of such Shares at a future date in accordance with the terms and conditions of a grant. The terms and conditions shall be determined by the Committee, in its sole discretion, but generally are expected to be based substantially upon the attainment of targeted financial performance objectives. 16.2 Grant. The Committee may grant an award of Performance Shares at such times, in such amounts and under such terms and conditions as it deems appropriate. ARTICLE XVII CASH AWARDS 17.1 Grant. The Committee may grant Cash Awards at such times and in such amounts as it deems appropriate. 17.2 Limitation. The amount of any Cash Award in any Fiscal Year to any Participant shall not exceed the greater of $500,000 or 50% of his cash compensation (excluding any Cash Award under this ARTICLE XVII) paid in such Fiscal Year. 17.3 Restrictions. As determined by the Committee in its sole discretion, Cash Awards may be subject or not subject to conditions, restricted or nonrestricted, vested or subject to forfeiture, and may be payable currently or in the future or both. 9 10 ARTICLE XVIII OTHER STOCK BASED AWARDS AND OTHER BENEFITS 18.1 Other Stock Based Awards. The Committee shall have the right to grant Other Stock Based Awards which may include, without limitation, the grant of Shares based on certain conditions, the payment of cash based on the market performance of the Common Stock, and the grant of securities convertible into Shares. 18.2 Other Benefits. The Committee shall have the right to provide other types of Benefits under the Plan in addition to those specifically listed, if the Committee believes that such Benefits would further the purposes for which the Plan has been established. ARTICLE XIX MISCELLANEOUS PROVISIONS 19.1 Termination of Employment. If the employment of a Participant by the Employer terminates for any reason, all unexercised, deferred, and unpaid Benefits may be exercisable or paid only in accordance with rates established by the Committee. These rules may provide as the Committee in its sole discretion may deem appropriate, for the expiration, forfeiture, continuation, or acceleration of the vesting, except as may be provided in an Agreement, of all or part of the Benefits. 19.2 Unfunded Status of the Plan. The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation. With respect to any payments or deliveries of Shares not yet made to a Participant by the Company, nothing contained herein shall give any rights that are greater than those of a general creditor of the Company. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Shares or payments hereunder consistent with the foregoing. 19.3 Designation of Beneficiary. A Participant may file with the Committee a written designation of a beneficiary or beneficiaries (subject to such limitations as to the classes and number of beneficiaries and contingent beneficiaries as the Committee may from time to time prescribe) to exercise, in the event of the death of the Participant, an Option, or to receive, in such event, any Benefits. The Committee reserves the right to review and approve beneficiary designations. A Participant may from time to time revoke or change any such designation of beneficiary and any designation of beneficiary under the Plan shall be controlling over any other disposition, testamentary or otherwise; provided, however, that if the Committee shall be in doubt as to the right of any such beneficiary to exercise any Option or to receive any Benefit, the Committee may determine to recognize only an exercise by the legal representative of the recipient, in which case the Company, the Committee and the members thereof shall not be under any further liability to anyone. 19.4 Nontransferability. Unless otherwise determined by the Committee or specified in an Agreement, (i) no Benefit granted under this Plan may be transferred or assigned by the Participant to whom it is granted other than by beneficiary designation, will, pursuant to the laws of descent and distribution, or pursuant to a qualified domestic relations order, and (ii) a Benefit granted under this Plan may be exercised, during the Participant's lifetime, only by the Participant or by the Participant's guardian or legal representative; except that no ISO may be transferred or assigned pursuant to a qualified domestic relations order or exercised, during the Participant's lifetime, by the Participant's guardian or legal representative. 19.5 Rule 16b-3. With respect to Participants subject to Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all applicable provisions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Plan 10 11 administrators fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the committee. 19.6 Underscored References. The underscored references contained in the Plan and in any Agreement are included only for convenience, and they shall nor be construed as part of the Plan or Agreement or in any respect affecting or modifying its provisions. 19.7 Number and Gender. The masculine, feminine and neuter, wherever used in the Plan or in any Agreement, shall refer to either the masculine, feminine or neuter; and, unless the context otherwise requires, the singular shall include the plural and the plural the singular. 19.8 Governing Law. The place of administration of the Plan and each Agreement shall be in the State of Missouri. The corporate law of the Company's state of incorporation shall govern issues related to the validity and issuance of Shares. Otherwise, this Plan and each Agreement shall be construed and administered in accordance with the laws of the State of Missouri, without giving effect to principles relating to conflict of laws. 19.9 Purchase for Investment. The Committee may require each person purchasing or receiving Shares pursuant to a Benefit to represent to and agree with the Company in writing that such person is acquiring the Shares for investment and without a view to distribution or resale. The certificates for such Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. All certificates for Shares delivered under the Plan shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under all applicable laws, rules and regulations, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate references to such restrictions. 19.10 No Employment Contract. Neither the adoption of the Plan nor any Benefit granted hereunder shall confer upon any Employee any right to continued employment nor shall the Plan or any Benefit interfere in any way with the right of the Employer to terminate the employment of any of its Employees at any time. 19.11 No Effect on Other Benefits. The receipt of Benefits under the Plan shall have no effect on any benefits to which a Participant may be entitled from the Employer, under another plan or otherwise, or preclude a Participant from receiving any such benefits. 11 EX-99.2 5 MCDONNELL DOUGLAS CORPORATION INCENTIVE AWARD PLAN 1 EXHIBIT 99.2 MCDONNELL DOUGLAS CORPORATION INCENTIVE AWARD PLAN AS AMENDED AND RESTATED AS OF 20 JULY 1990 2 TABLE OF CONTENTS
Page ---- 1. PURPOSE. .................................................................. 1 2. DEFINITIONS. .............................................................. 1 3. ELIGIBILITY. .............................................................. 2 4. AWARDS. ................................................................... 3 5. INCENTIVE COMPENSATION AWARDS. ............................................ 3 6. LONG-TERM INCENTIVE AWARDS. ............................................... 4 7. OPTION AWARDS. ............................................................ 5 8. CONTINGENT CREDITS. ....................................................... 5 9. PAYMENT OF AWARDS; OPTION AGREEMENTS. .................................... 5 10. OPTIONAL DEFERRED PAYMENT. ................................................ 6 11. DIVIDEND EQUIVALENTS; INTEREST. .......................................... 6 12. PRICE AND TIME OF EXERCISE OF ISOs AND NQSOs. ............................. 7 13. EXERCISE OF SARs. ......................................................... 8 14. EXPIRATION OF OPTIONS. .................................................... 8 15. CONVERSION OF NQSO OR ISO INTO SAR. ....................................... 9 16. CONVERSION OF STOCK SAR INTO CASH SAR. .................................... 9 17. PLAN LIMITATIONS. ......................................................... 9 18. TERMINATION OF EMPLOYMENT OR CHANGE IN WORK ASSIGNMENT. ................... 10 19. DESIGNATION OF BENEFICIARY. ............................................... 10 20. ADMINISTRATION OF THE PLAN. ............................................... 10 21. ADJUSTMENTS TO STOCK. ..................................................... 11 22. TRANSFER OR ASSIGNMENT OF OPTIONS. ........................................ 11 23. NO CONTRACT OF EMPLOYMENT. ................................................ 11 24. CONDITION TO ELIGIBILITY. ................................................. 12 25. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN. ........................ 12 26. NO EFFECT ON OTHER PLANS. ................................................. 12 27. EFFECTIVE DATE. ........................................................... 12
3 1. PURPOSE. The purpose of this McDonnell Douglas Corporation Incentive Award Plan (Plan) is to attract, motivate, reward, and retain key management, technical, and professional employees who contribute to the success of McDonnell Douglas Corporation (MDC), by relating their individual compensation to that success. These objectives will be accomplished by grant of Incentive Compensation Awards (IC Awards), Long-Term Incentive Awards (LTI Awards), and/or Option Awards, which will be in addition to the base salary of Participants in the Plan. IC Awards will relate to performance during a single calendar year, while LTI Awards will relate to performance during a specified Performance Period of 2 to 5 years. Relevant performance may be that of MDC, MDC common stock, the individual Participant, his assigned component, other relevant work group(s), and/or related component(s). Option Awards will be granted as the committee of the MDC Board of Directors which administers the Plan (Committee) determines is in the best interests of MDC. All Awards will be based on a consideration by such Committee of the reasonableness of the Participant's total compensation, compensation practices within the applicable industry or market, and such other factors as the Committee deems relevant. The Committee may exercise its authority and discretion and delegate administration of the Plan to others as and to the extent permitted by Section 20. 2. DEFINITIONS. Unless the context clearly indicates otherwise, the following terms, when used in the Plan, will have the meanings set forth in this Section 2. 2.1. "Award": An IC Award, an LTI Award, or an Option Award granted pursuant to the Plan. 2.2. "Award Percent": The percentage of a Target LTI Award which is earned. 2.3. "Closing Market Price": The closing price of a share of Stock on the New York Stock Exchange or, at the discretion of the Committee, the composite closing price of a share of Stock as reported for New York Stock Exchange issues in the Wall Street Journal. 2.4. "Code": The Internal Revenue Code, as amended from time to time. 2.5. "Committee": A committee consisting of 3 or more members of the Board of Directors of MDC who are "disinterested persons" within the meaning of Securities and Exchange Commission Rule 16b-3. 2.6. "Contingent Credit": A right granted pursuant to Section 8 to receive Stock in lieu of exercising an Option. 2.7. "Dividend Equivalent": An amount equal to the declared cash dividend on Stock which, on the dividend record date, has been granted pursuant to Section 5.2 or credited pursuant to Section 8, or which the Committee has determined to issue in payment of an Earned LTI Award pursuant to Section 9, but not yet registered in the name of the Participant or his successors in interest. 2.8. "Earned LTI Award": The portion of a Target LTI Award which is earned based on the extent to which performance targets and other performance conditions established by the Committee are met. 4 2.9. "Grant Date": The date as of which an IC Award, Target LTI Award, or an Option Award, is granted. 2.10. "IC Award" or "Incentive Compensation Award": An Award granted pursuant to Section 5. 2.11. "ISO": An incentive stock option (within the meaning of Section 422A of the Code) to purchase Stock. 2.12. "LTI Award" or "Long-Term Incentive Award": An Award granted pursuant to Section 6. 2.13. "NQSO": A non-qualified stock option to purchase Stock. 2.14. "Option": An ISO, NQSO, or SAR. 2.15. "Option Award": An Award granted pursuant to Section 7. 2.16. "Option Conversion Factor": A number, not less than 2 nor greater than 6, determined by the Committee as provided in Sections 5.3 and 6.4, with respect to each IC Award in the form of an Option and each LTI Award in the form of an NQSO or SAR. 2.17. "Participant": An employee selected by the Committee to participate in the Plan. 2.18. "Performance Period": The period, from 2 to 5 years as determined by the Committee, over which a Target LTI Award may be earned. 2.19. "Performance Share": A right to receive a share of Stock, or the cash value thereof, granted pursuant to Section 6.3. 2.20. "SAR": A stock appreciation right entitling the holder thereof to receive, for each share of Stock subject to the SAR, an amount (payable in cash or Stock) equal to the excess of the Closing Market Price on the date the SAR is exercised over the exercise price of the SAR. 2.21. "Stock": The common stock of MDC. 2.22. "Target LTI Award": An LTI Award which is granted contingent upon the attainment of specified performance targets and other performance conditions. 2.23. "Work Force Adjustment": A termination which is not for cause but rather is due to a permanent or indefinite reduction in the work force, including, but not limited to, the elimination of a Participant's position as a result of facility closure, discontinuance or relocation of operations, merger, acquisition, reorganization or sale (including the sale by MDC of a business unit, division, product line or functionally related group of assets). 3. ELIGIBILITY. Any key management, technical, or professional employee, including an officer or director, of the Company or any of its subsidiaries may participate in the Plan if selected as a Participant by the Committee. Members of the Committee and any other persons whose participation in this Plan would cause 2 5 disqualification of this or any other benefit plan intended to be qualified under Securities and Exchange Commission Rule 16b-3 are ineligible to participate in the Plan. 4. AWARDS. The Committee will, from time to time, select Participants, grant Awards to Participants, and determine the type(s) of Awards to be granted to each Participant and, when appropriate, the cash value of each Participant's Award. A Participant may, at the discretion of the Committee, be granted IC Awards, LTI Awards, Option Awards, or any combination thereof. 5. INCENTIVE COMPENSATION AWARDS. 5.1. Determination of IC Awards. Each IC Award will be in the form of cash, Stock, an NQSO, an ISO, a SAR or any combination thereof, as the Committee determines. No later than 4 months after the end of each calendar year, the Committee will determine the cash value and form of each IC Award. A Participant may be permitted to indicate his preference as to the form(s) of his IC Award. The Committee will select a Grant Date with respect to each IC Award which will be on or after the date on which the cash value and forms(s) of the Award are determined. The Committee may, at its discretion, determine individual target IC Awards, or establish procedures or formulas for determining target IC Awards generally (e.g., as a percentage of salary or of salary above a threshold amount). Such target IC Awards, if established, will be advisory only and actual IC Awards, if any, generally will be granted after the end of the calendar year for which such Awards are granted, as provided in the preceding paragraph of this Section 5.1. Target IC Awards may be used, however, as the basis for determining actual IC Awards, in light of each Participant's personal performance and/or that of his assigned component, other relevant work group(s), and/or related component(s) during the preceding calendar year. 5.2. IC Awards in the Form of Stock. In the event the Committee grants a portion of an IC Award in the form of Stock, the number of shares of Stock to be issued will be calculated by dividing the cash value of the portion of the IC Award granted in the form of Stock by either: (i) the Closing Market Price on Grant Date, or (ii) the average of the Closing Market Price on the 10 trading days immediately preceding the last trading day of February of the year in which the IC Award is granted, as determined by the Committee at the time the Award is granted. Any fractional share will be rounded up to the next whole share unless otherwise determined by the Committee. 5.3. IC Awards in the Form of Options. In the event the Committee grants a portion of an IC Award in the form an Option, the number of shares of Stock to be subject to the Option will be calculated by dividing the cash value of the portion of the IC Award granted in the form of an Option by the exercise price of the Option as determined by the Committee pursuant to Section 12 or 13 and multiplying the resulting quotient by 3 6 the Option Conversion Factor determined by the Committee. Other terms of the Option will be established pursuant to Section 12 or 13. An IC Award in the form of an Option may be granted with or without an underlying Contingent Credit, as the Committee determines. 6. LONG-TERM INCENTIVE AWARDS. 6.1. Determination of Target LTI Awards. Each Target LTI Award will be in the form of cash (LTI Cash Award), Performance Shares (LTI Performance Share Award), an NQSO, a SAR, or any combination thereof, as the Committee determines. The Committee will grant each Target LTI Award contingent upon the attainment of performance targets and other performance conditions established by the Committee. The Committee will determine the Grant Date, cash value (where appropriate), and form of each Target LTI Award. A Participant may be permitted to indicate his preference as to the form(s) of his Target LTI Award. 6.2. Performance Targets/Earned Awards. Each Participant granted a Target LTI Award will be entitled to an Earned LTI Award (ranging from 0% to 200% of the Target LTI Award) at the end of the Performance Period, depending upon the extent to which the performance targets and other performance conditions established by the Committee for the Target LTI Award are met during the Performance Period. The performance targets and other performance conditions for each Target LTI Award will relate to one or more financial or other measures relevant to the individual Participant, MDC or its Stock, or a component or group of components of MDC as of the Grant Date, as the Committee determines. The Committee will establish a minimum performance level at or below which none of the Target LTI Awards is earned. The Committee will also establish a performance level at or above which the maximum amount (as determined by the Committee, but not to exceed 200%) of the Target LTI Award is earned. The percentage of the Target LTI Award earned (Award Percent) will vary between the minimum and maximum performance levels in the manner determined by the Committee. At the end of the Performance Period, the Award Percent will be multiplied by the Target LTI Award (in the form(s) in which originally granted) to determine the Earned LTI Award to which the Participant is entitled. Notwithstanding any other provision of this Section 6.2 to the contrary, the Committee may, at its discretion, at any time, in respect of all or any one or more Target LTI Awards, determine an Award Percent and Earned LTI Award prior to the end of the applicable Performance Period whenever warranted in the sole judgment of the Committee. In such event, the Award Percent will be determined by the Committee based on the portion of the Performance Period elapsed and the extent to which, in its judgment, the performance targets and other performance conditions have been met at the time the determination is made. 6.3. LTI Awards in the Form of Performance Shares. In the event the Committee grants a portion of a Target LTI Award in the form of Performance Shares, the number of Performance Shares to constitute the Award will be determined by the Committee and may, at the discretion of the Committee, be calculated by dividing the cash value of the portion of the Target LTI Award granted in the form of Performance Shares by either: (i) the Closing Market Price on Grant Date, or 4 7 (ii) the average of the Closing Market Price on the 10 trading days immediately preceding the last trading day of February of the first year of the Performance Period, as determined by the Committee at the time the Award is granted. 6.4. LTI Awards in the Form of NQSOs or SARs. In the event the Committee grants a portion of a Target LTI Award in the form of an NQSO or a SAR, the number of shares of Stock to be subject to the NQSO or SAR will be determined by the Committee and may, at the discretion of the Committee, be calculated by dividing the cash value of the portion of the Target LTI Award to be granted in the form of an NQSO or a SAR by the exercise price of the NQSO or SAR as determined by the Committee pursuant to Section 12 or 13 and multiplying the resulting quotient by the Option Conversion Factor determined by the Committee. Other terms of the Option will be established pursuant to Section 12 or 13. At the time each Target LTI Award in the form of an NQSO or SAR is granted, the Committee will determine whether or not the Earned LTI Award, if any, resulting from such Target LTI Award will be entitled to an underlying Contingent Credit and, if so, determine the Option Conversion Factor to be used in calculating the amount of Contingent Credit. 7. OPTION AWARDS. Each Option Award will be in the form of an NQSO, an ISO, a SAR, or any combination thereof, as the Committee determines. The Committee will determine the number of shares of Stock to be subject to each Option Award and the form(s) of each Option Award. The Committee will select a Grant Date with respect to each Option Award which will be on or after the date on which the number of shares of Stock to be subject to the Award and the form(s) of the Award are determined. The exercise price and other terms of the Option will be established pursuant to Section 12 or 13. 8. CONTINGENT CREDITS. For each Participant granted an IC Award, or portion thereof, in the form of an Option, the Committee may establish, in the name of the Participant, an account (Contingent Credit) representing a contingent right to receive a number of shares of Stock (Contingent Credit Stock) equal to the number of shares of Stock which the Participant would have been granted had such Award, or portion thereof, been granted in the form of Stock. For each Participant entitled to an Earned LTI Award, or portion thereof, in the form of an Option, the Committee may establish, in the name of the Participant, Contingent Credit Stock equal to the number of shares of Stock subject to the Option divided by the applicable Option Conversion Factor established by the Committee pursuant to Section 6.4. Upon exercise of an Option in whole or in part, the Participant's Contingent Credit, if any, related to such Option will be reduced by the number of shares of Contingent Credit Stock equal to the number of shares of Stock with respect to which the Option is exercised divided by the applicable Option Conversion Factor. Upon expiration (other than pursuant to Section 24) of an Option, the related Contingent Credit Stock, if any, will be paid to the Participant (or the Participant's beneficiary, in the event of the Participant's death), provided that the Participant is either still employed by MDC or a subsidiary of MDC or is no longer so employed by reason of death, retirement, or Work Force Adjustment. 5 8 9. PAYMENT OF AWARDS; OPTION AGREEMENTS. 9.1. IC Awards. Payment of IC Awards in the form of cash or Stock may be made, at the discretion of the Committee, in installments over a period of not more than 5 years after Grant Date. Notwithstanding the provisions of the preceding sentence, the Committee may, at its discretion, at any time, in respect of all or any one or more IC Awards the payment of which the Committee has elected to make in installments, terminate such election and make immediate payment thereof. Unless the Committee elects to pay in installments or determines, upon the request of the Participant, to defer payment pursuant to Section 10, each IC Award in the form of cash or Stock will be paid within 4 months after the year for which the Award is granted. 9.2. Earned LTI Awards. With respect to each LTI Award, the Committee will, within 4 months after the end of the Performance Period, determine the Award Percent and the Earned LTI Award and, unless the Committee determines, upon the request of the Participant, to defer payment pursuant to Section 10, make payment thereof if the Earned LTI Award is an LTI Cash Award or an LTI Performance Share Award. Each Earned LTI Cash Award will be paid in cash. Each Earned LTI Performance Share Award will be paid in cash, Stock, or any combination thereof, as the Committee determines. If paid in cash, the value of an Earned LTI Performance Share Award will be determined by multiplying the number of earned Performance Shares (determined pursuant to Section 6.2) by the average of the Closing Market Price on either (i) the 10 trading days immediately preceding the last trading day of February of the year following the Performance Period or (ii) the last 10 days of the Performance Period, as determined by the Committee. If paid in Stock, the Participant will be entitled to one share of Stock for each earned Performance Share. Any fractional share will be rounded up to the next whole share, unless otherwise determined by the Committee. 9.3. Option Agreements. Each Participant granted an Option Award, or IC Award or Earned LTI Award in the form of an Option, will receive an Option Agreement or other written instrument specifying the terms and conditions of the Option as determined by the Committee, consistent with the Plan. 10. OPTIONAL DEFERRED PAYMENT. If payment has not previously been made, the Committee may elect, upon the request of a Participant, to defer payment of an Earned LTI Performance Share Award, Earned LTI Cash Award, IC Award in the form of cash or Stock, or Contingent Credit Stock payable upon expiration of an Option. Payment of such Awards or Contingent Credit Stock may be deferred to the date requested by the Participant, or for the number of days or months after termination of the Participant's employment by MDC or one of its subsidiaries as requested by the Participant. In any event, all payments which are deferred will be paid no later than 12 months after the termination of the Participant's employment by MDC or one of its subsidiaries. Notwithstanding the foregoing provisions of this Section 10, the Committee may, at its discretion, at any time, in respect of all or any one or more Awards the payment of which the Committee has elected to defer, terminate such election and make immediate payment thereof. 11. DIVIDEND EQUIVALENTS; INTEREST. 11.1. Dividend Equivalents. The Committee may provide for the payment of Dividend Equivalents on: 6 9 (i) IC Awards in the form of Stock the payment of which is deferred or made in installments, (ii) Earned LTI Performance Share Awards payable in Stock the payment of which is deferred, or (iii) Contingent Credits prior to the payment or cancellation thereof. Any Dividend Equivalents will be paid on the respective dividend payment dates. 11.2. Interest. The Committee may provide for the payment of interest, at such rates and in such manner as the Committee determines, on: (i) IC Awards in the form of cash the payment of which is deferred or made in installments, or (ii) Earned LTI Awards payable in cash the payment of which is deferred. 12. PRICE AND TIME OF EXERCISE OF ISOS AND NQSOS. As determined by the Committee at the time the Award is granted, the per-share exercise price of an ISO granted as part of an IC Award or an Option Award will be 100% (110% for an ISO granted to a Participant who on Grant Date owns, within the meaning of Section 425(d) of the Code, Stock possessing more than 10% of the total combined voting power of all classes of stock of MDC or one of its subsidiaries) of either: (i) the Closing Market Price on Grant Date, or (ii) the average of the Closing Market Price on the 10 trading days immediately preceding the last trading day of February of the year in which the ISO is granted, if equal to or greater than the amount specified in (i) above, but in no event less than its par value. As determined by the Committee at the time the Award is granted, the per-share exercise price of an NQSO granted as part of an IC Award, an LTI Award, or an Option Award will be either: (i) the Closing Market Price on Grant Date, or (ii) the average of the Closing Market Price on the 10 trading days immediately preceding the last trading day of February of the year in which the NQSO is granted (in the case of an IC Award or an Option Award) or of the first year of the Performance Period (in the case of an LTI Award), but in no event less than its par value. Each NQSO and ISO will become exercisable on the date(s) designated by the Committee at the time the Award is granted, which, in the case of an LTI Award, will not be prior to the determination of the Earned LTI Award. Notwithstanding the provisions of the preceding sentence, the Committee may, at its discretion, at any time, in respect of all or any one or more IC Awards, Option Awards, or Earned LTI Awards in the form of an NQSO or ISO, accelerate the date on which such NQSO or ISO becomes exercisable. Subject to Section 14, the exercisable portion of an NQSO or ISO may be exercised from time to time thereafter, in whole or in part. An ISO granted before 1 January 1987 may be exercised by the Participant only if the Participant does not have outstanding any earlier awarded ISO, or SAR which has 7 10 replaced such an ISO. All Stock purchased upon exercise of an NQSO or ISO will be paid for in full at the time of exercise. Subject to Committee restriction or disapproval to preclude "pyramiding of shares," already-owned Stock may be used as full or partial payment of the exercise price. Prior to the date of issuance the Participants will have not shareholder rights with respect to such Stock. Stock used as full or partial payment will be valued at its Closing Market Price on exercise date. 13. EXERCISE OF SARS. As determined by the Committee at the time the Award is granted, the exercise price of a SAR will be either: (i) 100% of the Closing Market Price on Grant Date, or (ii) the average of the Closing Market Price on the 10 trading days immediately preceding the last trading day of February of the year in which the SAR is granted (in the case of an IC Award or an Option Award) or of the first year of the Performance Period (in the case of an LTI Award). At the time the Award is granted, the Committee will determine whether a SAR will be paid in cash (a Cash SAR) or Stock (a Stock SAR). The number of shares of Stock to be paid upon exercise of a Stock SAR will be determined based on the Closing Market Price on exercise date. Any fractional share arising from exercise of a Stock SAR will be rounded up to the next whole share, unless otherwise determined by the Committee. Each SAR will become exercisable on the date(s) designated by the Committee at the time the Award is granted, which, in the case of an LTI Award, will not be prior to the determination of the Earned LTI Award, and, which, in the case of a Cash SAR, will not be prior to 6 months after the determination of the Target LTI Award by the Committee. Notwithstanding the provisions of the preceding sentence, the Committee may, at its discretion, at any time, in respect of all or any one or more IC Awards, Option Awards, or Earned LTI Awards in the form of a SAR, accelerate the date on which such SAR becomes exercisable to a date, in the case of a Cash SAR, which is at least 6 months subsequent to the determination of the Target LTI Award by the Committee or the conversion date (if the Cash SAR has been converted from an NQSO, ISO, or Stock SAR pursuant to Section 15 or 16). Subject to Section 14, the exercisable portion of a SAR, may be exercised from time to time thereafter, in whole or in part, provided that, with respect to a Cash SAR, both the election-to-exercise date and the exercise date must occur during a period beginning on the 3rd business day following the date of public release of any quarterly or annual summary statement of MDC sales and earnings and ending on the 12th business day following that date, as specified in Securities and Exchange Commission Rule 16b-3. The election-to-exercise date is the date the Participant, by execution of an appropriate MDC form or by other manner of notification approved by the Committee, acts to advise MDC of his election to exercise. The exercise date is the later of the date of receipt by the Company of the Participant's notification of election to exercise or a date specified by the Participant in such notification. 14. EXPIRATION OF OPTIONS. Each Option will expire the earliest of: (i) the date established by the Committee at the time the Award is granted, which will not be later than 10 years after Grant Date (5 years with respect to a 110% ISO described in Section 12), provided that an Option (other than an ISO) scheduled to expire within 60 days after the Participant's death will not expire until 60 days after the Participant's death; 8 11 (ii) the date of the Participant's termination of employment by the Company or one of its subsidiaries if termination is for cause as determined by the Committee; (iii) in the case of an NQSO, ISO, or Stock SAR, 30 days (or such lesser period as determined by the Committee) after a Participant's termination of employment by the Company or one of its subsidiaries if termination is by reason other than death or retirement and is not for cause (provided that, if the NQSO, ISO, or Stock SAR has not become exercisable on or before the date of such termination, it will expire on the date of termination); (iv) in the case of a Cash SAR, the last day of the next quarterly exercise period which commences after the Participant's termination of employment by the Company or one of its subsidiaries (or such earlier date as determined by the Committee) if termination is by reason other than death or retirement and is not for cause (provided that, if the Cash SAR has not become exercisable on or before the date of such termination, it will expire on the date of such termination); or (v) in the case of an ISO, 3 months after the Participant's termination of employment by the Company or one of its subsidiaries if termination is by reason of retirement, unless the Participant dies during such 3-month period. 15. CONVERSION OF NQSO OR ISO INTO SAR. At any time prior to the exercise, expiration, or cancellation of an NQSO or ISO granted pursuant to the Plan, the Committee, at the request of the Participant, may at its discretion cancel the NQSO or ISO and issue in its place an equivalent SAR. Such SAR will be subject to the same terms and conditions as the related NQSO or ISO (i.e., such SAR's terms and conditions will be determined as if it had been granted on Grant Date of the related NQSO or ISO) and will be exercisable only to the extent that such NQSO or ISO was or would have been exercisable, except that a Cash SAR arising from such conversion may not be exercised until 6 months after the conversion date. This 6-month limitation will not apply in the event death or disability of the Participant occurs prior to the expiration of the 6-month period. 16. CONVERSION OF STOCK SAR INTO CASH SAR. At any time prior to the exercise, expiration, or cancellation of a Stock SAR granted pursuant to the Plan, the Committee, at the request of the Participant, may at its discretion cancel the Stock SAR and issue in its place an equivalent Cash SAR. Such Cash SAR will be subject to the same terms and conditions as the related Stock SAR (i.e., such Cash SAR's terms and conditions will be determined as if it had been granted on Grant Date of the related Stock SAR) and will be exercisable only to the extent such Stock SAR was or would have been exercisable, except that such Cash SAR may not be exercised until 6 months after the conversion date. This 6-month limitation will not apply in the event death or disability of the Participant occurs prior to the expiration of the 6-month period. 17. PLAN LIMITATIONS. The aggregate number of shares of Stock that may be issued or subject to Awards (including the number of shares of Stock subject to SARS) granted pursuant to the Plan (measured, with respect to Target LTI Awards, by the maximum number of shares potentially issuable with respect to such Target LTI Awards), will not exceed 2,500,000, all or any part of which may be issued under ISOs. Shares issued pursuant to the Plan may be issued from authorized but unissued shares of Stock or treasury Stock. If any shares of Stock subject to an Award are not issued and cease to be issuable, or are no longer subject to an Award, for any reason other than as the result of the exercise of a Cash SAR (e.g., upon expiration of an Option, or in the event less than the maximum number of shares potentially issuable with respect to a Target LTI Award is earned), the shares not so issued or no longer subject to an Award will no longer be charged against the limitations in this Section 17 and may again be made subject to Awards. No IC Awards, Option Awards, or Target LTI Awards may be granted pursuant to the Plan after 1 January 1996. The aggregate fair market value (determined by the Closing Market Price on Grant Date) of the Stock with respect 9 12 to which ISOs are exercisable for the first time by a Participant during any calendar year (under all plans of MDC and its subsidiaries) may not exceed $100,000. 18. TERMINATION OF EMPLOYMENT OR CHANGE IN WORK ASSIGNMENT. Each Target LTI Award granted pursuant to the Plan will be prorated, unless the Committee determines that the Target LTI Award should not be reduced, should be rescinded entirely, or should be reduced in a manner other than a pro rata reduction, for any Participant if: (i) his employment by MDC or a subsidiary of the Company terminates by reason of death, retirement, or Work Force Adjustment during the Performance Period, (ii) his work assignment is altered during the Performance Period to the extent he should (as determined by the Committee) no longer continue as a Participant, or (iii) he transfers from one component or group of components of MDC to another during the Performance Period. An IC Award in the form of cash or Stock, an Earned LTI Cash Award, or an Earned LTI Performance Share Award will not be paid to any Participant whose employment by MDC or one of its subsidiaries terminates prior to payment thereof by reason other than death, retirement, or Work Force Adjustment unless otherwise determined by the Committee (in which event all or any portion of such Award may be paid at the Committee's discretion). 19. DESIGNATION OF BENEFICIARY. A Participant may by written notice to the Committee designate a beneficiary who will receive any Award or Contingent Credit Stock payable after his death, or who may exercise any Option exercisable after his death. 20. ADMINISTRATION OF THE PLAN. Full power and authority to construe, interpret, and administer the Plan will be vested in the Committee. The Committee will have final and ultimate authority to make all determinations of matters involving the Plan, including determination of the extent to which performance targets and other performance conditions have been met. In the event of a change in the business operations or activities of MDC or a component or group of components thereof through acquisitions, divestitures, or otherwise, the Committee may adjust the performance targets and/or other performance conditions applicable to LTI Awards. All decisions of the Committee will be final and binding upon all parties, including MDC and its shareholders and employees. The Committee may exercise the authority and discretion granted to it under the Plan by establishing one or more separate incentive award programs for various components or groups of components of MDC. In the case of LTI Awards, for example, such programs may consist of uniform financial measures, performance targets, Performance Periods, and earn-out ratios and other matters within the discretion of the Committee, to be applicable to all LTI Awards to Participants from that component or group of components during the term of the program. With respect to IC Awards, such programs may consist, for example, of uniform standards for determining the amounts of Awards and/or allocating Awards among the components or groups of components then participating in the Plan. 10 13 The Committee may, to the extent consistent with Securities and Exchange Commission Rule 16b-3, delegate to others the administration of any portion of the Plan. In no event, however, may the Committee delegate to others the authority to: (i) select any person as a Participant, (ii) determine the initial cash value of an Award granted to an officer or director of MDC, (iii) determine the form in which payment of a SAR will be made, or (iv) consent to or disapprove a request to convert an NQSO or ISO into a SAR or to convert a Stock SAR into a Cash SAR pursuant to Sections 15 and 16, respectively. The place of administration of the Plan will conclusively be deemed to be within the State of Missouri and the validity, construction, interpretation, and administration of the Plan and of any determination, decision, or program made hereunder, and the rights of any person having or claiming to have any interest herein or hereunder, will be governed by and determined solely in accordance with the laws of the State of Missouri. 21. ADJUSTMENTS TO STOCK. If outstanding shares of Stock are changed in number or class by reason of stock dividend, split-up, combination, merger, consolidation, or recapitalization, corresponding adjustments will be made to the number and class of shares of Stock which may be issued or subject to Awards granted pursuant to the Plan, to the number and class of shares of Stock subject to outstanding Awards granted pursuant to the Plan, and to the exercise price of outstanding Options so as to reflect such change. 22. TRANSFER OR ASSIGNMENT OF OPTIONS. With the exception of transfer by will or by the laws of descent and distribution, Awards may not be transferred or assigned, and an Option may be exercised during the lifetime of the Participant only by the Participant, provided, however, that an NQSO or a SAR may be exercised during the lifetime of the Participant by his guardian or legal representative. No Award may be made subject to any encumbrance, pledge, or charge of any kind, except that a Participant may at any time designate a beneficiary pursuant to Section 19. 23. NO CONTRACT OF EMPLOYMENT. Nothing in the Plan, nor any instrument executed pursuant hereto, will confer upon any Participant the right to continue in the employ of MDC or any of its subsidiaries or affect the right of MDC, or any component thereof, to change any Participant's present or future rate of compensation or work assignment or to terminate the employment of any Participant with or without cause. No Participant or any other person will have any contractual or other right under the Plan or any interest in any specific assets of MDC or any of its subsidiaries by reason of an Award granted pursuant to the Plan. 24. CONDITION TO ELIGIBILITY. It is a continuing condition to eligibility to (i) hold any target IC Award or Target LTI Award, (ii) be granted or paid any IC Award or Earned LTI Award, or (iii) exercise any outstanding Option, that a Participant not, directly or indirectly, either before or after termination of employment, intentionally act in a 11 14 manner contrary to the best interests of MDC or any affiliate of MDC. If the Committee determines that a Participant has acted in such a manner, such Participant will, unless and to the extent otherwise determined by the Committee, no longer be eligible to (i) hold any target IC Award or Target LTI Award, (ii) be granted or paid any IC Award or Earned LTI Award, or (iii) exercise any outstanding Option, as of and after the date such determination is made, and any such IC Award, LTI Award, or outstanding Option will expire as of the date of such determination. No such determination will affect any cash or Stock paid, or amounts which would have been paid but for deferral pursuant to Section 10, or Option exercised, prior to the date of such determination. 25. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN. The Committee may from time to time amend, suspend, or terminate the Plan, provided, however, that no amendment will, without the approval of the shareholders of MDC: (i) materially increase the benefits accruing to Participants, (ii) materially increase the number of shares of Stock which may be issued under the Plan, or (iii) materially modify the requirements as to eligibility for participation in the Plan. 26. NO EFFECT ON OTHER PLANS. Nothing in this Plan is intended to be a substitute for, or will preclude or limit the establishment or continuation of, any other plan, practice, or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, which MDC or any subsidiary now has or may hereafter lawfully put into effect, including, without limitation, any retirement, pension, savings, profit sharing, insurance, stock purchase, incentive compensation, or bonus plan. 27. EFFECTIVE DATE. The Plan, as amended and restated, is effective as of 20 July 1990. -----END PRIVACY-ENHANCED MESSAGE-----